The Ownership Fallacy

If you asked a lawyer, the BC Business Registry, or the CRA, they’d all say I own 50% of Classmate. And if you asked an accountant or business valuator, they’d value Classmate at some number — suggesting my stake in Classmate is 50% that number. Most people believe that makes sense, but I think that belief is contagious more than it is correct.

From my point of view, I own 50% of a business number, a trademark, and maybe the current assets and liabilities — nothing more. I don’t own the business itself, because the business is a collection of services which are delivered by a collection of people, all of whom I do not and cannot own (except for myself). So if I do not own the people who deliver the services that make up the business, I don’t own the business.

Furthermore, our business, like many others, is very much centred around relationships with clients — the people that pay us. Those people have a much stronger relationship with the people inside Classmate then they have with Classmate itself.

So, as an example, if you took all the people inside Apple and started a new company called Orange — which organization would likely create your next favourite gadget? The company called Apple that’s been refilled with new people, or the company named Orange that’s filled with the people who made your current favourite gadget?

It is a foolish premise to believe you own more than you actually do. You can’t own people, and what is a business without it’s people?