anyone curious how employee ownership can work for large tech enterprises, a good starting point can be the material made available through the Beyster Institute - https://rady.ucsd.edu/why/centers/beyster/index.html
The founder built an $8 Billion dollar employee owned company, SAIC - and then allowed it to be carved up once he left having failed to ensure the culture of employee ownership was rooted as firmly with the board of directors as it was with the rank and file employees. I worked there for 12 years and saw firsthand the slide away from the ownership model, and it was instructive for me in my early career years.
US economic policy is not very favorable to co-ops.
Cooperatives face complex tax structures that can be less advantageous compared to traditional corporations. Unlike C-corporations, which have clear tax advantages and deductions, cooperatives must navigate unique tax rules, such as Subchapter T of the IRS code, which governs patronage refunds.
The tax code heavily favors investor-owned firms through incentives such as lower capital gains taxes and deductions for stock-based compensation, which cooperatives do not benefit from in the same way.
Beyond that, banks and financial institutions are often hesitant to lend to cooperatives, as their ownership structure does not provide the same level of collateral or control as investor-owned firms. Government-backed loans and grants that support small businesses often don't adequately accommodate cooperatives. For instance, SBA loan programs historically have been difficult for cooperatives to access.
And because co-ops are a niche business structure, many federal and state laws are designed with traditional corporate structures in mind, making it difficult for cooperatives to navigate compliance requirements. Cooperative incorporation laws vary by state, leading to inconsistent legal protections and administrative burdens.
I've been a part of several coops that fizzled out, and in none of these cases was tax law the culprit. Taxes and regulations suck, but I think there are deeper causes for the rarity of success in ventures like this, which are so appealing, and so often attempted. I don't know what they are, but I'd bet that some of the major causes are psychological and logistical in nature!
I have been extremely excited about cooperatives and doing research but good info is scattered (suggestions welcome!). From what I learned I will echo what you said - laws are stacked against cooperatives. In general the corporation, a structure that is centuries old, gets preferential treatment in all situations. It is like human development has been abolished in that domain in the 1800s and that is the status quo.
If you go into history of some nations, e.g. in some regions of Italy, coops go much farther back than the 1800s (the modern form comes about in the 1800s though) and there is an ecosystem of coops to develop and be supported by gov't and each other. In the US though the support legal, financial, and common understanding is much less mature.
The hardest part is converting an existing corporation into a coop.
The vast majority of coops are, like credit unions, relatively small and local. Instead of expanding to new areas, they often "split" into new areas, so you'd expect them to remain just below the noise threshold of the large multinationals.
> Coops are basically geared toward mediocre success - because there's really no pressure to risk aiming for amazing/startup-style success.
I'm just straight-up offended at this. Co-ops are the job most people want. What you refer to as "amazing success" is dismantling our society and the people who run them appear to struggle to empathize with other humans.
Granted, i'm sure coops can be equally antisocial and misanthropic. But growth surely isn't what we want to be optimizing for.
Enshittification is the most obvious one—we should be nationalizing efficient processes at the point they fail to yield further productivity gains.
I don't really have much energy to argue with true believers today, so all I'll say is "read schumpeter dammit". For an industry allegedly founded by the dude I haven't met a single person working with VCs who's actually read the man. He would not consider today's America to have a healthy economy.
• You can have input in whether to optimize for longevity or short-term profit.
• If you do choose to have a profit-sharing, you experience arguably proportional reward for the work you invest.
• Unions are less necessary if you don't need to actively organize to engage in democratic decision structures.
These are examples of qualities that I've found that appear to be desired by the majority of both my tech social-circles and certainly my non-tech-social circles. Certainly there's immense bias in my viewpoint, but I'm not the person equipped to draw together evidence that people want something they aren't even presented with, but it's something I do believe is generally true.
For more historical evidence, to put aside the co-op structure (which is, in my opinion, secondary to the qualities that people want from their business), flat companies have had their moments of popularity with both Valve and Zappos. (obviously neither are co-ops, and I doubt either have labor-proportional profit-sharing now if they ever did, but it's limited evidence people are turned off by the dysfunction of hierarchical businesses.)
More evidence: in the fight between workers and shareholders, shareholders had to use the courts to enforce shareholder primacy: https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co. This indicates the natural tendency of society is to mediate between the needs of the shareholders and workers, something most naturally achieved by making the workers the shareholders.
