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Comment by marcusverus | Hacker News Reader

It's hard to imagine such an organization working out over the long term. The incentives are all wonky! The more you contribute, the more you sacrifice by joining a coop. The less you contribute, the more you gain. I for one can't think of a less attractive idea than taking a product idea that I love and turning ownership and creative control over to a group of strangers.

And that's probably why these things are so rare. After all, it would take a helluva lot of drive and energy to bring such a thing to life--probably much more than it would take to start a company in the usual way. If you were capable of building such an organization, why not retain creative control of your ideas and make millions at the same time?

Making millions doesn't have to be a selfish act, by the way. If you want to help people, money affords you the opportunity to do so in any way you please. Horray, effective altruism!

Meanwhile, if you start a software co-op... who exactly are you helping? Software developers, who get a chunk of profits instead of a measly 150K? Software consumers, who're likely business owners? Folks who have money to pay for software?

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>The more you contribute, the more you sacrifice by joining a coop. The less you contribute, the more you gain.

How do you think co-ops work? Are you imagining a flat organizational structure like Valve Software? An open source project plus invoices? Those are all interesting ideas, but co-ops presently work like employee-owned business and usually have managers and compensation structures that fit the obvious way those things work. HN's tendency to GPT whenever exposed to something it doesn't know about is driving me nuts today. :-)

Interesting fact - valve no longer works this way because it didn't work.

Valve was never actually flat, they always had a corporate wing setting payscales and directing the company. It's a common misconception, partly brought about by their recruitment marketing.

That's some great marketing. I never applied to work there, I just assumed "now that's how you run a company!"

It didn't really make sense to me. How did you imagine any decisions working?

For technical stuff it works okay, because people can make decisions just by doing whatever it is, or by talking to the team and agreeing on something. It's a lot harder to get people to do that for bonuses and pay.

Right, or "should we spend millions on Steam Deck which will pay off in 10 years" vs "should we all just get a big pay rise now with the money?"

The fact that even Valve, which is one of the companies closest to the idea of having endless free money, and thus the most forgiving to a structure like that, didn't make it work, must surely at least give us pause for thought!

At Valve the corporate wing made (and still makes) those decisions, trying to have ten people agree on who deserves to be paid what and whether it should be invested instead hasn't been tried in any company I know of. In contrast having managers who are collectively answerable to those ten employees through the share ownership structure has been tried, and it works out okay.

> having managers who are collectively answerable to those ten employees through the share ownership structure has been tried

How does that work? As in the employees are owners but the managers aren't?

But are those 10 professionally qualified to check the manager's work quality during those 10 years? (Or do they buy some audit service from another division?)

In this example we're talking about 11 more or less equal shareholders, one of whom is a manager.

Sorry. I genuinely don't understand. Is it that the ten people report to the manager, but the manager also reports to the ten people?

What happens if half of the ten think the manager is good and the other half think he's bad?

I've always been curious about claims that such an approach inevitably doesn't work. I feel like my intuition tells me it could with the right people and variation on the concept. But it's probably difficult. Even the best managers I've seen usually have blind spots on how the team is running.

Tons of very proficient people are simply not interested in responsibility that comes with flat structure.

Because of that such company will either stay small (probably leaving ambitious people with unfulfilled ambitions) or change along the way, because you simply will not find enough people to make it grow.

Many ambitious people thrive in a flat environment, though. That's one reason some people like startups.

It's been a few years since I pondered this, but I used to spend a lot of time thinking on this subject. I think for it to be successful you need a lot of the type of person that prefers to work in such an environment, and to make effort to keep it that way. That might mean staying small staffed, but I'm not totally convinced it even needs that.

A good boss is a BS shield, that enhances productivity. I enjoyed startups when I was younger, but now I like to be focused. Fighting fires for a living can result in broad experience, but also less deep work, which can “stunt growth”. At least that’s my opinion/experience. They were also the most fulfilling, that completely disappeared 8 years of my life.

I think not all startup experiences are the same. I had a startup experience that had lots of deep, focused work and not putting out fires. That sort of holy grail is one thing that had me thinking about this topic and how to buck conventional wisdom about what type of environment is inevitable, or what can't work.

But where is the room for ambition in a large company with flat staffing? If you, completely independently, build something adding $2 million of revenue at e.g. Google, you've increased the company revenue by 0.0007%. Even hundreds of millions of dollars remain but a decimal point. The company is simply so large that even if you achieve amazing things, they're going to be largely irrelevant. So the only real avenue for ambition is climbing the ladder of hierarchy. But when that ladder doesn't exist?

One could argue that social economic systems, at scale, are functionally similar to a massive corporation operating on a flat environment. And you end up with a similar issue there. "Company" ambition doesn't really have a viable path forward, and so the optimal solution is to just coast by - and direct your ambition towards your own personal stuff. Or even set the ambition aside, and just enjoy life. At least until the consequences of everybody operating under a similar system of demotivation kicks in.

