Something I’ve noticed over the years is that there’s a natural membership economy mindset among many family-owned businesses and organizations, not on the venture-backed IPO acquisition path. Companies that aren’t on a tight timeline to an exit have the ability to invest in long-term, trusted relationships with customers and with employees.

After a career as both a founder of multiple successful companies and a venture investor with Kleiner Perkins, Dave Whorton decided he wanted to work specifically with what he came to call Evergreen leaders, the ones who combined sound business principles, extraordinary purpose, and a desire to share their success with their employees.

His Tugboat Institute researches these organizations to identify best practices, and then he brings together these leaders to teach and support one another. Now, he’s written a book, “Another Way: Building Companies That Last…and Last…and Last”. It’s a playbook for entrepreneurs seeking an alternate path to success.

In my conversation with Dave, we discussed how venture capital has changed the face of entrepreneurship, what it means for founders, the 7Ps that are the guiding principles of Evergreen companies, and the two key constituencies that matter most to your organization’s long-term success.

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Listen to the podcast here

Building Evergreen Companies with Dave Whorton, Founder of the Tugboat Institute and Author of Another Way: Building Companies that Last…and Last…and Last

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Robbie Baxter: Dave, welcome to the show.

Dave Whorton: Good to be here. Thanks, Robbie.

Robbie Baxter: Tell me a little about yourself and how you came to found the Tugboat Institute.

Dave Whorton: I’ve actually had a few jobs in venture capital and I’ve started three companies and one nonprofit, so four in total. And I have always been looking to find those entrepreneurs that are very similar to Dave and Bill of Hewlett-Packard (HP).

I had the good fortune of working with them in high school and college working for their company, not for them directly. I’m just exposed to them and I love their values. I love the HP way, and I found over time that I kept going back to that touchstone of how they treated people, how they built great products, how they engaged their communities, and I really admired that.

I found in 2010-2011 timeframe, coming out the great recession, that I just wasn’t exposed to people like that in my very early stage of venture capital investing. Smart people, capable people, ambitious people, but there was a real orientation around wealth generation at a level I had not seen when I first got involved in Silicon Valley. And there’s some other things happening, behavioral that just caused me to believe that it didn’t feel the same as what I’d first been exposed to in technology. And so I went on a learning journey to see if I could identify the next generation of Dave and Bill’s. And in the process of doing that, it was very slow because as you can imagine, I’m turning to a lot of friends in Silicon Valley saying, “Who do you know that’s ambitious to build a big and meaningful company that wants to do it but has no interest in raising venture capital, private equity, and no interest in ever being sold or going public?” And I got a lot of blank stares initially and they say, “What? That doesn’t even make sense. You can’t tie together a big impactful company with somebody who’s not raising capital. It doesn’t work.” But as getting as I got through that, I started meeting these folks and I met a number of people around the country that were doing this. Both founders and multi-generational family businesses that were ambitious to build important, meaningful companies, but doing with really good values. And through that process, a number of them said, “Hey, look, if you’re meeting other people who are thinking the way I’m thinking and are aligned with these values, I sure would like to meet them.”

I made some one-on-one introductions, and pretty soon I’d heard it enough that I decided why not invite a group of these folks to get together and talk about this and share ideas, best practices, and celebrate. And I had a second home in Sun Valley, Idaho, and I thought that’d be a great place to gather people. So we did that in October of 2013. I had the first gathering. It was about 40 people of CEOs and leaders of what I came to call Evergreen companies. And within 24 hours, I knew this was what I wanted to do. I was on the right path to finding the Dave and Bill through this kind of company. That was the beginning of Tugboat Institute.

Robbie Baxter: Just to make sure I understand, were you doing this as a gift to the world or was there a business in bringing them together? What was the motivator to do this?

Dave Whorton: At first, it was to see was there any role for me to play in serving them?

And I wasn’t sure. Not, I didn’t know a lot about the way they built businesses. These were bootstrap businesses, these were multi-generational businesses. And so it was really in that first 24 hours where I had a lot of people get up on stage. I adopted the TED style. I’ve gone to TED Talks since the late 1990s.

Get up there, 20-minute talk, no Q and A, and just share an idea that you shared with me with the rest of the group. And then we’ll talk about these over lunch and hikes around the mountains and whatever else we were doing that afternoon. And I saw very quickly that there was an opportunity to be of service to them, that this sharing of best practices, this kind of giving them an opportunity to connect and inspire each other, was pretty powerful.

I didn’t know exactly what the business model would be. It ended up being a membership model, which is pretty appropriate for your show. Yes, there was first, I had to see if there was really a need, and then second was, could I actually design a business model that made this make sense for me?

