Platform Co-ops Offer Startups Viable Funding Alternatives to Investor Control
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- Published on December 10, 2021
- Last Updated March 19, 2022
- In Video
- Directly Sourced
- Phone Interview
- Email Interview
- Edited by EQ
I was extremely lucky to (VIDEO) chat about platform co-ops with Nathan Schneider, Assistant Professor at University of Colorado Boulder.
Nathan is the Author of Everything for Everyone: The Radical Tradition that Is Shaping the Next Economy and Co-editor of Ours to Hack and to Own: The Rise of Platform Cooperativism, a New Vision for the Future of Work and a Fairer Internet.
The interview was conducted on the 25th October 2021 and was originally intended to be just recorded for notes of our conversation "on background" while I was researching a student (Mizzou) journalism assignment into Broadband Co-ops.
That original story got abandoned but this conversation was so interesting, Nathan kindly gave me permission to convert our call into an audio episode and publish on EQ.
The interview has been edited for clarity.
We discuss lots of interesting stuff, from topics such as new legislation passed in 2021 that improves crowdfunding options for startups and what it's like to run a platform co-op, to how blockchain innovation overlaps with the cooperative mission to create stakeholder led companies.
[00:00] Jonathan Allen: Do you think there’s any mileage still in co-ops and, particularly platform co-ops? Because, you know, in 2019 —the Start.Coop event— that was a really big thing.
And it felt like the beginning of a wave. In the moment Trump was still in power; there was a lot going on in which platform co-ops were just a real hope; a real kind of viable hope for the future.
And I just wondered, has it changed because of the pandemic? Has interest waned? Does it seem more complicated?
And I guess the reason I ask is that one very big co-op —I can’t remember the name of it—, but they announced that they were shutting down in 2020, I think. And they were trying to compete with Amazon or something like that.
So… how do you feel it’s going?
[00:54] Nathan Schneider: I mean, 2019 was, was already kind of well into uh, you know, “this is a long game”. This is not something where we’re, imagining that everything’s going to change overnight.
We’re inheriting a legacy of cooperative business that’s —in it’s modern form— 150 years old more. And if we if we all just gave up because there was some setbacks there are always setbacks and there are always challenges, but actually the last couple of years, I think I’ve pointed to some really exciting progress.
To me the critical piece is not, how many startups are wildly succeeding against Amazon in the current environment. The current environment is designed against cooperatives, in a number of very debilitating ways.
What I think we really need is pioneers, who are able to demonstrate the viability of these models, and then, very serious policy strategies that make these models meaningfully viable.
So that’s what happened with rural electrics, for instance. Rural electrification cooperatives were going in the 19-teens and 1920s. They had about a 50% failure rate or something, I heard recently.
It was not a wildly successful model, but in some cases it was effective and it demonstrated that if they actually had infrastructure that this would really work. And sure enough, in 1936, congress passed legislation creating a vehicle for financing these entities, and they solved the rural electricity problem in a decade.
And I think we’re looking at that except, rather than trying to just insert co-ops into a narrative or a narrow sector of the economy, we’re interested in making co-ops viable across the economy.
For instance, the last few years in 2018, Congress passed the main street employee ownership act; really important for employee ownership. The government still hasn’t really implemented it but there are two major bills running through Congress now that are even more ambitious.
On the policy side, there’s a lot of reason to be hopeful. There’s also a lot more appetite than a couple of years ago to crack down on the excessive power of investor backed platforms.
And that too is really important for co-ops to succeed, because if they’re competing against infinite amounts of capital and and a policy environment that’s basically willing to give the green light to monopolies that makes it a lot harder to do honest business. So I think there’s a lot in the structural signals leaning toward a change.
We’re also seeing, new investment strategies we’re seeing for instance some really large cooperatives getting going. Drivers cooperative in New York city is now the largest worker co-op in the country; didn’t exist in 2019. On a lot of fronts, I think there’s a lot to be to, to be hopeful about.
[03:43] Jonathan Allen: Yeah. Just quickly, what are the two major bills then that are relevant to co-ops?