Some interesting approaches that companies are taking around this are described in Matt Parker's book, "A Radical Enterprise" for example, companies being made up of many microenterprises.

Once you can break away from many traditional imaginations of what a business is and how it should run there are some interesting possibilities.

Very challenging and easy to get wrong though I'd guess.

https://itrevolution.com/articles/radical-enterprise-pioneer...

My intuition is basically its like networking. Using broadcast on a shared medium works fine for small groups, but in big groups it overwhelms. Similarly, in small groups flat structure is fine, but eventually in large groups you have to spend 110% of your time managing relationships and stakeholders, which simply isn't practical.

And that is true even if the group is the best people possible. The only way would be to have no disagreement, but then you would probably be creatively dead.

To put another way, i suspect communication scales quasi linearly with managers, but at least quadratically without.

I think you're probably right. I've seen it work at small companies. What it doesn't do is scale to large companies, which is the heuristic most growing companies use for any decision. You'd have to say "we'll grow no larger than our flat structure can sustain, even if it costs us billions," and who is going to do that? Not saying it's a good thing, in fact the opposite — optimizing for scale is the source of many of our woes as an industry, in my grumpy opinion.

Even assuming those "right people" exist, you'd need a hiring process that could pick them out, and they'd need to want to work for you.

And hope they never change. Say something happens in one of their lives and they no longer contribute anything. Getting rid of them would be exactly what the OP post is criticizing.

Isn’t ~50% of people working at companies with less than 10 people?

Somehow that works, so maybe that suggests ~50% of employees at a business could be in self-organising units of less than 10 people?

It works for attorneys and accountants. It’s an approach with ups and downs. The biggest down being it’s harder to scale.

Interestingly though attorneys and accountants charge by the hour to customers. So their individual value to the group is easy to quantify and measure.

And while they may have support staff, they typically "work alone" in the sense that there's one partner per account, so very little oversight or management is needed.

The primary purpose of this "collective" is to create a "brand" of sorts. Ernst and Young has more prestige than say Franklin and Franklin. This draws in higher paying customers.

I feel like there are sufficient differences in this kind of business to a typical software business that the comparison is not especially useful.

Which is not to say that a coop can't work, just that the comparison to accountants and lawyers doesn't work.

Attorneys: associates, junior partners, senior partners, managing partners, named partners. Does not look like flat structure to me.

Like I said, growth is hard.

My brother is an attorney in a small practice of 6 attorneys. They are all partners, share ownership, and rotate who the managing partner annually.

Technically there is nothing preventing you from stacking 10 eggs on top of each other, If you balance it just right, they won't move assuming no outside forces.

Realistically, you may as well talk about it as something that can't be done. If anything, it's probably easier to stack eggs than to get more than 4 people to work collaboratively without the current incentives and rules making it all hold together.

Do any sources state that Valve transitioned to a traditional hierarchy? There's been reports of cliques and internal opaqueness going back a decade, but the only concrete difference I've heard versus pre-2012 is a shift towards microtransactions and hardware design.

Oh wow, I had no idea. When did they stop?

I think it was always so, ie cliques of power happened almost right away and a de facto power hierarchy manifested organically. This is what I've surmised from ex Valve people but until we have a book or documentary that reveals what really went on we may only speculate.

Ah, thanks for the info.

To be fair, there are worker-owned co-ops that function like companies, and there are those that are heavy on the ideological experience. I once did some consulting for one of the latter ones and it was worse than any bureaucracy I've ever encountered. Everyone has a say, everyone must be heard on everything, decisions take forever and there's a lot of overhead.

On the one side, you'll have a normal company where the workers own the company (well, most employed engineers own some shares in FB, Google etc, too), on the other hand you have anarcho-syndicalist groups that are super hard into the process and THE PLENUM is paramount.

In a public big tech company your ownership is immaterial in terms of your influence on the direction of the company.

Presumably in a smaller private company with 100% insider ownership, it could be arranged that employees have more influence. For example, the employees could vote on board seats or raise and discuss issues at a General Meeting of the company’s shareholders.

This would presumably not be the case in VC-funded startups where the founders and VCs would choose the board and retain the lion’s share of equity and all nominal control.

In practice, in most companies that are not agency-style partnerships the insider ownership doesn’t really matter in terms of influence from what I’ve seen. In agency partnerships there is a dual class issue of partners and regular employees.

A private company with a BDFL who retains 50% + 1 control but has the minority stake dispersed among the rest of the employees seems like an interesting approach. The “B” comes into play in how the majority owner supports decision making. The “D” acts as a forcing function and guardrail to limit the effect of internal politics.

