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Ask HN: Examples of tech worker cooperatives?

144 points| jboynyc | 12 years ago

Cooperatives are an intriguing business model for reasons addressed in a recent New York Times article [1] as well as a recent documentary film called Shift Change [2]. The discussion sparked by Thomas Piketty's Capital in the Twenty-First Century [3] provides further reasons for seeking out an alternative business model. Wikipedia has a good entry on the worker coop model [4].

I've come across Quilted [5] and Colab [6], two worker-owned and run cooperatives working in the tech space in the U.S. Both have a fairly impressive lineup of worker-owners and compelling portfolios, indicating that the model can really work.

Does anyone know of other examples of such coops, both in the U.S. and around the world?

1: http://www.nytimes.com/2014/03/30/magazine/who-needs-a-boss.html

2: http://shiftchange.org/about/

3: https://news.ycombinator.com/item?id=7618971

4: https://en.wikipedia.org/wiki/Worker_cooperative

5: http://quilted.coop/

6: http://www.colab.coop/about

97 comments

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[+] wingo|12 years ago|reply
Igalia, http://www.igalia.com/ -- 40+ people, 11 or 12 years old (I forget!).

A few articles I wrote on working at Igalia last year:

http://wingolog.org/archives/2013/06/05/no-master

http://wingolog.org/archives/2013/06/13/but-that-would-be-an...

http://wingolog.org/archives/2013/06/25/time-for-money

[+] bratsche|12 years ago|reply
hah! I was just coming here to comment and mention Igalia, but you beat me to it. :)

Igalia is a great company, really wonderful people and they do fantastic work. I really love the model they've created for the company.

[+] jawns|12 years ago|reply
Not a direct response to OP's question, but I wanted to give some general background info on worker cooperatives and coops in general.

A cooperative is type of a business entity that does not have outside shareholders. Rather, its members are its owners.

So, in the case of a worker cooperative, the people who work for the business are its member-owners. (In the case of a consumer cooperative, its patrons are its member-owners.)

What are some benefits of cooperative businesses?

For one thing, because the business is not beholden to outside shareholders, who typically only have an interest in the financial health of the company, it can make decisions that a for-profit company might not be at liberty to make.

For instance, a for-profit bank, under shareholder pressure, might introduce sneaky hidden fees to increase its bottom line -- but at the expense of irritating its patrons. That just wouldn't happen with a credit union (a form of cooperative), because the investors and patrons are one in the same, and their interests are aligned.

Another big benefit, and this is especially true with tech companies, is that the member-owners are invested in the company's success in a way that mere employees are not -- and they have the decision-making power to actually influence how the company operates, because coops are democratically controlled. A lot of tech companies grant stock options and offer profit-sharing programs, but stock options can be a crap shoot (there are a lot of ways for them to end up being worthless, even when the company is profiting handsomely), and profit-sharing doesn't necessarily mean power-sharing.

There are two major downsides to operating a business as a coop, though. One is that you have to raise all of your capital from your members, rather than relying on outside investment. That can be really tough, especially when you're just starting out.

The other downside is regulatory. I'm not sure how it works in other countries, but in the U.S., there are a lot of restrictions and hoops you have to jump through. For instance, consumer cooperatives must restrict membership based on some type of common bond -- a geographic area or an alumni association, for instance. But some types of businesses just don't flourish unless you open them up to everyone. This is less of a problem, though, for worker cooperatives.

I'm a big fan of the cooperative movement, and the broader distributist movement (http://en.wikipedia.org/wiki/Distributism), and I wish more people knew about the benefits coops offer.

[+] evunveot|12 years ago|reply
> One is that you have to raise all of your capital from your members, rather than relying on outside investment.

Actually, it is possible to raise outside capital. One way is a traditional bank loan, though that usually requires collateral. There's also "patient capital" available from some institutions.

https://en.wikipedia.org/wiki/Patient_capital

http://coopcapital.coop/coopcapital

We also have a National Cooperative Bank in the US, created by an act of Congress and later privatized (as a co-op, naturally), that specializes in banking services and loans for cooperative enterprises. They may not be completely up-to-speed on worker cooperatives, however.

https://en.wikipedia.org/wiki/National_Cooperative_Bank

A really interesting option is a direct public offering, where you can sell non-voting shares to individuals while avoiding most of the legal implications of an IPO, as long as you comply with various restrictions and raise a limited amount of money. There's a case study about a pickle company that transitioned to a worker co-op by buying out the previous owners that way:

http://www.buylocalfood.org/real-pickles-financing-case-stud...

[+] stronglikedan|12 years ago|reply
Thanks for the informative post. I'm new to the idea, and I have a question. You say that the decision making process is democratic. Couldn't that be dangerous?