Robbie Baxter: It’s interesting that you brought up the membership model around the institute, but the original reason that I really wanted to have you on the show is because a lot of the principles that Evergreen companies use that you’ve so beautifully defined, framed, and illustrated.

A lot of those principles are very similar to the principles of the best membership economy companies, and a mutual friend of ours pointed that out to me several years ago. And since then, I’ve been avidly following what you’re doing at the institute. But I’m interested in why it was so hard to find these people at first. What has happened in Silicon Valley that makes it not so fun to be like David and Bill?

Dave Whorton: It’s interesting.I don’t think that there are founders who would not like to be like Dave and Bill, right? It’s aspirational. They’re two incredibly human beings, the great book, “The HP Way” is about them. But I think the game as it’s played today is one that’s very much about raising capital. It starts in your first conversation with an angel investor. It starts with a conversation with your lawyer. Things are so geared in Silicon Valley to, “Hey, look, if you wanna build something of significance, you know you’re just gonna have to go raise money.”

So the angels start talking about this, your lawyer starts talking about this, your neighbors start talking about it, and pretty soon, for almost everybody. It’s the de facto path. There is no other path. I remember one time I had a conversation with an attorney. I said, “Look in practice, do you incorporate companies first as LLCs or C corps?”

And he said, “C Corps.” And I said, “Why not LLCs? They’re actually more beneficial for the entrepreneur if they’re not going to raise venture capital. It’s a tax advantage status, because if they’re going to distribute cash, it doesn’t get dividends. It’s not going to be taxed twice. LLCs do not tax twice. C Corps would tax twice.” And he was like, “What are you talking about, Dave?” I said, “So you don’t even think about this. You don’t even have a conversation?”This is a very successful Silicon Valley attorney, about which path you want to take. And he says, “No. It’s obvious the path to take is going to be to raise money from the best venture capital firm you can.”

That’s what made it so challenging because in posing this question, who do you know is ambitious to build a meaningful company who has not raised venture capital or private equity for many people, that’s a null set. There is nobody they know because the entire ecosystem in Silicon Valley and more broadly is geared towards that pathway.

Robbie Baxter: And why do you think that is?

Dave Whorton: I think it’s become the de facto standard because there are so many celebrated successes along that pathway. Google, Amazon, Juniper Networks, Facebook, LinkedIn, and those are the stories you get told. Those who have studied venture capital know that it is a very rare occurrence to have companies that exit at those levels or become public at those levels.

There’s a very much a power law dynamic in the venture industry, and half or more of most VCs’ portfolio companies actually don’t even return capital. They just get shut down, or they don’t survive an extra amount of financing, and it’s only a few percent that actually end up having a meaningful return.

So that’s what’s exciting, that’s what’s accelerated. It’s a lot more interesting to put on the front page of Inc. Magazine. Elizabeth Holmes, when she was considered the next Steve Jobs and worth a billion dollars, and put on the cover myself or Jessica Heron to talk about Evergreen companies, which is exactly what happened with Inc. Magazine in October of 2015. They swapped out a cover photo that was really celebrating this idea of Evergreen companies. It was written by Bo Burlingham, the co-author of “Another Way.” They decided no, there’s this woman, she wears all black outfits, she’s a cute blonde girl, and she’s going to revolutionize blood testing, and she’s worth a billion dollars.

Three weeks later, The Wall Street Journal broke this, that this was a fraud, and she’s in jail today. But there’s just something exciting about the kind of coming from nowhere, hugely successful, getting rich, and all the people getting rich along the way, they rarely talked about the very high failure rate and what that experience feels like. I don’t know why it’s become so dominant but I can tell maybe from personal experience, there were a few family businesses in my business school class at Stanford Business School, graduated 1997 as the dotcom boom was taking off, and we were largely not interested in them.

We were really interested in what was happening in venture capital, what was happening with dotcom, with the e-commerce. We’re reading the Red Herring magazine, which was celebrating all of this. It’s very unfortunate because I think venture capital is very appropriate for some businesses, particularly businesses that have very large upfront capital expenditures.

But for the vast majority of businesses, doing something Evergreen will lead to a much higher likelihood of having a successful company for that founder and going for that rocket fuel, and trying to get escape velocity.