For a similar example of the difference between ownership and management, while it's not a co-op, Vanguard Group (the investment firm) is structured so that the company is owned by the funds it manages and thereby by its own investors. The internal structure is still basically the same as any other big corporation, the difference is how the top-down management behavior is incentivized.

>> to GPT

Nice verb, is this an original coinage?

love it, I'm going to use it when someone talks without knowledge of what they're talking about.

I've said this elsewhere, but GPT's probabilistic filler, emitted without concern or awareness of whether it's true or not matches the academic definition of "bullshit." :)

>HN's tendency to GPT whenever exposed to something it doesn't know about is driving me nuts today. :-)

today? checks created date.

I mean, lol, this place was basically blasting anyone who dared say GPT Bing was going to be less than the revolution of our lifetimes. Right before it went off the rails.

The coop that I'm a part of (Quorum1) has been using game theory to play out just those scenarios. We've been at it for two years and you're right it's been like 10x as difficult as starting a normal company (I'm a serial entrepreneur and have started lots of traditional companies too). But we think the payoff is worth it, plus doing things differently is just straight up more fun, so there's that.

What we're finding is that if you start with the right culture and balance the incentives very carefully you can basically create a magnet-like mechanism where the more people join the network/coop, the greater the value derived for all members and the greater the opportunity cost for the remaining hold outs to not join.

-> What we're finding is that if you start with the right culture and balance the incentives very carefully you can basically create a magnet-like mechanism where the more people join the network/coop, the greater the value derived for all members and the greater the opportunity cost for the remaining hold outs to not join.

Well, now you owe us a blog post

Lol, yes you're right I do. Don't have it yet though. :)

I am very interested in what you have built. I've recently stepped down as a director of engineering at a fintech startup where I was building self-organizing teams based off the models I found in the book Reinventing Organizations. I have been considering starting a coop much like Quorum1, but I haven't been sure where to start. I'd love to chat sometime about Quorum1 and perhaps get the chance to work together in the future. My email is email at steve shogren dotcom if you are interested. Thanks!

Awesome, I'm definitely down to talk. Sending you an email now. Also my LinkedIn is: https://www.linkedin.com/in/hankholiday

> It's hard to imagine such an organization working out over the long term. The incentives are all wonky! The more you contribute, the more you sacrifice by joining a coop. The less you contribute, the more you gain.

If that were true, there would be no successful co-ops anywhere in any field of work. That's obviously not the case. Just look at this list https://en.wikipedia.org/wiki/List_of_cooperatives#United_St... if you're from the USA, I'm sure you'll be able to recognize a name or two.

Most of those coops are professionally managed, if they're of any size.

Just like a democracy dies once the voters figure out they can vote themselves money from the public till, a coop dies when the workers realize they can decide they don't have to work.

I feel like this can be mitigated with the right by-laws and whatever, and also screening very heavily for culture fit during the hiring process.

The flattest companies (meaning, the ones where individuals had the most autonomy, and were actually interested in business ideas that came from the bottom up) cared more about culture fit and the ability to learn things quickly.

I'm thinking most of those are customer-owned cooperatives, not employee-owned. Big difference.

> The more you contribute, the more you sacrifice by joining a coop. The less you contribute, the more you gain.

You could say the same thing to describe working for any corporation.

Any corporation which fails to extract more value from it's employees than it pays them doesn't stay in business for long.

But yes, you are absolutely correct, and the value added by a productive developer is probably vastly larger than the value added by the rest of the rank and file. That's why developer centric startups can grow so large, so quickly.

Still need the rank and file to take care of pesky things like sales, payroll, governance/compliance, etc...

> Any corporation which fails to extract more value from it's employees than it pays them doesn't stay in business for long.

Same rule applies to co-ops

Unless they are in a monopoly position in a lucrative business.

Not sure of the co-operatives in software. I am from state of Kerala, India. We have a number of very successful and long running co-operatives.

1. Milma - Kerala Co-operative Milk Marketing federation. Virtually every household uses and trusts milma. It has been around for 53 years.

2. Indian Coffee House - It is a worker co-operative restaurant chain. Very successful and is around since 1958.

3. ULCCS - India's oldest worker co-operative. Operating from 1925, mainly in construction sector. It also has an IT wing.

The company Torchbox (creators of Wagtail CMS) are an interesting example of an employee owned company. In their case it was a matter of the founders selling/moving most of their ownership to an Employee Owned Trust (as opposed to starting as a coop from scratch) - EOT is an interesting option in the UK with tax incentives to make it work.

https://torchbox.com/careers/employee-owned-trust

https://baxendaleownership.co.uk/torchbox-digital-agency-mov...

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> Horray, effective altruism!

Yup, there we go

It's 10x harder because you are doing something counter-cultural and pro-social. The global economic system is structured to prevent you from doing precisely that.

