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Comment by grecy | Hacker News Reader

I don't understand why there are not more co-ops in this world.

In Canada, Mountain Equipment Co-Op (MEC) is the all-in-one kick-ass outdoor store (like REI). It is a co-op, so you pay $5 for a lifetime membership.

The place does not make a profit. All expenses are paid, all employees earn their living. At the end of the year, if they accidentally made a profit, they simply return the extra money to all the members of the co-op as a percentage of whatever that person spent for the year, thus they make no profit.

This, to me, is brilliant. Customers get what they want, employees get paid. Win. Win.

Why do we need stores that make profit?

Why do we need banks that make ever-increasing billions in profit?

I imagine a world where banks, Apple, Ford, etc. all worked like this. I want to live in that world.

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Sweden has quite a few dominant coops. The ones listed here all have history dating back to between 1899-1931

Around 20% of grocery retail is by co-ops https://en.wikipedia.org/wiki/Kooperativa_Förbundet

The largest dairy https://en.wikipedia.org/wiki/Arla_Foods The second largest dairy https://en.wikipedia.org/wiki/Milko_(Swedish_cooperative) The third largest was a co-op until it was sold to a French conglomerate in 2012 https://en.wikipedia.org/wiki/Skånemejerier

One of the largest housing corporations https://en.wikipedia.org/wiki/HSB_(Sweden)

The largest insurance provider https://en.wikipedia.org/wiki/Folksam as well as another of the largest ones https://en.wikipedia.org/wiki/Länsförsäkringar

There are many cooperatives that you don't know about. For example, State Farm is a "mutual insurance" cooperative, so are many mid-western Blue Cross & Blue Shield (Anthem is private). Credit unions are cooperatives. Here's the problem: people don't choose cooperatives over non-cooperatives, and, even if they did, they do not participate in the governance of these cooperatives.

I think there is huge technology opportunity here: (a) increasing usage of cooperative services, and (b) giving consumers/producers "users" of the cooperative a real say in these organizations.

The question is never about why something doesn't exist - it's about if it can be made to exist. I.e. how can we get from here to there. Economy is a dynamic system; for coops to thrive, they not only must be good coops, but also better or equivalent to regular companies, in order to survive on the market.

I'd rephrase your question as: under what conditions can coops survive and thrive among regular businesses? After figuring those out, the next question is: how do we get from here to there? I.e. is there any way we can nudge the market, be it bottom-up or top-down, towards that future?

REI is a coop as well, with a somewhat similar dividend structure. However I doubt that all of the profits are fully distributed at the end of the year to members. I would bet that there are 'members' who are investors/owners, not typical consumers, who actually take some of the profit home (but that is a guess, I am happy to be wrong). And of course any business should have savings as well, for multi-year capital expenditures, incidents and accidents, etc.

The interesting thing about MEC is that they have had pretty good growth in the past 25 years. I started going to the one in Ottawa in the 90s. It was the fourth store. MEC started in 1971 and Ottawa's store open in 1992. There are now 22 locations. The buildings they built aren't cheap either.

Looking at their most recent financial statement, it looks like they have $284 million in assets ($164 million being property). They did $365 million in sales with ~$110 million in gross margin. They made $3 million in earnings. So pretty darn healthy, especially with their current aggressive growth. ~3% profit from gross margin is quite reasonable. The company owes ~$190 million to its share holders, but they have no way to redeem it...

I wonder what the executives pull in. "Selling and administrative expenses" are $110 million (which I guess includes all the salaries and executive compensation). So not too shabby.

If you want to live in that world... it might be worth giving it a try.

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