The majority is not always right, or even informed enough to make a correct decision. An executive hierarchy puts this process in the hands of key decision makers, who are supposed to make the correct decisions to protect the company's interests based on their experience.

What happens when the decision made by the democratic majority is potentially harmful to the company? Is there a hierarchy in place to mitigate bad decisions?

Thanks for the informative post. I'm new to the idea, and I have a question. You say that the decision making process is democratic. Couldn't that be dangerous?

The majority is not always right, or even informed enough to make a correct decision. An executive hierarchy puts this process in the hands of key decision makers, who are supposed to make the correct decisions to protect the company's interests based on their experience.

What happens when the decision made by the democratic majority is potentially harmful to the company? Is there a hierarchy in place to mitigate bad decisions?

EDIT: jawns has clarified that the democratic process can be used to appoint an executive heirarchy. I was under the impression that every business decision was put to a vote by the entire cooperative. I understand now that key decision makers can be elected in order to mitigate decisions that may be harmful to the business.

[+] skybrian|12 years ago|reply
I have no particular experience with this, but it seems like another drawback is that you're missing the outside view? If all shareholders are "true believers" with a vested interest in the company doing well, then that makes it hard to set a fair price for shares when someone enters or leaves.
[+] dragonwriter|12 years ago|reply
> There are two major downsides to operating a business as a coop, though. One is that you have to raise all of your capital from your members, rather than relying on outside investment.

That's only true of equity, which isn't the only form of capital financing. But, yes, its an important limitation.

[+] platz|12 years ago|reply
Surely there must be some difference between a co-op and a private company without shareholders (i.e. funding can't be the only difference)
[+] nickbauman|12 years ago|reply
I tried to form a worker cooperative for IT workers a few years ago. I thought the idea of providing health insurance, 401k, business insurance and even a bench would be something my fellow engineers would be interested in since it was better than going it alone. As long as they knew that what they paid into the coop was going straight to the support of each other. Economies of scale and all.

But to do it you have to put up some cash to create that umbrella. The IT workers (my co-workers in many case) I spoke with were not willing to do that, preferring to take the higher risk of being a lone freelancer to participating in any kind of cooperative system.

I think people in the tech sector have a belief that they will always land on their feet and as hard as times can be, they want to maximize their earnings over everything else. And they mistrust organizations in general from both a pragmatic perspective and from being somewhat misfits themselves.

How the heck have these IT coops gotten started, then?

[+] jboynyc|12 years ago|reply
> How the heck have these IT coops gotten started, then?

I can't tell you on the basis of empirical knowledge of concrete cases, but in theory (e.g., Elinor Ostrom's work on the commons) you need some lower-level guarantor of trust (such as a shared culture) for higher-level institutions that can solve these kinds of collective action dilemmas to develop.

[+] nimblegorilla|12 years ago|reply
Are you the same Nick in MN? I know a small IT coop in St Paul.

Funding a bench doesn't seem appealing to me. Too many people at contracting companies view it as vacation time.

Otherwise I think a coop sounds cool.

[+] dissentertainer|12 years ago|reply
At ArtsPool we are in the process of building a cooperative of NYC arts nonprofits centered around a collectively-owned administrative agency. Part of this will involve building out a co-employment legal structure to create a fluid labor network that will effectively allow agency member-owners to "insource" employee time from their peers on an ad hoc basis. Eventually we want to white label our solutions and make them open source so that any nonprofit sector in any city can use them, but for now we are focusing on a the arts sector in NYC. It's all very preliminary and we are really wrestling with a fear of new ideas that is endemic in nonprofit culture, but we are taking a lot of inspiration from what is going on in the tech sector (where problems are things to be solved and not monsters under the bed). There's more on our co-employment approach on our nascent blog and in the Collective Insourcing concept paper that the project is based on (linked to in the post below). http://artspool.co/stronger-together/

I'm Max and I'm new to HN. My contact info is in the team section of our website if you want to chat further or get a copy of our fleshed-out business plan. I also need to hire a developer soon so... :-)

[+] producist|12 years ago|reply
I've been exploring this space since 2010 and always wondered what it would look like if a tech co-op got as big as Facebook, Amazon, Google, or Apple.

I created an evolutionary economic model called Producism, which includes building an ecosystem of cooperatives and b-corps, alternative currencies, and other concepts. I wrote a book about it that's free to read online, http://producism.org/manifesto (updated version coming late May).