The systems and processes for running a psychopathic corporation are laid out like the Netflix Paved Path for anyone who wants to play the game of "get as much as you can." This path will push you to build the most exploitative thing there is possible in order create maximum returns for capital (even if that becomes you). The end result is what you see: GE, Exxon, Amazon, Wal-Mart, BP Google, etc... an organization with no long term goal other than making money for investors. Is that your definition of "Working out over the long term?"

How about we build a real strong community where we're all owners and we have a say in how the process works, we share in the wins and the losses and don't screw anyone over ever. It's possible, yet somehow all of my fellow geniuses - despite all our ingeniousness - can't unpack this super simple problem that cooperatives around the world have been solving forever. Oh sorry, a few anecdotes about some failed ones and some old hippies that fight yet retain amazingly robust communities, means it will never work.

The systems and processes for "share everything from the beginning" - while working within the economic system that exists today - that's severely underdeveloped and needs thousands of former-capitalists like you and me to start putting the work in to change it.

Or you can build yet another private dictatorship cause it's "easier" for you.

A co-op doesn't mean everyone must share profits equally.

How about an internal market where people bid for tickets?

There are crypto projects facilitating governance of organizations. They could help both enforce and simplify keeping records. Example: https://aragon.org/

Edit: Earlier I suggested hiring people for internal-money, but that might be tax evasion. Don't do it without consulting lawyers in your country.

+1 for using marketplace dynamics, particularly when you want groups to be able to grow to be quite large. (For small groups they are overkill and potentially harmful.)

This can be done without involving anything crypto related too. A great design principle to incorporate is Stigmergy: https://en.wikipedia.org/wiki/Stigmergy

To be clear though: Just because folks talk about using "markets" doesn't mean those marketplaces have to be built around "currencies" as we typically imagine them (crypto currencies included). They can be built around anything that can be counted or conceptualized numerically. For instance, HN / reddit votes are a type of stigmergic marketplace.

When designed effectively, markets can be massively scalable engines for human consensus.

No reason to turn everything into market, and use blockchain for voting automation or partial governance, especially seeing what clownshow DAOs have been.

You could have a plain Reddit clone web server for governance, and whatever compensation the group deems fair, to account for the work done by each member.

Have you actually ever seen a co-op work?

> why not retain creative control of your ideas and make millions at the same time?

Because there are (a lot!) of people who are more interested in an equitable work than extracting fortunes for themselves.

Because you "make millions" on the backs of the people you string along, and not everybody wants that.

> Horray, effective altruism! You mean the thing that allows you to ignore any current problem in favor of pretend problems a hundred years out? And conveniently includes making yourself rich, which is of course only happening to fix said pretend problem. And, well, your life really pleasant on the backs of others, but that's a rounding error.

> Meanwhile, if you start a software co-op... who exactly are you helping? One option here is helping an industry that's currently setting itself up for a marvellous collapse because it treats open source as an opportunity to extract only. (Until the maintainers give up, and then there'll wailing and gnashing of teeth)

Another side is helping people live a more sustainable live. There's nothing wrong with a co-op to e.g. ensure health care and pensions. While working reasonable hours.

Could this fail? Probably. Maybe even likely, because co-op folks tend to be a bit more idealist, which makes business survival a bit harder.

But let's not pretend there aren't a lot of people who wouldn't be willing to join a co-op, or that it generates absolutely no benefit.

“On the backs of others” implies the world is zero sum, which is just dumb. If you come in with an idea that gets 10% more efficiency out of an industry, you can pay more to the laborers for the same work they were doing before and still become a millionaire.

The laborers made more money because of your idea while performing the same work. They are better off and still had no part in making the improvement.

>still had no part in making the improvement.

Please explain how this "improvement" happened without the "laborers"

Lots of ways. Buying cost critical supplies in bulk from cheaper suppliers. Switching from truck based shipping to rail for distance where the flexibility isn’t needed.

Those are just the low hanging fruits without any major impact to how work is done.

Stepping down into the internals of the business, it’s going to vary a lot but in manufacturing you spend time looking at high failure rate processes, bottlenecks, and single points of failure. Changing these with effectively no change to how individual laborers work is quite common and can significantly improve yield stability and throughput.

Going even lower level, it might be as simple as better insulation around a bake process resulting in 50% less energy.

You might be interested in reading about the improvements in steel mills where the labor required was reduced by an order of magnitude over the last 50 years: https://en.wikipedia.org/wiki/Steel_crisis

Improvements come without labor all of the time and it’s a frequent point of contention with the labor when it eliminates a role rather than acts as a force multiplier.

I love how the answer is "by eliminating labor altogether"

I couldn't have explained worker alienation better had I tried

You air quoted something I did not say. Re-read my comment and at least try to learn how people that improve productivity are beneficial both to society and can be to labor itself.

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