A Technology Freelancer's Guide to Starting a Worker Cooperative [pdf]
techworker.coop
techworker.coop
I am part of a growing tech worker cooperative called Tribe Works (https://www.tribeworks.io). We are a platform cooperative that helps tech workers connect with businesses looking for contractors or direct hires. We were set up as an alternative to "gig platforms" (upwork, etc) and staffing firms, and quickly realized that the real value in our model was in longer engagements. We usually target roles that last at least 3 months so that our members can access healthcare through the cooperative if they are working full time and allow workers to buy in. The platform ties together the functionality of an applicant tracking software (ie jobvite.com) and professional employer organization (ie justwork.com) and we add recruitment process outsourcing as a service on top. We have only just launched our beta platform right now but hoping to fully launch when we reach 301 members (we are about 1/4 of the way there). We have community calls every other week as well for people interested in learning about the co-op.
We are also part of a larger cooperative called the Staffing Cooperative (https://www.staffing.coop) which is a holding company owned by every worker. Here is a webinar we were recently on describing the holding company structure: (http://transformfinance.org/investor-resources)
In 1966, the potential for computers to be used in accounting had just become apparent, and by thinking about companies and markets the way we now do, you would have thought that the situation should have been a slam dunk for IBM. That's not how it played out in Germany. Instead of individual tax advisors entering into individual deals with IBM, the tax advisory profession set up a coop to buy and operate central mainframe infrastructure (don't know if it was IBM or not), to be used by all the coop's members and, while they were at it, instead of buying software from anywhere (like from IBM), they hired some engineers to write their own software. Personally, I find this an absolutely baffling turn of events. The profession realized what a giant disruption the introduction of computers would be. They realized the strategic importance of maintaining control over software and computer operations. They realized that, by sticking together and acting in a coordinated fashion, they had the power take on a corporate behemoth like IBM at their own game and tell them to go stick it. Absolutely inspiring, if you ask me.
As I look at things like Uber and YouTube and Twitch, it reminds me of a friend's definition of Web 2.0: "You do all the work, we take all the money." Given the history of business, there's no reason to think VC-funded platforms will do anything other than extract maximum cash. Great for VCs and execs, not so great for the people doing the work.
I've been thinking about what those companies might look like if they were truly centered on workers and creators from the get go. Sounds like the platform coops are thinking along the same lines.
Yes, competition (from corporations) means it's not enough to say "we're a co-op" if the product doesn't actually work, but well-funded corporate competition could clone any feature that isn't linked to a more egalitarian equity structure. My "co-op for Doordash but we don't steal tips" is far harder to copy, business-wise than "co-op for Doordash, but with a 'food me now' button that picks food for me".
Not quite sure you know how coops work - its not just a nice trendy name to put over yet another exploitative "gig" economy
Co-op doordash turns the entire concept of tipping on its head, contrary to traditional corporate governance, which has incentive to funnel money to a CEO and a board, compared to a more egalitarian co-op structure.
But like any cooperative you can expand your membership to include any stakeholder. Users, workers, customers, investors, etc. It is mainly about aligning ownership incentives and control/voice according to whatever the design goals are of the company.
Happy to chat later (will read later to), but I would also point people towards https://www.coops.tech/ which lists many such co-ops. You can find their chat board at https://community.coops.tech/ Also, in the U.K. https://www.uk.coop/ is a great resource.
Can I suggest anyone asking legal questions states where they are? While the principals are the same, legal options will differ massively between countries.
I was also at the founding of CoTech (a UK network of tech cooperatives). Common Knowledge are a member.
Happy to answer any questions here or hit me up at alex at commonknowledge.coop for anything further.
In the UK the process of setting up a simple co-operative takes about a month. It's filling in a set of forms on top of a normal company registration and applying to Co-operatives UK for accreditation. Basically no sweat.
We aren't that - we are one company, with regular employees. Our clients make a contract with the company, not with any one of us, and the staff members that do particular work for a client may change, just like a normal company. (The fact those employees also hold a share and are directors doesn't alter the nature of our contracts with clients).
Will try to read more later.
It basically prevents one person "contractor" companies from acting like employees but getting paid like a business and so somehow avoiding tax. If the HMRC thinks your contract with BigCo means you are a "disguised employee" then they will ask you for your missed back taxes.
But on April 2020 they will stop asking me for my back taxes and will instead ask the client for whom I work (ie BigCo). As such BigCos across the UK are unwilling to face years of potential back taxes and will from April 2020 do some combination of
- state every freelancer / contractor working for them is really a disguised employee so that the employee's company must pay the equivalent income tax / NI
- let go of their contractors en mass
- push their contractors to major suppliers like Accenture
- move their UK based work off shore to NYC / Paris / Mumbai
Basically combined with Brexit, UK tech jobs are going to disappear / take a 25% haircut or go abroad.
It's not looking good.
people working together in different countries.
But in a sense this makes no difference from remote first companies, like Buffer, 37signals or Automattic.
When doing tech work for tech businesses you will often find that they already operate their own network of tech contractors and membership in such a network basically implies being a lone-wolf freelancer character for a number of reasons (a) They work with people not headcounts. They will do extensive individual vetting to decide who they work with, and after deciding they want to work with you won't allow you to switch yourself out for another personnel resource. (b) They will want to keep each individual contractor's bargaining power in check, so even when they need more than one headcount, they might think twice about picking up a headcount greater than one from something that's already self-organizing as a business entity of some kind.