Our startup, Producia (screenshots of upcoming new version https://angel.co/producia), is implementing this new kind of economy on college campuses and local communities as a real-world social entrepreneurship game, that challenges players to kickstart and grow meaningful ideas into impactful businesses. We are a hybrid cooperataive (worker & member-owned) and instead of following a pure democratic model, we use the "Better Means Model" (https://www.youtube.com/watch?v=IdcAxGGRafc).

As far as raising funds for our cooperative, we are taking a creative approach. First, my founder and I are turning ourselves into startups, literally, and doing a similar deal like the music businesses "360 Deal", where investors get a piece of everything we do. We are also going to create a sister company (benefit corporation) that will offer a white label version of our platform to enterprises. We are pursuing an equity deal for that. So in all, it'll be a mixture of a royalty and equity.

If anyone has any questions or wants to learn more, feel free to email me at drewl at illvp dot com.

Cheers!

[+] jrochkind1|12 years ago|reply
> I've been exploring this space since 2010 and always wondered what it would look like if a tech co-op got as big as Facebook, Amazon, Google, or Apple.

For a science fiction exploration of this, see Bruce Sterling's 1988 novel _Islands in the Net_, which features a global democratically owned and controlled tech corporation. http://en.wikipedia.org/wiki/Islands_in_the_Net

[+] FinnLewis|12 years ago|reply
I am part of Agile Collective (http://agilecollective.com/), a UK base web development company governed as a workers co-op. We are 7 permanent members, up from 6 when founded in 2011. We are a company limited by shares, and we do have a structure in which we have two type of shares: member shares, one for each member, and equity shares which can be used to raise capital. Only the member shares have any voting power in governance, so contrary to what jawns said, you can have outside shareholders. We are still for profit, and do share profits with members, but the main point is that the members have the decision making power, not equity share holders. (We don't actually have any external equity share holders, but it is an interesting area for consideration if trying to raise money to expand.)
[+] yochaigal|12 years ago|reply
Hello all. I have founded two worker cooperatives, both in the tech sector. I am also a moderator of the subreddit http://reddit.com/r/cooperatives. Check out the sidebar for a whole bunch of links!

If you have any questions about starting a worker coop, especially in CA or MA, I can help.

[+] loomio|12 years ago|reply
I'm a bit late to the party but I wanted to mention that in addition to being a tool created to support the kind of collaborative decision-making that happens in cooperative models (which they are using it for at CoLab, as solarlion kindly mentioned already) Loomio [0] is itself structured as a cooperative with 12 worker-members and growing.

Loomio is part of the larger Enspiral ecosystem (as te_chris already mentioned), which is a network of startups doing business differently, with a social good focus and also upending internal organisation. We're innovating new ways to do core business processes in collaborative, distributed ways. Loomio is an example of that for decision-making, and we're also doing the same in budgeting, strategy setting, governance, and more.

We're quite passionate about the cooperative model and collaborative process design and are happy to talk more in-depth with anyone who is interested.

[0] http://www.loomio.org [1] http://www.enspiral.com

[+] roflc0ptic|12 years ago|reply
I'm on a Tech-Coop mailing list:

http://npogroups.org/lists/info/tech-coop

They're a friendly, cooperative bunch. Join and introduce yourself, or read the archives. It seems like most of them have thought really hard about what they're doing, and it's pretty solid.

[+] jboynyc|12 years ago|reply
This list seems to have spawned the site techworkers.coop mentioned by audionerd. Good to see there's a space where people have been having this important conversation.
[+] IndieDevClub|12 years ago|reply
When the new equity crowdfunding rules go into effect, I was thinking a more interesting model could involve equity. Every person in a "startup cooperative" could own a piece of everyone else's startup. It might help minimize the risk with doing a startup if you own a small piece of a number of other companies.
[+] producist|12 years ago|reply
+1!!! We're following that model with our virtual incubator program for our tech co-op, Producia.
[+] iamwithnail|12 years ago|reply
That's really quite a cool idea. Definitely do it! I'd be interested in helping to build it. The cooperative rules are, I think, quite different in the US and UK, but I'm reasonably familiar with it in the UK.
[+] josv|12 years ago|reply
I’m a member at a worker-owned mobile dev coop in Ottawa. (htttp://www.brierwoodapps.com)

I spent some time in grad school studying economics, and I've felt a bit like a mole on a couple of occasions, but I do think it’s a really interesting structure.

There’s definitely been some self-selection of members based on equality- and social-mindedness. Some of that expresses itself internally: There’s a lot of information sharing and support for professional development.

I think one of the great practical advantages is that it’s a structure without employee numbers. Every new employee is hired with the hope that they’ll stay on and become a full member-owner. The fact that every member is on the same footing as the founders can be pretty advantageous in a tight labour market when trying to bring on board talented developers who might otherwise prefer to work independently.