[03:49] Nathan Schneider: So in the house there arose a proposal to essentially fund worker co-ops and to just provide federal funding for something that has been done in cities quite a bit in recent years. But this is stepping up that process and that’s very exciting.
So again, it just builds on these local experiments. The other is coming out of Colorado here, our Senator John Hickenlooper introduced a bill called the Capital for cooperatives act, which would require the small business administration to, to lend, to cooperatives of all kinds that are relevant to SBA loans.
That I think, in some ways it’s very modest —just do what the SBA is supposed to do— but it’s very radical in the sense that I can’t think of another piece of federal financing legislation that actually approaches cooperatives as a generalized business strategy rather than as a narrow model.
So every time cooperatives have been subject to policy innovation in us history, it’s been, “OK you’ve got credit unions. That’s cool. Here is policy for your specific credit union: we’re going to really straight jacket you. So you have to do everything according to this model.”
Same with rural electrics. Sorry, you have to be this kind of thing to, to benefit from this. If you’re a co-op of any kind, other than a traditional agricultural co-operative, you’re going to have trouble going to Cobank, the $130 billion cooperative staying here in Colorado.
So this is very exciting, in that it is a piece of legislation that looks to the co-op model, not as a thing that we need to protect the economy from but actually a thing that we should allow ourselves to unleash on the economy. And that is a major shift.
[05:35] Jonathan Allen: Yeah. And actually… one of the things I notice, when I bring up co-ops in the business community, they find the whole thing over complicated, and yet the idea is relatively simple.
People don’t understand the legal structures and all of those things, but I remember from one of your podcasts that now Colorado is basically allowing you to register your co-op in Colorado and become like the Delaware of co-ops.
Sounds like more of the same thing in terms of what you mean about this generalized business strategy? Can you talk a little bit about Colorado becoming the Delaware of co-ops? And how someone like me can take advantage of that?
[06:17] Nathan Schneider: Sure. It’s a term that comes from our lawyers here, especially Jason Weiner’s office, a really innovative from here.
Around the country there, each state as with other kinds of business formation has its own statutes for Cooperatives. And that ranges from, many states in the deep south, which only allow agricultural cooperatives credit unions —very restrictive— to regimes like here in Colorado where we have what’s called the Limited Cooperative Association Statute.
And there’s some other states that have this. Colorado has really pioneered it and put it to good use. And this is an example, again, of developing co-op policy for creativity rather than for pigeonholing. The ICO was advanced by farmers in Colorado, by the ag community, b ut fortunately unlike past ag co-op policy, they didn’t limit it to ag. So they said, ‘we just want a flexible statute’ that is able to handle multiple forms of stakeholder classes, that is even able to handle some investor participation while preventing investor control.
As a result, they created a statute that is now being used by the most innovative, platform co-ops around the country. And and again, that’s because they created a tool that is multipurpose that is, that invites creativity rather than constraining it. Which is really the exception more than the rule.
And as a result, Colorado is really a hotbed of cooperative innovation right now. Not only cooperatives based in Colorado, but co-ops across the country that are choosing to incorporate here and using our lawyers.
[07:58] Jonathan Allen: Yeah. And that’s the thing, I’ve been trying to look at, turning a media company into a co-op. It’s just amazing how little information I find.
Even talking to, local lawyers that I really respect, they’re kind of stumped by the question of co-ops. I think you’ve just nailed the experience I’ve been having, which is, it’s always you’re not in farming or banking or electricity, so what are you doing?
But it does seem like this idea of co-ops or the generalized business strategy is like massively appealing, particularly our audiences get more and more fragmented and communities become more fragmented.
If you want to build like successful internet products, you have to go niche. And you have to really play to your community.
But the irony is that there’s less trust in your community, if you go and get oodles of VC capital, and so you end up betraying your community if you go the conventional traditional route. And they also feel sort of disenfranchised because they just become a customer.
That’s why I was starting to think, was the concept of co-ops dying out? But actually, I’m see ing what you’re saying, like it is the opposite.
So I’ve got two questions specifically about co-ops. A lot of startup owners, right, fear investor control now; particularly when they want to serve nich e communities.