Robbie Baxter: Yeah, that’s a very interesting point that you make, that it’s going to be a much more successful outcome for the entrepreneur which I think is key to this. Thinking about why you get into an entrepreneurial venture in the first place is often to build something lasting and meaningful. And that makes an impact. And to me, at least as someone who grew up here and in Silicon Valley, I’ve been here almost my whole life. The imagined outcome of being the next Google feels very vivid and very real. But the reality for so many founders is you give up a lot of control when you take the venture money, and the expectations are to hit certain metrics in the short term, which may potentially impact you in the long term, or potentially impact your ability to build out the vision that inspired you in the first place.

Dave Whorton: This is a nuance point, but with the size of most venture capital funds today, for them to return that fund and have a good profit on it, let’s say do somewhere between three and five times return of the initial capital, they need really big exits. So they’re gunning hard for having things that are going to become really big. And again, it’s a path for some that’s very appropriate. Still very risky. But for the vast majority, building something more slowly, building it from your own fuel could give you an opportunity to build something.

Still very significant, but it’ll be done over a longer period of time. It won’t be done in five or 10 years. It could be done within your lifetime. You could build something from zero to a billion in revenue in your lifetime on a self-funded basis. With the right market opportunity, with the right business model, with the right team. It’s very doable. We have examples of that.

Robbie Baxter: Yeah, I would love to break down some examples of what you are, you’ve alluded to a couple of times, to an Evergreen company.

What is an Evergreen company? What makes it different from a deciduous company? What makes it different from the venture-backed companies?

Dave Whorton: When I was meeting with these different companies. I was meeting family-owned businesses. I was meeting employee-owned businesses. I was referred to foundation-owned businesses, partnerships, a variety of different ownership types. And so what I realized is there wasn’t really a name for this type of company that could be one of those ownership types, but with this core value system. And so that’s why I came with Evergreen. I socialized it with some of the early people I was interviewing with, and they were like, “Hey, that’s a cool name. It has a good connotation. There’s a significance to it. There’s a pacing of growth to it. There’s a resilience to it. There’s a kind of majesty to it, an elegance.” But after we had our first event, my colleague, Chris Alden, made a very astute point. He said, “We’ve got to be careful about this because we’re going to put a lot of effort into building this idea of Evergreen companies, and we should trademark,” and we’ve done all those things you could imagine. But he said, we really need a framework for two reasons.

One, so that we really are the people who define what it means to be an Evergreen company. As we invest all of this energy in building this community and these ideas that somebody can’t co-op us, and particularly who’s worried about a private equity firm, for example, starting to say that, perhaps, their companies were Evergreen companies. And then, in addition to that, he said it’s also a flag in the ground so people know that if they do operate consistently with these values today, they’re a good candidate for being part of our membership organization. I came up with the 7Ps to define this, and I presented it to the group back in 2014 after we incorporated Tugbout Institute and its purpose, perseverance, people first, private, profit, paced growth, and pragmatic innovation (7Ps). And the idea is that if you continue to mature on each of those 7Ps. And as a system, strike a balance between those Ps, ’cause there are in some cases some trade-offs, you have a much higher probability of being around a hundred years from now than if you’re some other work, some with some other value system. And what’s been so rewarding is I put that out to the community back then, and I said, “Look, this is really a straw man. It was a concept I learned at Bain & Company.

It was a hypothesis. And I said, I want you to poke holes in this. Is this right? Is it wrong? Am I missing something? Is there too much in this? And here we are. It’s 12 years later, and it’s as strong as ever, and I continue to get incredible satisfaction when I meet particularly multi-generational family businesses.

They’ve been around for a 100, 150, 200 years, and they’re like, you know what? That’s a very good framework for how we think about how we run our business. And so it gets validated over and over again. And so not to say that there aren’t other things you shouldn’t be concerned about. It doesn’t mean companies can’t have their own specific value system and how they want to interact and operate with each other, but that these 7Ps are very resonant with the community and people who see themselves as Evergreen companies.

Robbie Baxter: Can you share an example of an Evergreen company that we might know?

Dave Whorton: I think we all experienced when we were younger is Radio Flyer. So the Red Wagon Company, that’s a third-generation company founded by Antonio Pasin a hundred years ago, and today it’s run by his grandson, Robert Pasin. And run very successfully by incredible people. The first culture is very committed to staying private for generations, profitable, growing consistently, very innovative. Spent some time with them and some other members at their headquarters just outside of Chicago, and it was really fun to see how they innovate. They’re a case study in what IDO would teach you about experimentation. I think Robert calls it planting lots of seeds and planting them early, and finding out what it takes and then really investing behind those because you don’t have the luxury in an Evergreen company to go raise $20 million and burn it on product design to have something come out that doesn’t work. You have a company and it’s profitable, and you want to steward that successfully, and you want to grow it. So you get very creative about reducing risk around innovation in a way that’s more consistent with how venture capital was practiced 30 years ago than we see today.