I realize little of this is likely to be as convincing as the evidence of so many for-profit companies largely not owned by workers, but there's a lot of literature discussing the perverse incentives of divorcing ownership (and investment) from labor that is far too large for a HN comment.
There are, of course, very large co-ops others point out (health insurance, REI (I think?), credit unions), but I can't say I have the insight into the historical reasons why they appear in some industries and not others, in some regions (states) and not others, etc etc.
FWIW, I have worked in for-profit environments where I don't own stock and I've observed genuine concern for all the qualities above. This isn't a hard and fast rule. But most of my workplaces don't show this behavior, and it's quite soured me on gambling with my time (the typical capitalist-to-worker-pitch) rather than finding a lower-return but stabler form of employment that prioritizes quality of work and life. You can get a lot of this by working at large tech companies, but they often undersell how much this affects quality of life despite enormous compensation, and also undersell the sort of dysfunction that would normally be remediable if you let the workers have true representation on the board and among stockholders.
I would say the same thing about for-profit joint-stock ownership, I think there's a lot of subjective value embedded in ideology of the political economy. Especially when combined with VC-funding it can provide growth, but growth was never the primary pitch—it was collectively-rational division of resources, services, and labor. On that mark, our globalized division of resources strikes me as having failed on the face of it. No smartphone is flashy enough to fully occlude the enormously inequitable division of labor that produced it, nor the enormous political-economic consequences of such coercion.
Exactly - it's like the startup vs "lifestyle business" (we have to keep making terms for what just used to be "business") discussion.
The sad part is when something on the startup track fails as a startup but is a perfectly workable "lifestyle" business; but it can't switch tracks and instead plows along until destroyed.
When you talk about coops, there is a distinction between a consumer coop and a worker coop. A consumer coop is generally where consumers band together to get better prices on consuming some product or group of products. A worker coop is where workers have ownership and make business decisions together. There are actually other coops too - e.g. farming coops are generally capital equipment sharing arrangements - think sharing ownership of the processing center for some crop. (Also ESOP worker coops - but I would say they generally are very weak on workers making significant decisions).
The REI workers are basically employees of a retail company that happens to be a coop. The coop part is for shopper/consumer members of people who buy things at REI.
i see thanks for explaining. i wish they were a bit more clear about that upfront. i had assumed the workers received some of the dividends as well, given their personal investment in the firm.
REI is routinely rated one of the best places to work. When I was there, we had both a pension plan and a 401k with match. Part time employees got PTO and (really good) insurance. They have mandatory paid sabbaticals on top of PTO. But as an employee you get no dividend, as the dividend is based on purchases, and the discounts available were far greater than the 10% back. Still, I wish I had stayed and moved into a technical role as I have never been treated as well as an employee as when I was there.
According to their Wikipedia (https://en.wikipedia.org/wiki/REI), REI is a "consumers' co-operative". This is a different thing than a "workers' cooperative". My understanding is that most grocery co-ops are organized as consumers co-ops, or something close to it.
The grocery co-op near me has occasionally faced the prospect of the formation of an employee/worker union. I imagine that unionization is a thing that doesn't happen (or get seriously discussed) in a workers' co-op.
I find this distinction vaguely fascinating, but (apparently) not enough for me to actually get informed about it.
(which happens to be featured somewhat prominently in Kim Stanley Robinson novel 'The Ministry For The Future', which I am currently working my way through, and recommend for anyone who (a) likes coops and (b) is feeling overwhelmed by humanity's current situation)
I know of several examples of worker-owned coups where the product is excellent: Cheeseboard pizza in Berkeley, Moog synthesizers, etc.
I've always wondered whether this model could extend to cutting edge technology, where the contributions of a few extremely talented individuals could be the decisive factor.
That's not to say Bocoup is limited by this question, because it could be their work does not require any cutting edge research, but instead is deploying existing stable technologies in an artisan/workman/guildsman like professional manner--which I think is the sweet spot for worker-owned/worker-directed activities.
Cool. What do financials/shares look like? How does the company grow from just 6-8 people? I'm curious because this is what I've always wanted to start. I know that worker-owner/member orgs can exist at scale as well (Mondragon is one example) but the internals and growth is fascinating to me.
Credit unions are probably a pretty good place to start, as they're cooperative by nature but also operate similar to a normal banking corporation (expansion, etc).