But when they think about co-ops and they haven’t thought about it as a generalized business strategy, it does seem very daunting and full of administration. My question for you is what’s the day-to-day of running a platform co-op versus being your normal startup CEO?
[09:43] Nathan Schneider: It’s perplexing in some respects because, investor ownership is also baffling to anybody who’s not familiar with like ‘series X’ rounds and SAFEs, and all these crazy contraptions people have come up with to make investor ownership work in the startup economy.
I’ve had to learn all this stuff against my will and it’s complicated. Co-ops, I don’t think are any more complicated and, probably, not even necessarily less complicated.
It’s just a different set of stakeholders. Rather than money essentially dictating the logic of governance and of ownership, participation does. And that might involve monetary investment as well, but it’s really participation is the gold standard.
And so how does that compare? It really depends.
In some cases, as with some startups really want their investors to be involved and design the thing to have high touch investor kind of guidance and mentorship. In some cases, it’s really not: they’re bringing the investors along for the ride, but they’re really asking the investors to trust the leadership of the founders.
I’ve seen co-ops of both types. And for more established businesses, when I think of my credit union for instance, it is probably 95% of the time operating like the Bank of America or Wells Fargo across the street.
That 5% of the time when they’re not making up fabricated accounts or whatever, to defraud wall street, that’s the difference!
And that’s the difference I care about. And that profits are not flowing elsewhere.
They’re staying in the community where, you know, where I live is something that really matters. It’s a difference, that you don’t necessarily feel day-to- day, but it’s a difference that makes a difference.
I think it’s important for co-op founders, and other founders of other kinds of community-owned businesses, to recognize that being a co-op doesn’t relieve you from the responsibility of being a leader. Co-ops need leaders too, just like any kind of organization.
Just because we claim to have a democracy in the United States doesn’t mean that we don’t have political leaders.It just means that those leaders are accountable to the people who elect them, not to their family bloodline or whatever.
Again, in some ways it’s a small difference. Lots of co-ops use clearly conventional management structures. Keep in mind, that investor in companies often have thousands of shareholders. Even millions.
It’s not like we’re unfamiliar with the logic of having many owners. It’s just a question of who those owners are and what their bottom line is; what they expect of a company. And when you put it in that context it’s really not so different.
The way I think about it is, who is the CEO lying in bed at night, worrying about? Are they worrying about their investors ultimately? And they’re willing to throw their workers under the bus for those investors?
Or are they worried about their, those workers, fundamentally at the end of the day? Or consumers? Or another cause they called their class?
So that’s really what it’s about. It’s, it’s not about bringing utopia to earth, in some kind of crazy way, it’s just about, running a reasonable business that has healthier accountability structures.
[12:52] Jonathan Allen: Yep. Okay. Two questions about that. You said stakeholder participation is the gold standard for co-ops, but isn’t also say like dividend payments to the members?
I’d have thought that was also kind of good standard and that’s how we get more and more people building co-ops and investing in co-ops and participating is through dividends. So how does the prospective platform co-op CEO think about stakeholder participatioN?
And then also, how does someone thinking about just running a startup, mulling over the idea of co-ops, think about dividends? Because, I guess, in the startup scenario, essentially, you just exit at some point and that’s how you pay your shareholders; in a co-op scenario, it seems that you wouldn’t do it like that.
[13:44] Nathan Schneider: One of the co-operative principles is member economic participation. So that’s pretty big.
And it gives co-ops legally, generally, two super powers. They can take participant investment.
Whereas your average startup can’t really take investment, generally, from the average user, only from wealthy people, co-ops can. So that’s one motive, which might not be right for all of them.
In many cases, they’re trying to serve people without capital on hand and that’s fine. And then same with dividends. Some co-ops are really all about dividends, but for instance, credit unions are a type of co-op that is not allowed to provide dividends.
They’re only allowed to reinvest benefits in, for instance, lower costs: “reinvest surpluses and lower costs.” And I know of platform co-ops that do both.