Robbie Baxter: That’s so it’s interesting, this very long-term vision, this willingness to experiment and iterate. And this idea of a kind of continuous small improvement.

Dave Whorton: It’s part of that. So there’s a lot of pragmatic in innovation, which is what you call Kaizen. It’s continuous improvement. An example in the Toyota production system, but there’s also invention. So I’ve had some really interesting conversations with Clayton Christensen before he passed away about how Evergreen companies can take very long planning horizons, very long investment horizons, it doesn’t mean they don’t have to be disciplined about getting to early profitability either on the company or on a future product line.

There’s an important discipline to be, as he would say to me, “Be impatient for profits, but patient for growth.” He said, “Silicon Valley’s the opposite. You guys are impatient for growth, but too patient for profits.” And with that mindset, you can actually develop something over a period of time, enter a niche market, validate the technology in that niche market, make it better, make it stronger, and then move upstream to more mainstream markets over time or expand the greenfield market you’re in very successfully. I don’t want people to think Evergreen companies are just companies that are in unsexy industries where they’re getting a little bit better every day. Yeah, they’re doing that but there are moments of, in some of these companies, incredible invention. Some of these companies have really sophisticated capabilities for buying companies and successfully integrating them. Look at Enterprise Rent-A-Car, that’s an Evergreen company. Andrew C. Taylor very successfully bought National Car Rental and Alamo Rent A Car and did something that I don’t think most strategic buyers or private equity firms would do is he bought them and left them alone.

Because he realized through the diligence process, they were both well-run companies, and they actually had different customers same cars, they had different customers and customer profiles. And so he did take Rick Stubblefield and put them in over the two companies to make sure that they adopted the enterprise system and values and things, but they didn’t fundamentally change them.

The playbook would’ve been if we had been back in business school, right? Robbie would’ve been, “Hey, you bought National and Alamo, roll them into Enterprise, rebrand all of them, then they become an enterprise.” And he was smart enough to realize that, there are different travel segments and let’s make sure we address those well.

So I just say that because sometimes they get that from people saying, “Oh, these are probably sleepy company.” I’m like, “Oh no. Don’t underestimate these companies.” And they don’t. People typically innovate where they see a really clear opportunity, versus being highly speculative.

I see that as a discipline, but again, that was a discipline that was quite normal back in Silicon Valley. This highly speculative stuff people do with lots of money comes down to how effectively the founder can sell capital providers on their idea. He doesn’t have to sell customers or has to sell funders, and that’s a really interesting orientation where your business’s early days are either rooted in the foundations of serving customers well and getting to early profitability, or they’re in how do I raise continuous rounds of funding to continue staying in business and fake it until I make it? It’s a very different type of foundation to be building from.

Robbie Baxter: I think the customer centricity of these Evergreen businesses is what one of the things that’s sort of resonated with me when I think about membership businesses in a membership economy company, and I’ve talked about this a lot and I say mostly there’s subscriptions involved, but a membership economy company they’re focused on the customer relationship and they’re looking for a business where they have an ongoing relationship with the customer and they follow the customer to innovation

We’ve had several guests on the podcast who I think really fit your definition of an Evergreen company. One that comes to mind is Hagerty, originally an insurance company. Now, increasingly a lifestyle brand around classic cars.

Dave Whorton: I wish they stayed private.

Robbie Baxter: Yes, that’s for another discussion, unfortunately.

For many years, a private company was closely held, run by McKeel Hagerty, the son of the founders. And another one that is really interesting to me and close by is Blue Diamond Almonds.

Dave Whorton: I enjoy their products, but I don’t know them well.

Robbie Baxter: They are delicious. But they’re a co-op,

Dave Whorton: Co-ops can be Evergreen companies. We have several in our group that are Evergreen

Robbie Baxter: They said, our goal is to protect the integrity of the almond growers. We’re not just focused on making more money, we’re focused on quality product in a business for the next generation.

Dave Whorton: Yeah. That’s great.

Robbie Baxter: And it’s that kind of different mindset that. It requires a longer runway, which I know is something that you talked about

You said Evergreen companies have the benefit of time, right? The challenge of time, right? They have to be patient in many cases, but it does pay off. It’s a more solid foundation from which to grow.

Dave Whorton: That’s what we believe, and that’s what I see.

And think about some of the dynamics around this. If you raise a lot of capital, you’re expected to grow very fast. You want to get to hundreds of millions in revenue in a six to seven-year period. The company is probably more than doubling every year. So that means you’re probably more than doubling your employee base every year.