Browsing the barebones site and reading the Code of Conduct, I get the sense that political activism is a higher priority than engineering. There's a dedicated BLM page, where they honor George Floyd, but not the woman who was pistol-whipped by Floyd and his crew during an armed robbery, while the woman was home alone with her children.[1] I am aware that this is wrongthink.
Americans rejected this worldview in the recent presidential election. While I have no issue with people advocating for their flavor of justice, I can't imagine this being the most savvy business decision in the current climate. I certainly would not be interested in hiring or working with an agency for whom caustic ideology appears to be more important than any other concern. Their hostility towards people with my skin color is palpable.
hi, American here. i didn't reject this worldview - a portion of eligible voters rejected it.
maybe their principles are more important to them than "current climate" and a profit motive? if you don't care for it, don't hire them - i'm sure they wouldn't want to work with you anyway as your values seem completely incompatible.
> While I have no issue with people advocating for their flavor of justice
Really? Because I'm getting extremely strong "I have an issue with people advocating for this kind of justice" vibes from your comment here. Might want to take a look again if you didn't intend that.
Announce your company is worker-owned in a blog posted by a guy whose profile pic shows him in a banana suit. Not the best way to build confidence in the new ownership...
anyone curious how employee ownership can work for large tech enterprises, a good starting point can be the material made available through the Beyster Institute - https://rady.ucsd.edu/why/centers/beyster/index.html
The founder built an $8 Billion dollar employee owned company, SAIC - and then allowed it to be carved up once he left having failed to ensure the culture of employee ownership was rooted as firmly with the board of directors as it was with the rank and file employees. I worked there for 12 years and saw firsthand the slide away from the ownership model, and it was instructive for me in my early career years.
What are some success stories of coops? I’m thinking United , REI , Winco.
I’m curious why aren’t there more and why they generally have mediocre success if not failure
US economic policy is not very favorable to co-ops.
Cooperatives face complex tax structures that can be less advantageous compared to traditional corporations. Unlike C-corporations, which have clear tax advantages and deductions, cooperatives must navigate unique tax rules, such as Subchapter T of the IRS code, which governs patronage refunds.
The tax code heavily favors investor-owned firms through incentives such as lower capital gains taxes and deductions for stock-based compensation, which cooperatives do not benefit from in the same way.
Beyond that, banks and financial institutions are often hesitant to lend to cooperatives, as their ownership structure does not provide the same level of collateral or control as investor-owned firms. Government-backed loans and grants that support small businesses often don't adequately accommodate cooperatives. For instance, SBA loan programs historically have been difficult for cooperatives to access.
And because co-ops are a niche business structure, many federal and state laws are designed with traditional corporate structures in mind, making it difficult for cooperatives to navigate compliance requirements. Cooperative incorporation laws vary by state, leading to inconsistent legal protections and administrative burdens.
I've been a part of several coops that fizzled out, and in none of these cases was tax law the culprit. Taxes and regulations suck, but I think there are deeper causes for the rarity of success in ventures like this, which are so appealing, and so often attempted. I don't know what they are, but I'd bet that some of the major causes are psychological and logistical in nature!
I have been extremely excited about cooperatives and doing research but good info is scattered (suggestions welcome!). From what I learned I will echo what you said - laws are stacked against cooperatives. In general the corporation, a structure that is centuries old, gets preferential treatment in all situations. It is like human development has been abolished in that domain in the 1800s and that is the status quo.
If you go into history of some nations, e.g. in some regions of Italy, coops go much farther back than the 1800s (the modern form comes about in the 1800s though) and there is an ecosystem of coops to develop and be supported by gov't and each other. In the US though the support legal, financial, and common understanding is much less mature.
Coops are basically geared toward mediocre success - because there's really no pressure to risk aiming for amazing/startup-style success.
Ownership structure doesn't change many of the business risks, but coops can avoid the "expand or die" that sometimes normal companies experience.
The largest coops are mutuals (think: insurance) and banks (think: credit union).
Others exist in farmer's coops (Land o' Lakes, Dairy Farmers of America, etc).
https://ncbaclusa.coop/blog/2022-world-cooperative-monitor-r...
The hardest part is converting an existing corporation into a coop.
The vast majority of coops are, like credit unions, relatively small and local. Instead of expanding to new areas, they often "split" into new areas, so you'd expect them to remain just below the noise threshold of the large multinationals.
> Coops are basically geared toward mediocre success - because there's really no pressure to risk aiming for amazing/startup-style success.
I'm just straight-up offended at this. Co-ops are the job most people want. What you refer to as "amazing success" is dismantling our society and the people who run them appear to struggle to empathize with other humans.