Some that pride themselves on feeding dividends to their —generally— workers, because their purpose as a co-op is to provide great livelihoods for value creators. And then, there are also kinds of co-ops whose job is really to be a steward.
So maybe they’re — thinking of an example that is essentially a data steward of medical data— their goal is not to incentivize their members to gorge the value of their medical data because that could c ause long-term harm. So they do not provide dividends. They, again, encourage reinvestment.
So, it really depends. On that kind of question about startups, it’s absolutely right ; any growth oriented startups should not be paying up dividends every five minutes, they should be reinvesting in growth.
I think the same would go for co-ops. Many of them are not paying dividends as a result, or they’re paying, reasonable ones. Often co-ops actually set a cap, at the kinds of dividends they can pay out in order to prevent the members from essentially eating the company alive.
But it’s another reason that I’ve articulated this idea of exit to community.
A vision where you might begin as, as a more ordinary startup. But you would seek to work toward something like cooperative ownership or, another kind of model like it with the idea that maybe it doesn’t make sense to have that member ownership at the beginning, but once you mature, once you’re at a stage where, you’re getting a little more steady state, and people are really depending on you, that’s when you might turn toward being more of a dividend distributing cooperative rather than a growth oriented startup.
Jonathan Allen: Yeah. And I love the idea of exit-to-community. And again, when I talk about this in all kinds of very qualified circles, everyone intuits this kind of tension at the beginning of the compromise between getting something up and running and being democratic from the very beginning.
So, a question around that is, have you ever had to suggest ways that a company can signal that, in the long run, it intends to exit to community? And what are the little things that it can do on its growth stage to keep signaling that is it’s intention. At the same time, it does have to just focus on slightly despotic control in the early days.
[16:55] Nathan Schneider: Yeah. So this is a reason that we ran our lab here at CU, a cohort of founders interested in exit-to-community about a year ago, was to explore how they’re doing that kind of signaling and relationship building.
And I think it, it really depends on the context. In some cases, exit-to-community might be something you didn’t plan for, but it’s something you back into. In other cases it might be something that you’re aiming for all along.
And one thing that is seeming to be really important is to have funds that are able to invest in early stage projects that are E-to-C (exit-to-community) compatible or friendly.
So an example of this is a company called Open Collective that did take an early investment. But did it in partnership with an organization called purpose that helped design a kind of cap table strategy that would not involve creating high expectations of certain kinds of exits.
And so they were able to set expectations with the investors who came on, in a way where now they’ve become quite successful, and they’re in a position where investors can’t really demand of them the kind of conventional exit and they’re working toward a community exit.
Unfortunately, we don’t have a lot of infrastructure for that right now, but that’s something that to me is a really high priority to build.
[18:18] Jonathan Allen: Right, and you know, co-ops can take participant funding. Is that basically a bit like regulation crowdfunding, where it’s allowed to not necessarily use accredited investors and that kind of thing.
[18:33] Nathan Schneider: Yeah. A lot of similarities. I think of co-ops as the original crowdfunding.
REI, the recreational equipment co-op, got it’s start because some people in Washington state wanted to buy a nice German ice axe. And, at the time, it didn’t make sense to just order one from Amazon, so they had to get a bunch of people who also wanted that ice axe together and, buy it in bulk. And, you still see that axe in their logo.
And so today, I think the increasingly liberalizing strategy of equity, crowd funding, regulation crowd funding presents an opportunity to bring that idea of co-ownership in crowdfunding into the 21st century. The SEC is continuing to raise the level that companies can bring in through that method.
For instance, the Driver’s Co-op, this kind of rideshare co-op in New York city just ran a very successful equity crowdfunding round. So you can do equity crowdfunding in a co-op, and for a co-op and essentially as co-op membership, or you can do it in a different way.
A company called HackerNoon, here in Colorado, is a family business owned by a husband and wife team. They needed to do a major technology build, so they used equity crowdfunding to raise a million dollars without going to investors —professional investors.
They really wanted to retain their family control. And ironically they use community ownership as a way to make sure that they would not saddle the business to investor needs; that they would really be able to retain control.