Think about the strain on the culture, the training, the assimilation, the onboarding. And so a lot of these companies end up culturally having weak foundations because there are so many new people all the time that it overwhelms, and it’s very hard for the young founder and leader to continue adapting and learning to keep up with that pace.

In the context of an Evergreen company, if you’re targeting, I’m gonna run this for the rest of my life, and I’m looking to build something of scale. You might be very comfortable growing it at 15 to 20% a year, and the same type of thing if your employee base is increasing by 15 to 20% a year, you can very easily assimilate those people, train them, onboard them, guide them, you can develop your first line managers.

Photo by fauxels: In an Evergreen company, steady growth means first-line managers get the training they need s every new hire feels supported from day one.

As everybody knows, and Tom Peters has talked about over and over again, the entire employee experience is most affected by the first-line managers in rapidly growing companies. First-line managers are often promoted with no training at all. It’s just they’ve been there longer, and now it’s time for you.

Whereas in Evergreen companies, they can be extremely deliberate. There’s one called McCarthy in Dallas, and that one, the CEO, is involved in first-line manager training because he says it’s so important to get them off on the right footing as early managers and then develop them over time as leaders.

And the pacing of growth creates a lot of room for building your culture, developing your team, and very importantly and very selfishly, if you’re a founder and I’ve been a founder, it gives you room to grow yourself and it gives you breathing room to get better and better because we all start with only so much experience, no matter where you came from. And frankly, we all started with no experience if you go all the way back. But it’s really wonderful to see CEOs who are able to go on to what I like to call learning journeys. They’re now at 50 million in revenue. The wheels are shaking a little bit. They’re not sure they got the right management team. Maybe they’re having to revise and tweak their business model, and they’re like, “I gotta go talk to other really smart people. I’m gonna spend the next year going out and meeting with people and sharing ideas and seeing what I can bring back to the group and then coming back, with some really good fundamental insights to take the company to the next a hundred or 200 million in revenue.”

No venture-backed CEO has that luxury to spend a year, can you imagine?

Robbie Baxter: You can’t even take a week.

Dave Whorton: Or a weekend. You get the idea, pace growth is pretty powerful.

Robbie Baxter: There are a couple of things I want to highlight that you just said that I think are really relevant for our audience.

One of them is if you’re an entrepreneur building a business, or you’re thinking about launching a business, this is another path you can take.

Number one, I think you’ve made a case for building a lasting, profitable business, but also, you only get one life. And having an opportunity to do the work that you want to do, continue to learn and grow, and have the power to create and support meaningful work for the people on your team.

Dave Whorton: I think most Evergreens feel that way, which is they look at the employee experience as being a really important part of their contribution over their lifetimes, and they’re very proud of that.

High net promoter scores, people going home at night, happy to see their families, not completely exhausted, not looking working long hours. Those same people who are well-trained they can actually serve on nonprofit boards in the community. They can do other things to positively unpack the experience of other people that they care about in their broader communities.

That’s pretty important stuff, and also being able to retire comfortably. Maybe not getting a big IPO exit, with millions of dollars, which happens to very few. Keep in mind so many fail. But in this case, I see tremendous generosity by the owners of these Evergreen companies.

If somebody spends their career with them, 20, 30, 40 years, they often retire very comfortably with millions and millions of dollars in retirement, which you don’t see if people are changing jobs every four or five years. And if they’re in a situation where either there’s not great compensation, or they never get the brass ring because they never end up one of the lucky ones that got in one of the big exits.

So I do want to say one thing that you remind me of too, is that what I love about the Evergreen path is that there are no financial gatekeepers. If you’re going to raise venture capital, you have angels, you have VCs, you’ve got to have the right VCs. You have to have VCs round after round. And so there’s this constant gatekeeping on whether you’re doing well or not, and it’s how they perceive you and the board perceives you versus how the customer sees you or the employees see you.

Maybe a little bit of the customers, right? But not really the employees. Unfortunately, I think that’s the case in an Evergreen company, it has two consistent groups. You’re very focused on it, particularly early, and you maintain this forever, which is, do you have happy customers, and do you have happy employees?

Photo by Jopwell: Do you have happy customers, and do you have happy employees?

And if you can satisfy those two conditions, you will likely have profits unless you have a really silly business model, but if you have a thoughtful business model, you will generate profits with those two happy groups, and then you can become self-sustaining very early. And funny enough, the person who shared this with me with such simplicity was Andrew Taylor of Enterprise Mobility. He said that was what got them off the ground. His father Jack, started the firm was just, Jack was just focused on having happy customers and happy employees. And I think it’s all going to work out fine. That’s a $35 billion revenue company today. I guess it raised a little bit of outside capital, but the family that gave it to them decades and decades ago wanted out. Unfortunately for them, they got out.