Granted, i'm sure coops can be equally antisocial and misanthropic. But growth surely isn't what we want to be optimizing for.
are there any examples?
Enshittification is the most obvious one—we should be nationalizing efficient processes at the point they fail to yield further productivity gains.
I don't really have much energy to argue with true believers today, so all I'll say is "read schumpeter dammit". For an industry allegedly founded by the dude I haven't met a single person working with VCs who's actually read the man. He would not consider today's America to have a healthy economy.
this doesn't sound like an example, more of a complaint
You didn't bother to articulate what particular claim you wanted an example on. I can't read minds, and you're wasting my time.
> " Co-ops are the job most people want."
-- what are some examples?
• Stable employment
• Democratic workplace
• You can have input in whether to optimize for longevity or short-term profit.
• If you do choose to have a profit-sharing, you experience arguably proportional reward for the work you invest.
• Unions are less necessary if you don't need to actively organize to engage in democratic decision structures.
These are examples of qualities that I've found that appear to be desired by the majority of both my tech social-circles and certainly my non-tech-social circles. Certainly there's immense bias in my viewpoint, but I'm not the person equipped to draw together evidence that people want something they aren't even presented with, but it's something I do believe is generally true.
For more historical evidence, to put aside the co-op structure (which is, in my opinion, secondary to the qualities that people want from their business), flat companies have had their moments of popularity with both Valve and Zappos. (obviously neither are co-ops, and I doubt either have labor-proportional profit-sharing now if they ever did, but it's limited evidence people are turned off by the dysfunction of hierarchical businesses.)
More evidence: in the fight between workers and shareholders, shareholders had to use the courts to enforce shareholder primacy: https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co. This indicates the natural tendency of society is to mediate between the needs of the shareholders and workers, something most naturally achieved by making the workers the shareholders.
I realize little of this is likely to be as convincing as the evidence of so many for-profit companies largely not owned by workers, but there's a lot of literature discussing the perverse incentives of divorcing ownership (and investment) from labor that is far too large for a HN comment.
There are, of course, very large co-ops others point out (health insurance, REI (I think?), credit unions), but I can't say I have the insight into the historical reasons why they appear in some industries and not others, in some regions (states) and not others, etc etc.
FWIW, I have worked in for-profit environments where I don't own stock and I've observed genuine concern for all the qualities above. This isn't a hard and fast rule. But most of my workplaces don't show this behavior, and it's quite soured me on gambling with my time (the typical capitalist-to-worker-pitch) rather than finding a lower-return but stabler form of employment that prioritizes quality of work and life. You can get a lot of this by working at large tech companies, but they often undersell how much this affects quality of life despite enormous compensation, and also undersell the sort of dysfunction that would normally be remediable if you let the workers have true representation on the board and among stockholders.
i mean in reality . any that worked?
I would say the same thing about for-profit joint-stock ownership, I think there's a lot of subjective value embedded in ideology of the political economy. Especially when combined with VC-funding it can provide growth, but growth was never the primary pitch—it was collectively-rational division of resources, services, and labor. On that mark, our globalized division of resources strikes me as having failed on the face of it. No smartphone is flashy enough to fully occlude the enormously inequitable division of labor that produced it, nor the enormous political-economic consequences of such coercion.
> Coops are basically geared toward mediocre success
There's something deeply wrong with a society that can label moderate success as "mediocre".
I wish society gave more incentives to healthy, moderately successful, profitable companies instead of "growth and greed at all costs" success.
Or, as you put it, "amazing/startup-style success". Fuck that noise.
the phrase you're looking for to describe "mediocre success" is "sustainable business".
expand or die is a bullshit concept employed by those more concerned with a quick buck than creating something lasting
Exactly - it's like the startup vs "lifestyle business" (we have to keep making terms for what just used to be "business") discussion.
The sad part is when something on the startup track fails as a startup but is a perfectly workable "lifestyle" business; but it can't switch tracks and instead plows along until destroyed.
REI is a purchaser coop, not an employee coop.
REI is not a worker coop they just cosplay as one.
can you explain more to an outsider? i've been a lifelong member and they were very active in their COOP image in all the member comms
When you talk about coops, there is a distinction between a consumer coop and a worker coop. A consumer coop is generally where consumers band together to get better prices on consuming some product or group of products. A worker coop is where workers have ownership and make business decisions together. There are actually other coops too - e.g. farming coops are generally capital equipment sharing arrangements - think sharing ownership of the processing center for some crop. (Also ESOP worker coops - but I would say they generally are very weak on workers making significant decisions).