And they were successful in doing that. It didn’t become a co-op. It just meant that part of their cap table was now owned by, a large number of small investors, who were not going to bother them very much. And they retain their control and also get to share their growth and their upside with their community.
[20:19] Jonathan Allen: Yeah, that’s another thing that people have, right? Is a fear of losing control or creating a company that they then get voted off through the co-op structure. So what you’re saying is it’s not necessarily against the spirit of a co-op to, to actually specify all of these things upfront.
Our intention is to maybe, retain control, but pay out dividends to smaller investors and all of these things. What I’m getting is that none of these obligations that we automatically assume are there. Just like a normal company, we can fashion it however we think works best, and then our job is just to sell it to our stakeholders, essentially.
[21:02] Nathan Schneider: You know, you should think of it as a creative pallet for developing an appropriate business, just like, a C Corp or an LLC. But in this case, the priority is really on those participants.
Unfortunately, it is true that we live in a system where investor ownership is have privileged over other forms of ownership. The tax code is written that way.
The SEC operates that way. It treats people as investors, not as full participants in a way that where even, for instance, employee owners through an ESOP, an employee stock ownership plan, might want to continue owning a business, in many respects.
They might make certain decisions in certain ways, but their trustee is obligated to seek their financial benefit at all costs. And in some cases that’s a good thing but, you know, it removes a little capacity for genuine democracy.
These are ‘pallets’ and I think, as we go forward, we need to create policy that respects that. Rather than, again, creating these kinds of fixed structures to instead enable the kind of creativity that, that investor ownership has had the benefit of enjoying with the development of things like SAFEs and all the other kinds of fun innovations that have enabled the startup economy to really function for investors and founders.
We need to —the capacity— to do that kind of experimentation with co-ownership. And when we, line them up side by side; line up a co-op with that investor and company —or line up the driver’s co-op next to Uber—, you’re dealing with, two different companies operating in two different, completely different, systems.
If we care about stakeholder capitalism, if we’re serious about taking social responsibility seriously we need to build a system that actually enables that to happen..
[22:55] Jonathan Allen: Yeah. Two questions about that. So one is, is just a facetious one, which is, “can you get rich founding a co-op, a platform co-op?”
The second question is I just wanted to you to go into one of the ideas from your book, which I really loved, which is just co-ops is like the most capitalist… particularly American approach to business.
So, firstly, can you get rich building a co-op?
[23:22] Nathan Schneider: I guess, if you wanted to. And people do. People get paid nicely for building these things.
People who are running large, insurance companies or. purchasing co-ops that are doing billions of dollars of business. They’re doing just fine and they’re setting up foundations and they’re doing all the things that rich people do.
They’re not getting Jeff Bezos rich. I would argue that people shouldn’t be getting Jeff Bezos rich.
I don’t think that’s a prosocial outcome. I think we, we want a society in which wealth is shared more, much more appropriately.
It’s the same reason that, you talked about what’s ‘uniquely American.’ It’s the same reason that, when the Louisiana purchase was being parceled out in the colonial process it wasn’t, you know, all to a handful of rich people.
The idea was let’s parcel it out to, to, to the yeoman farmer and that is going to be the basis of our democratic society. In that case, white male people were able to access land.
And that was the basis of a healthy but exclusionary democracy. That was at least the hope.
And in our time we have a chance to say, with the businesses that we’re trying to build for future generations, for ourselves, are we going to share the benefits in a fair way. And I think Amazon is an incredible example.
If Amazon had the amount of employee ownership that Sears did, at its height, every Amazon worker would be taking in six figures. The potential for wealth sharing. And that would still be fractional ownership. That’s a minority stake of the company.
Wealth is still possible, but it’s just of a different kind. And I think that’s a good thing. And I think it’s a very, it’s a very American thing in certain respects. We all argue about what American means. I’m not sure how much I want to invest in that.
One of the wonderful things about the cooperative tradition is it’s an international tradition where we’ve learned from each other and done so successfully. The credit union model was invented in Canada and brought down here by Edward Filene, the department store magnate who, was a wealthy person who believed that his workers should have a fighting chance in the economy and, fell in love with the credit union system as a way of doing that and helped establish it here.
