Post Growth Entrepreneurship with Melanie Rieback: Governance is Foundational

Earlier this year, the quirky Kelvin Club in Melbourne came alive with enthusiasm as attendees gathered for an evening on Post Growth Entrepreneurship. The event was organised by 888 Co-operative Causeway with support from RSA Oceania and attracted a diverse audience of social entrepreneurs and thinkers interested in creative, responsible enterprise practices. The evening kicked off by a keynote address from Dr Melanie Rieback, a pioneer in the field of Post Growth Entrepreneurship, complemented by contributions from the other speakers Antony McMullen (Co-operative Bonds) and Alison Holloway (head of SGS Economics & Planning), and Master of Ceremonies Clare Fountain ensured smooth proceedings.

Dr Melanie Rieback on Post Growth Entrepreneurship

Dr Melanie Rieback, CEO and Co-founder of Radically Open Security, captivated the audience with her innovative approach to entrepreneurship. As the world’s first not-for-profit computer security company, Radically Open Security is an example of Post Growth Entrepreneurship (PGE). Dr Rieback’s presentation provided an overview of PGE, highlighting how this model reframes business as a form of activism, art, spirituality, and creative expression. Melanie emphasised that PGE rejects the traditional need for investors, scaling, and exits, questioning conventional entrepreneurial wisdom and re-envisioning business as a vehicle for pure positive impact.

Despite what some people say, the governance structure a social enterprise chooses, matters. Melanie explained the legal structure of her company: “Our model uses an archaic structure from the Dutch church called a Fiscal Fundraising Institution.? We donate 90% of our profits to the NLnet Foundation, a 35-year-old agency funding open-source and digital rights initiatives”.

Alison Holloway, head of SGS Economics and Planning, remarked, “Hearing about Melanie's approach was incredibly inspiring. As someone leading an employee-owned, purpose-driven business, I wish I had heard this talk 20 years ago. It would have provided valuable tools for what we were trying to achieve.”

Not-for-Profit Doesn’t Mean Unprofitable – How to Run a “Nonprofit Business”

As the founder of Radically Open Security, Melanie embarked on a mission to challenge the traditional business landscape by exploring putting a financially non-extractive alternative on the commercial market. Such models force commercial enterprises to compete on different terms, not just for profit but for impact and values. “This approach disrupts traditional dynamics by offering fair market rates to employees and reinvesting surplus funds back into the company for growth and stability.”? After reinvestment, 90% of what remains is donated to NLnet.? Melanie challenges the Silicon Valley ethos of exits and high returns as measures of success, advocating instead for long-term sustainable growth.? By separating profit motive from business operations, Melanie aims to fundamentally realign incentives in the business - which was also reflected in her decision to give away her company for one euro.

Transforming Investment

Governance structure matters and so does investment. Melanie discussed the prevalent fee structure in the finance industry, the "2-20" structure, which is a 2% asset management fee and 20% carried interest. She explained how this structure powerfully motivates venture capitalists to push portfolio companies toward exponential growth and exits, thus embedding the growth imperative into startups. “Let's say that I'm a venture capitalist and you're my portfolio company. If you grow exponentially, on exit I get 20% of that,” Melanie elaborated, highlighting the direct impact of carried interest on business strategies.

Melanie also criticised the long-term effects of the 2% management fee by drawing parallels to a mortgage, showing how a small percentage can significantly erode returns due to compounding. She cited John Bogle, the founder of Vanguard (a mutual fund), who frequently discussed the detrimental impact of compounding fees and the conflict of interest it creates between fund managers and investors, referring to it as “the tyranny of the compounding fees.”

Melanie further noted the challenges within the impact investment sector, where even impact-focused venture capitalists follow the same "2-20" compensation structure. Melanie used the example of Snowball Impact Management and Purpose Ventures as innovative models that are redefining this structure. Snowball Impact Management, led by Daniela Barone Soares, operates under a foundation and has eliminated the typical carried interest, changing the fee structure to reflect actual operational costs. Similarly, Purpose Ventures operates as part of the Purpose Foundation and has applied a steward ownership model to lock down their mission in the long term.? These funds, according to Rieback, demonstrate how to create more truly sustainable (and less greenwashed) finance. This transformation is crucial for promoting long-term stability and integrity in business, setting a new standard for how investments can support social impact.

The Golden Share and the Oprah Winfrey Approach

Alison Holloway shared her approach at SGS, where the shareholders' agreement mandates a high bar for agreement among all shareholders for the company to be sold. This model makes it difficult for the company to be sold, as achieving unanimous consent among all shareholders is tricky. This helps her business to remain focused on purpose, and long term financial and operational sustainability.

Melanie also discussed the concept of a "Golden Share”, as a share of stock with voting rights but no profit rights, that can veto certain governance operations (like selling the company), thus making businesses impossible to sell.? Rieback proposed distributing multiple Golden Shares to various stakeholders to further safeguard against potential collusion to sell the company. “I think the best way to do it is to take what I would call the Oprah Winfrey approach to Golden Shares. "You get a Golden Share!? And YOU get a Golden Share!”

Making a company “unsellable”, and employing asset locks fundamentally realigns financial incentives, thus removing external pressures to externalize costs onto society and the planet. This model offers a solution for maintaining purpose-driven governance in a competitive market environment.

Practical Takeaways and Future Implementation

Many attendees left the event with concrete plans to implement the concepts discussed. “I will investigate Steward Ownership approaches to a business idea,” said one participant. Another shared the intention to ensure their company's governance aligns with its environmental and regenerative purpose, stating, “We will explore nonprofit structures for future ventures.”

Alison, reflecting on the importance of governance, said, “Whenever I talk about our governance structure, people typically glaze over. But governance is foundational. It's subtle but crucial in maintaining a business for the long term and staying true to your purpose.”

Antony McMullen closed the evening with a call to action, “What if you could form a not-for-profit business that locked in purpose and included an asset lock to prevent it from being sold off into the private market? Co-operatives offer investment that's non-extractive. They offer democratic participation, and non-distributing co-operatives offer a stewardship model as well. So, I think that's something we can talk about and learn about together." I could not have put it better myself! Ahh the wonders of transcription software …

Antony McMullen is a Senior Industry Fellow at RMIT FORWARD and a co-operative developer member of Co-operative Bonds. Based in Melbourne, he specialises in participatory place-based development and co-operative entrepreneurship and policy. He co-founded Melbourne’s first co-operative co-working space, 888 Co-operative Causeway. The co-operative is hosting an event on the relationship between co-operatives and the union movement: the Inaugural Basil Varghese Oration: featuring Sharan Burrow AC so be sure to book in!