REI is a consumer coop. At least some of their employees are actually unionized. https://www.motherjones.com/politics/2022/02/rei-coop-union-...
this is a helpful way of looking at it. so it sounds like REI employees are not seeing any dividends?
The REI workers are basically employees of a retail company that happens to be a coop. The coop part is for shopper/consumer members of people who buy things at REI.
i see thanks for explaining. i wish they were a bit more clear about that upfront. i had assumed the workers received some of the dividends as well, given their personal investment in the firm.
REI is routinely rated one of the best places to work. When I was there, we had both a pension plan and a 401k with match. Part time employees got PTO and (really good) insurance. They have mandatory paid sabbaticals on top of PTO. But as an employee you get no dividend, as the dividend is based on purchases, and the discounts available were far greater than the 10% back. Still, I wish I had stayed and moved into a technical role as I have never been treated as well as an employee as when I was there.
According to their Wikipedia (https://en.wikipedia.org/wiki/REI), REI is a "consumers' co-operative". This is a different thing than a "workers' cooperative". My understanding is that most grocery co-ops are organized as consumers co-ops, or something close to it.
The grocery co-op near me has occasionally faced the prospect of the formation of an employee/worker union. I imagine that unionization is a thing that doesn't happen (or get seriously discussed) in a workers' co-op.
I find this distinction vaguely fascinating, but (apparently) not enough for me to actually get informed about it.
Don't forget https://en.wikipedia.org/wiki/Mondragon_Corporation!
(which happens to be featured somewhat prominently in Kim Stanley Robinson novel 'The Ministry For The Future', which I am currently working my way through, and recommend for anyone who (a) likes coops and (b) is feeling overwhelmed by humanity's current situation)
[dead]
Never heard of these guys. Do they do good work?
I know of several examples of worker-owned coups where the product is excellent: Cheeseboard pizza in Berkeley, Moog synthesizers, etc.
I've always wondered whether this model could extend to cutting edge technology, where the contributions of a few extremely talented individuals could be the decisive factor.
That's not to say Bocoup is limited by this question, because it could be their work does not require any cutting edge research, but instead is deploying existing stable technologies in an artisan/workman/guildsman like professional manner--which I think is the sweet spot for worker-owned/worker-directed activities.
Cool. What do financials/shares look like? How does the company grow from just 6-8 people? I'm curious because this is what I've always wanted to start. I know that worker-owner/member orgs can exist at scale as well (Mondragon is one example) but the internals and growth is fascinating to me.
Credit unions are probably a pretty good place to start, as they're cooperative by nature but also operate similar to a normal banking corporation (expansion, etc).
Browsing the barebones site and reading the Code of Conduct, I get the sense that political activism is a higher priority than engineering. There's a dedicated BLM page, where they honor George Floyd, but not the woman who was pistol-whipped by Floyd and his crew during an armed robbery, while the woman was home alone with her children.[1] I am aware that this is wrongthink.
Americans rejected this worldview in the recent presidential election. While I have no issue with people advocating for their flavor of justice, I can't imagine this being the most savvy business decision in the current climate. I certainly would not be interested in hiring or working with an agency for whom caustic ideology appears to be more important than any other concern. Their hostility towards people with my skin color is palpable.
[1] https://www.washingtonpost.com/graphics/2020/national/george...
hi, American here. i didn't reject this worldview - a portion of eligible voters rejected it.
maybe their principles are more important to them than "current climate" and a profit motive? if you don't care for it, don't hire them - i'm sure they wouldn't want to work with you anyway as your values seem completely incompatible.
> While I have no issue with people advocating for their flavor of justice
Really? Because I'm getting extremely strong "I have an issue with people advocating for this kind of justice" vibes from your comment here. Might want to take a look again if you didn't intend that.
Announce your company is worker-owned in a blog posted by a guy whose profile pic shows him in a banana suit. Not the best way to build confidence in the new ownership...
I disagree. Stern corporate demeanor is a disadvantageous to a group that is trying to show personality.
Besides, what's wrong with getting one's apparel at Banana Republic?
To me, a guy in a banana suit appears more confident than a gut in a business suit.
Because business must always be boring and straightlaced to be taken seriously. I, for one, like a bit of frivolity in business.