Over and over, we’ve learned lessons, and shared lessons, with the world. And different countries and societies have had incredible successes that we haven’t had here with this model.
So to me, the exciting thing is I’ve had the chance to learn about co-ops in Kenya and Italy, in Spain and in France and the UK, and all around the world and each experience has lessons to to share.
One thing that I love about this model is, this is something that in 2016, when the Republican party still had a platform, expanding employee ownership was probably the only thing on both the Democratic and Republican party platforms. This is something that we should all be able to agree on.
And that, at a time of hyper-partisanship, I can tell you it’s just been a relief to be working in an area that is, and really shouldn’t be, subject to partisanship. Our strongest co-ops are in rural areas that, vote for Trump and there are most energetic new sector is in urban worker co-ops that are tending to vote Democrat.
So I just love that this was a tradition that really bridges those divides.
[26:54] Jonathan Allen: That kinda leads nicely onto the original premise of our discussion around broadband co-ops or electric co-ops rolling out rural broadband. What’s amazing about that story is you think that a 100 Meg upload and download speeds is something you could only find in South Korea or Finland, or something, or let alone 1 Gig symmetrical speeds, and they’ve managed to do that in like, Iowa, and Mid-Missouri.
Nathan Schneider: Western Colorado, co-op members are getting way faster internet than I do in startup, Boulder.
[27:32] Jonathan Allen: Exactly. That seems like an under publicized achievement in a way. One thing I’ve heard is that there’s a big need now for cities to try and get the same kind of speeds.
And so there’s this question of can we bring broadband co-ops into cities. And what I find remarkable about all the broadband co-op people I was talking to just in, in search of this story, was they struck me as probably voted Republican, and yet they were putting in systems that were all about neighbors looking after each other and had a kind of social welfare philosophy.
I found that very telling really. That’s when I was like, “this is super American”, in a way, because it’s through business that America is able to resolve a lot of its tension.
So I don’t think I had a question actually there, just an observation. Co-ops is a thing all over the world. I think that’s another really exciting thing. It’s got the same energy as the startup innovation movement, in that it’s global, and that anyone can participate in it from Kenya to China, to Spain, Portugal, whatever.
But then at the same time, like co-ops historically have had a hyper-local focus. Can platform co-ops be like… Can we make a new Facebook, basically, that’s a co-op? And can it be owned by a global community? Or does that cause —I dunno— weird geopolitical tensions and things?
[29:06] Nathan Schneider: It does cause some tensions, but I think it’s necessary. One way of framing, it is that the new local is global, right? Not to say that it’s global and everybody is local. When I think of communities, I’m part of, they don’t involve my nextdoor neighbor, but they do involve somebody on the other side of the planet.
And it’s still a relatively small number of people where we have close relationships and trust and that sort of thing. But it’s not geographically local. And we need to be able to build for that.
That can look a number of ways. That can mean, for instance, there’s a struggle right now in Canada to try to shift to their co-op statutes to be more friendly to global membership.
For instance, Stocksy United, there, is an artist owned co-op with members in dozens of countries, but in under Canadian law, you need your board of directors to have a certain number of Canadian citizens. That’s a real constraint.
And so one thing that I’ve been really interested in is can we explore virtual co-ops? So for instance, an example that I co-founded is called Social.coop. It’s a small social media community using a open source alternative to Twitter called Mastodon, and is networked with other servers that use the same or similar software.
In that case, we’re not a legal co-op, we’re fiscally sponsored by a cooperative, but we run on the platform OpenCollective that I mentioned earlier. And OpenCollective essentially enables you to build a virtual cooperative on top of an existing legal structure.
We’re now in the process of doing that for a worker co-op where it will have no independent legal association —structure— but it will be fiscally sponsored by the open collective foundation. And the idea there is that you build the co-op governance on a virtual layer rather than on the legal layer.
And that’s really exciting because you can do some pretty powerful constraining and regulating in a system like that, especially with some of the tools that we’re bringing in around online governance. That enables us to really not care where anybody is as long as they meet certain requirements.