Also, I feel quite strongly that if, in practice, there is a client relationship that you have 100% ownership of, then you want to make sure that this is also the case on paper, rather than having an indirection where you are 1% of some coop and 1% of that coop's revenue happens to be your client. -- And much of the upside described here can also be realized through a consortium of sole traderships (or otherwise 1-person businesses), rather than through a coop.
what you describe here looks less like freelance consulting but more like staff augmentation for which large businesses exist.
i prefer to work on solutions, and neither people nor headcounts should matter.
But, on the whole, you will have more opportunities at saving on taxes as a business than as an employee and more opportunities to "slip through the cracks" of the system when your business is so small that the tax authorities can't be bothered paying as close attention to it as they otherwise would.
Having said that, human organization issues are often the downfall of cooperatives for highly compensated and highly skilled labor.
One of the reasons programmer cooperatives don't last more than 2-4 years is because the best ones bring in the best clients, and the other programmers start to free ride. Apart from this, the best programmers also often get poached by other organizations ... either through employment or through direct contracts.
In practice, I think the biggest value cooperatives bring in a country like the US is that they can provide healthcare and retirement plans through scale, which would not be available to an independent freelancer.
The explosion of online communities and meetups in the last decade has made the other benefits of cooperatives (like camaraderie, reputation management, client sourcing, and knowledge sharing) less valuable.
GitHub/npm (centralized) has been the closest so far for software, and the Web (decentralized) has been the closest for content. But what if we could go further and implement XANADU 2020?
We would at minimum need a globally distributed utility token to allow value transfers without needing to mess around with merchant accounts and international payments.
Here is a progressively more detailed architecture of what something like that would look on a large scale:
https://qbix.com/whitepaper/whitepaper.html
If you read it, please share your thoughts and feedback - whether you like some things or would want improvements in other things. Especially interested in whether there is something we missed and the system absolutely won’t work (eg why would companies pay for open source software if they can just clone it and even distribute their fork and have their fork compete with it.)
I am a big fan of putting my money where my mouth is, so we are actually building this ecosystem.
Does the amount of money different people make in your cooperative seem fair? How do you handle situations where one person seems to contribute a lot more to the cooperative than others (say they bring in bigger clients, or they're more skilled)?
However, a lot of other cooperatives have different rates that work around a matrix of: hours worked, skill level and life need. These are democratically decided by the cooperative and tend to also have a pay ratio - e.g. the top earner can only earn 3x from the bottom.
DEV have a nice page on how they work this out - https://www.dev.ngo/join/pay-principles/
As I wrote, I don't know the current situation in the US well enough to deduce more than guesswork from it. Here, at least, it has a great impact on someone's choice of the right organizational form. Cooperatives are not out of the question, but you have to consider some newer factors to do it right.
Or if you know of any resources that help you find others with whom you might start a co-op, that would be great. (If that doesn't exist, I might be able to help. It shouldn't be too difficult to spin up an interest form that might help people connect.)
I loved the idea but the practice always seemed so far from the ideal. What I saw were one or two people in a cooperative make things happen (whether through initial founding, finding business, doing the boring stuff that make a business actually happen, or simply doing customer work) and then others would put in a similar amount of effort to a normal job but get an equal share in the rewards as the one or two people driving the whole thing.
I'm not saying that typical businesses today are ideal or fare. However, worker cooperatives seemed no less fair than other forms of business; it's just that they were unfair in different ways.
I'm still a fan of the co-op model but it brings with it its own set of challenges.
That means that certain products/services aren't a good fit. So I think if you are part of one and you have lofty aspirations for what you are working on, you should plan for the day you outgrow the co-op and need to hire a bunch of people.
However there are some co-ops who make platform software and questions of "scale" might apply there, so maybe some interesting reading? Check out https://www.loomio.org/ - their company handbook is online somewhere.
We chose to use a holding company model for our cooperative https://www.staffing.coop so that we could have many startups and conversions underneath one holding company worker cooperative.
In terms of scaling: You may either form a network or join one. I'm part of Europe based digital cooperative and we're starting to do just that https://medium.com/camplight/accelerating-a-global-movement-... :)
This allows the complex efficiencies of a capitalist corporation, but allows the people doing the work to retain direct control over their local workplaces and not be beholden to investors.
Mondragon in Spain is the most famous example of this.
As such networks develop, starting a new cooperative venture may become more attractive to some entrepreneurs than a traditional startup, which in turn drives growth of the network.
Capitalism is actually very unhealthy from a mental health perspective, so the cooperative model creates the safety net opportunity to take risks and try new things.
relatedly:
not sure why we don't create 'partner firms' a-la attorneys - the model seems a good fit.
Valve software is an example of a software developer’s “cooperative” though you’d probably call it anarcho-syndicalist, instead of socialist. They wrote a great blog about it:
http://blogs.valvesoftware.com/economics/why-valve-or-what-d...
The Internet has disrupted many economic models and affected society and even democracy (journalism, social networks). Automation reduces the demand for human labor. We have to have conversations about better solutions.
At my own startup, we constantly explore the intersection of technology, sociology and economics. Years ago, we explored proper compensation models using the socialist (not communist) principle “from each according to their ability, to each according to their contribution”
https://qbix.com/blog/2016/11/17/properly-valuing-contributi...
And now, we are working on a utility token to power a decentralized “free market” of web software that emphasizes collaboration and re-use over competition and duplication. Would be happy to get feedback on the actual implementation and economics, as we will be going live with it soon. Here is the link:
https://qbix.com/whitepaper/whitepaper.html
PS: to the downvoters: The above is open to feedback and revision. Instead of simply downvoting, why not click the link and read it, and offer a scathing critique? Again, we are trying to make sure this leads to an efficient and fair market in software development, and if we missed something, we would appreciate any feedback that involves words :)
https://www.pcgamer.com/ex-valve-employee-describes-ruthless...