What I love about the Evergreen path is that there are no financial gatekeepers. Share on X

But yeah, and that’s what I love. So if you’re sitting anywhere in the country, and you’re like I don’t have access to those angels. I don’t have access to the venture capital community. Maybe I’m in an underserved group, a minority group, or women, or whatever it may be. I say, go Evergreen, and build that yourself from a strong foundation. And I would love to see lots of minorities. feel empowered to build Evergreen companies, or if they have a company to say, “Oh, wow, I didn’t realize there was this path. I can now build something of significance.” I had an interesting conversation with a leader in the black community in Chicago about this, and he said, “Gosh, I really would love to see more people not be afraid to go the distance.” And his observation was that often in the communities he’s in, if somebody starts having some real success, they’re convinced to sell the company and capture the wealth because they say so few get that. You don’t want it to disappear on you. I’d love for it to be opposite, which is helping create the courage to go the distance.

Maybe some of those people start building companies that are doing billions in revenue and owning them themselves, and their family owns them. I think that would be an incredible thing. But again, I love this idea that the gatekeepers to an Evergreen company are your customers, your employees.

The gatekeepers on the venture path are the next round of financing. Who are those people gonna be?.

Robbie Baxter: And your book, which I have to just take a moment to remind our listeners of, that is coming out May 6th, 2025. “Another Way: Building Companies That Last…and Last…and Last”.

“Another Way: Building Companies That Last…and Last…and Last”

You’ll recognize the cover ’cause it has an evergreen tree on it. Which is actually a beautiful cover. And I guess the book plus the Institute are your ways of spreading what you’ve learned. What you’ve seen and providing some pattern recognition to those entrepreneurs who maybe didn’t have the benefit of working directly with you.

Dave Whorton: Yeah, that’s exactly right. So I’ve got really two parts to the vision for Tugboat Institute that I formed pretty early. And the first part was to build a membership organization where we were an unparalleled resource to support them, and doing that through curating the best ideas and practices within the community, with the rest of the community, and then bringing thought leaders in from the outside. Folks like you, Robbie, Tom Peters, General McChrystal, Susan Cain, people like that, who have a really clear point of view on things that are very much aligned with being an Evergreen company. So we also bring those insights into the community.

The second part, and I wasn’t able to work on this as much as I liked, until our first decade was completed. We’re now up to about 300 CEO members. It’s a robust, wonderful community and but now we’re trying to get the word out. So that this can be the insights, the best practices can be enjoyed by anybody anywhere in the country, if not around the world. And we do that. The book is a very important piece of this.

We have a subscription newsletter, the EJ+ which has a very low price point, gives access to. All of our articles and all of our videos, over 500 articles and videos around the best practices of Evergreen companies. And we even created a little assessment tool that people can do, they can go online, spend about an hour entering information about their company and their financials, and their people first policies, and how they’re structured from a private standpoint.

And then we give them a report back that shows how they’re doing on each of their 7Ps directionally. It gives them five ideas on how they could further mature the company against these Evergreen values. And then we just give them 30 or 40 best practices. And my hope is that, for small business owners in particular, they’re aspiring towards this. They can see where they are and maybe see where there might be some opportunities, because I think most people when exposed to good ideas they’ve never heard before, they get it pretty quickly. They say, “Oh, I didn’t know that was possible” ’cause a lot of the practices we hear about are about public companies and venture-backed companies and some private equity companies.

You really hear about the practice of these wonderful Evergreen companies. In the second part of my vision for this, share that generously again, beyond our borders. I hope people can enjoy this throughout the world.

Robbie Baxter: Yeah, it’s very generous of you to pull all of this together and to make it available for the cost of a book or the cost of a low-price subscription, as well as having the more real-time in-person benefits of the institute and your events.

Dave Whorton: With all humility, it’s the generosity of the members. The fact that they’re willing to share the ideas. I can give Chris Anderson credit for this because when he took over the TED Conference, I was part of it when it was a secret conference, not secret, you very hard to attend, about 350-400 people. All the talks were confidential. They gave DVDs afterwards to the attendees, said, “Please don’t share these with anybody”. And Chris, when he bought it, he said, “Look, these ideas are too important. Why wouldn’t we want to share these with the world?” And so he really inspired me on this too, which was, I’m going to ask upfront and very early, can we share these ideas beyond our walls? And there was enthusiastic support for this by the members, and that continues through today. Our ideas come from them.