And, um, you know, it’s that kind of imagination… I also look a lot to the blockchain world. There’s a lot to be concerned about there but I think it’s a space of incredible creativity right now.
It’s in blockchain projects, not in co-ops that, for instance, I’m seeing people inventing a new voting mechanism every week. And that’s super exciting!
People are really having to solve serious problems around how do groups of people self-govern. And I’ve raised concerns about some of the ways they’re doing it, but I’m also really in awe of some of the developments there.
That too, is a series of efforts to build global locals. Groups of, kind of, tribes of people who have really common interests and are trying to align and coordinate around those interests but for whom geographical location is immaterial.
[32:07] Jonathan Allen: Yeah. That’s pretty much the entire discussion about the metaverse really, when it comes down to it. Every NFT is just like a “Tribal Token” in this future metaverse that’s a badge of membership.
I’m glad you brought up blockchain because I always think that the future, to me as I see it, it looks like it’s either blockchain or co-ops.
I always push back on blockchain a little bit, and say, “Everything that you would want to solve with technology through blockchains, you could sell through policy with co-ops.” Do you agree with that?
[32:45] Nathan Schneider: I’m not sure because, again, policy relies on locality. It has a deep dependency on, on, on where you are and location and place and geography do matter in our lives and they’re going to continue to matter and they should.
Place is so essential. The built environment is so essential and so important, but it’s not the only thing that’s important.
And I think with blockchain stuff, you’re able to solve a different class of problems than you can solve with other policy. And what I’ve been doing in the blockchain world, generally, is basically try to facilitate a dialogue between the co-op world and the blockchain world recognizing that they have something to learn from each other.
And I’m just really interested in what new can emerge from that dialogue. For instance, we were talking about the Colorado statutes; and our Colorado lawyers have been incorporating blockchain co-ops, and solving some problems for blockchain projects using co-op legal structures.
And similarly, I think, co-ops can benefit a lot from, learning from what people are building in blockchain land; to build more accountable and participatory cooperatives than was possible before.
I see it as a space of tension sometimes. Blockchain is much more focused on, what is called in that space, “crypto economics.”
Everything is really —in so many of those projects— reducible to economic interests and I’ve argued quite forcefully, in that context, that you need to account for non-economic interests. We need to have a politics.
That is not just about who can get what, but it’s about other kinds of values that aren’t reducible to money. But, at the same time, it’s, it’s a space of incredible creativity that I don’t want to, I don’t want to clamp down, that I don’t, I want to keep exploring the possibility.
To me, it’s a bit scary what’s going on right now in blockchain land. And certainly with kind of the interventions that we’re seeing with Facebook and big companies that are trying to leverage their capital to really own these emerging economies.
Right now there is, if you look for them, there are some really interesting spaces in blockchain land where people are really reinventing the basic social contracts of our lives, in a way that I think is really interesting. And ever since I got involved in this stuff in 2014, it’s just been fascinating. And it’s only… it’s only moreso now.
[35:12] Jonathan Allen: Yeah. And I think, in a way, it’s perfect timing because one of the other criticisms of co-ops is like deep down, no one wants to be a participant. No one can be bothered to vote on these things.
They don’t really want these decisions. But, in a way, the whole crypto community is showing people are, like, super invested in it and really do want to be part of all of the minutiae of these decisions.
[35:39] Nathan Schneider: To some extent. I mean, over and over, I have blockchain founders coming to me being like “Wait, only 5% of my token holders are participating, what do I do? This is crazy!”
And I’m like, “Look, welcome to the co-op experience.” That’s what co-ops have been dealing with for generations.
The problem of participation was before them, but I think they have some really exciting tools for addressing it. For instance, the tool of the co-op tradition has been representative democracy.
You elect a board and the board takes care of most things and you just have to show up at the, at the annual meeting once a year and have whatever the local dish is and have a little pretty vote at the end of it. But, um, to me, I think there’s an opportunity now to develop new kinds of interfaces for our governance lives where we can, for instance, assign representatives in much more fluid, dynamic ways.
We don’t have to rely on just an annual meeting. We can assign and dis-assign and un-delegate our rights much more easily.
We can have voting systems that bundle our interests; that allow us to participate and engage with much less direct attention and involvement; that allow organizations to say, what do we really need our membership to be involved in? How can we use sociocratic structures to delegate authority to the places where it really should be? Rather than asking every member for every little decision.
So, to me, that’s a really exciting question is, what would a dashboard look like for, the digital citizen of the 21st century where you can see what’s going on from a bird’s eye view and decide what is worth your time to get involved in.
You see a glimpse of this in a platform called Loomio, which is a decision-making tool. It’s like a forum plus polling that was built by a worker co-op in New Zealand. And I’m a member of several cooperatives that use Loomio.
And, it’s not perfect, but you get a little glimpse there when you log into your Loomio dashboard, you see all the groups you’re part of; you see what’s going on in all of them; you can decide what you want to care about; you get a digest in your email if you ask for it. And, you know, it makes participation, relatively easy.
And we really need to do that. If we’re serious about co-ownership, we need to create the interfaces of the future.
That don’t just show us our feed of what all of our, what kind of conspiracy theories our friends and family are hawking, but instead it’d show us, “Okay. Here’s all the decisions being made in the groups that you care about, where do you want to jump in?”
[38:15] Jonathan Allen: I love that I’d never thought of it, but you’re right. Blockchain and co-ops, in a way, work together and there’s that legacy element.
Like I can build a co-op now, and a hundred years from now, my, great grandchildren or whatever, could still be casting the same, sort of, “voting line” that I started, through the blockchain, which is insane to think about actually.
Again, it goes back to what I do think is very American: “Let’s set up a little community in the middle of nowhere and bring electricity to it and just build from here.” I can see that in this vision of blockchain and co-ops.
You’ve made me inspired about co-ops again, which is great! Thank you.
[39:02] Nathan Schneider: Good! Yeah, I’ve managed to maintain my enthusiasm for it for a good number of years.
And sometimes it requires bouncing out into blockchain land or into other realms to try to remind myself, when the co-op starts frustrating me, but the need for shared ownership, the need for building a greater stake in our economic lives for more people, it’s just such an… it’s just so urgent.
We’re destroying ourselves with the accumulation and the inequality we’re building. And we’re destroying our, any premise of a democracy, unless we build democracy into the economy.
[39:39] Jonathan Allen: Yeah. Yeah. Thank you.
And going back to your point about Jeff Bezos —imagine— if you think about it, you probably never would have voted that your profits get spent on a space race that you’re just not going to benefit from and neither are your children or your children’s children. And had it been in a co-op…
[40:00] Nathan Schneider: Yeah! In a sense, democracy is capable of sending people to the moon. It’s the only social system that ever has done it.
The question is do we, do we need to do it Jeff Bezos style? Or, or do we see it as a public good?
Do we see space exploration as something that we, as a society and as species, want to do together and, when you look at how space exploration has developed, it’s really always been public investment that leads the way, and then the private investment follows up and tries to make bank on it. And you can see, there could be a healthy dialectic, I think it’s good that there’s some private activity happening in that sphere.
But, again, the idea that democratic things are only capable of, of small activities… No! Some of the greatest achievements of the human race has come about because of democratic decisions.
The absurdity of the Jeff Bezos case, it just reminds us of how dangerous this system really is. This is a person who, could eliminate poverty in significant ways, who has spent his entire career emanating taxes and preventing the construction of a healthy public sphere.
And then now going off and being like a second best space explorer… it’s such a disappointment.
[41:20] Jonathan Allen: It’s funny, isn’t it? It’s stranger than fiction.
You know that right now we’ve got literally like Elon Musk, Richard Branson and Jeff Bezos just flying into space. It’s like Spaceballs or something. Like a complete comedy.
Nathan Schneider: It’s no Neil Armstrong.
Jonathan Allen: Nathan, thanks so much for chatting with me.
Nathan Schneider: Yeah, absolutely. It’s good to connect and best wishes with all these efforts, hope you can convince your colleagues to care about this stuff.