Robbie Baxter: Something that I’ve found with membership organizations, particularly around professional development, business-oriented communities, and membership groups, is that people often come for the content and stay for the people.

Dave Whorton: Absolutely. Finding like-minded people is a very powerful thing. This concept of mirroring neurons, I heard about this many years ago, and it really struck me, is that kind of the people you surround yourself with will reinforce subconsciously how you behave yourself.

So if you’re really focused on a good diet and your people around you are, that just gets reinforced. If you really focus on exercise, you’ll be reinforced. It’s very rare to have somebody who’s in a group of non-exercisers or who’s a really passionate exerciser, ’cause it’s part of our socialization process. We mirror the behaviors of the people we surround ourselves with. So membership organizations are really important in that dimension, in my mind, very important to Tugboat Institute because as they’re running around the world, not just in Silicon Valley and other places. They will say over and over again. Why aren’t you selling your company? Why aren’t you diversifying your wealth? You’re taking too much risk. You’ve got a single company, you have sophisticated financial terms, and when you then gather with 300 others that say, “Yeah, I could diversify my wealth, but then what do I have? I just have money.” I have an account with Morgan Stanley, and they’re putting me in a bunch of investments. I know I’d rather reinvest in my business. I have a purpose that matters greatly to me and my family, and the other owners. That community portion is extremely important.

The people you surround yourself with will reinforce subconsciously how you behave yourself. Share on X

Robbie Baxter: I think a couple of things to say are that one of them is that you and I are around the same era of business school and the same age. That one would be if one graduated from business school in the mid-nineties. And I think I find that as I get older, purpose matters more. It becomes increasingly important and has meaning and a reason to get up in the morning, and something that you’re excited to do, and something that you’re excited to learn about, and get better a,t and be more impactful with, becomes increasingly important.

When I think about the institute and the community, and I’m guessing and hoping that you’re going to have something for your readers to also connect with each other, whether it’s through that EJ+ subscription, or whether it’s through some other more scalable programming.

Dave Whorton: I hope it’s through the EJ+, the Evergreen Journal Plus, if there’s more we can do, we’ll listen to the customers, and we’re extending ourselves into serving those customers. And it could be gatherings around that, too. And I don’t wanna get ahead of things, but we’re here ultimately to serve.

Robbie Baxter: I think it’s a combination of bringing the people together, but also the umbrella. Like you said, it’s not just that all of these Evergreen entrepreneurs business owners are gathering. Because what sometimes happens is you gather. They might all be gathered somewhere, but they don’t have the framework to have the right conversations. I think that’s a really important part. And even having something as simple as a book club around another way, it gets people talking about things that they might not have ever shared. And not that they’re secret, but just that they haven’t made it to the level of consciousness of what they’re trying to do, why it’s meaningful to them, why they’ve shied away from, diversifying themselves into a more secure financial picture.

I think that’s really important and really admirable, so thank you for that.

Dave Whorton: You said something earlier, I want to bring it back up. You have one life to live, and if you are so fortunate at some point in your life to identify something you could really get behind and focus on for decades, it could be in a non-profit, it could be in a for-profit. It could be in almost any domain in the arts, but specific to what I evangelize. If you figure out that there’s a customer base you would love to serve for the rest of your life, this is a great way to do it. Because I think the most heartbreaking thing I’ve seen over and over again, somebody who starts with that in mind, raises outside funding.

And then they are in a position where their companies are either sold or very rarely, taken public today, but primarily sold. And just a few years later, that dream is over. That company has not operated the way they wanted, but they had no control over it. They had taken the capital. At some point, the investors needed an exit.

And I call these the heartbreaking moments ’cause you’re finally getting to a point where it’s all working. You may be growing nicely, you finally got the right management team. You understand your markets, your development teams are working well. And you get the knock on the door, and two board members walk in and say, “It’s time to hire the bankers and let’s get the process going.” And that’s when the dream is over in many cases.

Robbie Baxter: There’s so much more that I know we could cover that I would love to talk about with you. But hopefully we’ll save that for a future conversation. But I’m wondering if, before you go, if you have time for a speed round?

Dave Whorton: Sure. I’m here for you, Robbie.

Robbie Baxter: Alright. First subscription you remember having?

Dave Whorton: Highlights Magazine.

Robbie Baxter: Me too.

Dave Whorton: Who’s a member of the Tugboat Institute now. Talk about a full circle for me.

Robbie Baxter: Oh wow. I love Highlights. I did not know it was an Evergreen company.

Your favorite subscription now?

Dave Whorton: If I’m being honest, it’s probably The Wall Street Journal because I do read that every day.

Robbie Baxter: Most impactful business book you’ve read this year or ever?

Dave Whorton: Ever would be “In Search of Excellence” by Tom Peters. I read that when I was at Berkeley as an undergrad, and that book I still have today, it’s dog-eared, but it’s what inspired me not to go into engineering, but to go into business and strategy.

Robbie Baxter: One membership or subscription business that you think we should know about?

Dave Whorton: The one that I modeled Tugboat Institute off of is The Advisory Board Company. I really liked the idea. Frank Williams, who’s a good friend of mine from baiting company, was the CEO, but I met him, talked about The Advisory Board Company when he was an executive, and I love this idea that they got paid upfront by, I think at the time 2200 medical professionals or organizations asked them what they wanted The Advisory Board to do research on over the course of the year, then played back that research to the group. I’m like, this is amazing. And they get their revenues up front. They know exactly what they can spend over the course of the year and how much they can grow.

I thought that was a powerful model.

Robbie Baxter: That’s a great story. I’ve got to get them on the podcast

Dave Whorton: For sure.

Robbie Baxter: Dave, thank you so much for being a guest on Subscription Stories. It’s been a real pleasure.

Dave Whorton: Thanks, Robbie. Enjoyed being here with you.

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That was Dave Whorton, founder of the Tugboat Institute, and the author of “Another Way: Building Companies That Last…and Last…and Last”. For more about Dave and The Tugboat Institute, go to tugboatinstitute.com, and for more about Subscription Stories, go to www.RobbieKellmanBaxter.com/podcast.

Also, I have a favor to ask, if you liked what you heard, please take a minute to go to Apple Podcasts or Apple iTunes and leave a review. Mention Dave and this episode if you especially enjoyed it. Reviews are how listeners find our podcast, and we appreciate each one. Thanks for your support, and thanks for listening to Subscription Stories.

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Important Links

About Dave Whorton

Dave Whorton is an experienced startup investor and entrepreneur who spent twenty years of his career at the highest levels of Silicon Valley venture capital and tech startups. He began his career at Hewlett-Packard at 16, then caught the eye of John Doerr, Chairman at the preeminent tech venture capital firm Kleiner Perkins. He worked with Doerr and his partners during the late 1990s and cofounded four companies, including drugstore.com and Good Technology. After Good, he spent time running the venture group for a top PE firm and founded his own VC firm. But as the get-big-fast model of entrepreneurship shifted to the even more wasteful, manic growth-at-all-costs model, Dave began to wonder if there was another way of building lasting, impactful companies—a better way.

In 2012, after witnessing first-hand how dramatically the early-stage and venture capital ecosystem’s values and practices had fundamentally changed since the dot.com boom, Dave began to interview ambitious, purpose-driven entrepreneurs who had no plans to exit and eschewed VC and PE money. They were building profitable, long-lasting businesses more like David Packard and Bill Hewlett’s pre-public HP than any ones coming out of Silicon Valley. But because they were not raising outside capital and not on a path to IPO or sale—they were underappreciated and often ignored. He coined the term “Evergreen” companies to describe them.

In 2013, Dave founded Tugboat Institute, a firm dedicated to supporting and celebrating Evergreen companies—privately held businesses built to endure, adapt, and grow profitably for 100 years or more. Based in Ketchum, Idaho, Tugboat Institute has helped introduce hundreds of Evergreen CEOs and presidents to each other and curated the wisdom, best practices, and innovative ideas of that community to the benefit of their companies, employees, customers, partners, owners, communities, and society. Dave believes Evergreen companies represent capitalism at its best.

As Tugboat Institute enters its second decade, Dave is bringing the Evergreen company concept and ideals to a global stage through his upcoming book, Another Way: Building Companies to Last… and Last… and Last, co-authored with Bo Burlingham and published by Harvard Business Review Press (May 2025). The book introduces Evergreen companies and the Evergreen 7Ps principles that define them, shares compelling stories and practices that can benefit all leaders, and inspires entrepreneurs across industries to reject our society’s defacto growth model and instead build Evergreen businesses that last beyond their lifetimes.

Dave holds a BS in Mechanical Engineering from University of California, Berkeley and an MBA from Stanford Graduate School of Business. He is happily married to his wife Lisa and has two children.
When he’s not championing the cause of Evergreen companies, you might find Dave chasing his next big idea for them, debating whether his third (or fourth) coffee should be regular or decaf, or enjoying a long hike in Idaho’s Sawtooth Mountains.

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About Dave Whorton

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