
A Technology Freelancer's Guide to Starting a Worker Cooperative [pdf] - johnfactorial
https://techworker.coop/sites/default/files/TechCoopHOWTO.pdf
======
Co_Reentry
I think that there is real value in thinking more broadly about the
cooperative model when building any new business! As a way to align incentives
it makes a lot of sense.

I am part of a growing tech worker cooperative called Tribe Works
([https://www.tribeworks.io](https://www.tribeworks.io)). We are a platform
cooperative that helps tech workers connect with businesses looking for
contractors or direct hires. We were set up as an alternative to "gig
platforms" (upwork, etc) and staffing firms, and quickly realized that the
real value in our model was in longer engagements. We usually target roles
that last at least 3 months so that our members can access healthcare through
the cooperative if they are working full time and allow workers to buy in. The
platform ties together the functionality of an applicant tracking software (ie
jobvite.com) and professional employer organization (ie justwork.com) and we
add recruitment process outsourcing as a service on top. We have only just
launched our beta platform right now but hoping to fully launch when we reach
301 members (we are about 1/4 of the way there). We have community calls every
other week as well for people interested in learning about the co-op.

We are also part of a larger cooperative called the Staffing Cooperative
([https://www.staffing.coop](https://www.staffing.coop)) which is a holding
company owned by every worker. Here is a webinar we were recently on
describing the holding company structure:
([http://transformfinance.org/investor-
resources](http://transformfinance.org/investor-resources))

~~~
braindead_in
We are an crowdsourced transcription service and are seriously exploring
converting into a worker coop. I have been researching worker coops for a
month now. How do we get started?

~~~
conatus
Happy to hook you up with someone to advise, but as people are saying would be
good to know your location first.

~~~
braindead_in
SF. We are a fully remote company though.

~~~
conatus
Cool. Found your email, will drop you a line.

~~~
braindead_in
Hey, do you have any connects to Loconomics?

------
clarkevans
There is another relatively recent tech movement -- Platform Cooperatives. In
the worker cooperative case, employees are the members of the cooperative. For
platform cooperatives, it's the users that are the members. Examples of
platform cooperatives include
[https://www.stocksy.com/](https://www.stocksy.com/),
[https://www.savvy.coop/](https://www.savvy.coop/), among others. For more
details about Platform Cooperatives, see
[https://platform.coop/](https://platform.coop/),
[https://ioo.coop/](https://ioo.coop/) and
[https://start.coop/](https://start.coop/)

~~~
stakhanov
One of the most potent kinds of coop that I've ever encountered is exemplified
by DATEV. It is a cooperative founded by the tax advisory profession in
Germany in 1966 to create accounting software which is, to this day, the
market leader in Germany for all accounting not having to do with corporations
that are big enough for SAP.

In 1966, the potential for computers to be used in accounting had just become
apparent, and by thinking about companies and markets the way we now do, you
would have thought that the situation should have been a slam dunk for IBM.
That's not how it played out in Germany. Instead of individual tax advisors
entering into individual deals with IBM, the tax advisory profession set up a
coop to buy and operate central mainframe infrastructure (don't know if it was
IBM or not), to be used by all the coop's members and, while they were at it,
instead of buying software from anywhere (like from IBM), they hired some
engineers to write their own software. Personally, I find this an absolutely
baffling turn of events. The profession realized what a giant disruption the
introduction of computers would be. They realized the strategic importance of
maintaining control over software and computer operations. They realized that,
by sticking together and acting in a coordinated fashion, they had the power
take on a corporate behemoth like IBM at their own game and tell them to go
stick it. Absolutely inspiring, if you ask me.

~~~
MrBuddyCasino
The software is horrible though, probably because of that monopoly position.

~~~
stakhanov
I agree the software is horrible. Somebody should get a new coop going there
;-)

------
jarofgreen
Hey. I haven't been able to read past the headline yet (very busy day today)
but I just wanted to say I work for tech workers co-op in the UK. We focus on
Open Data work.

Happy to chat later (will read later to), but I would also point people
towards [https://www.coops.tech/](https://www.coops.tech/) which lists many
such co-ops. You can find their chat board at
[https://community.coops.tech/](https://community.coops.tech/) Also, in the
U.K. [https://www.uk.coop/](https://www.uk.coop/) is a great resource.

Can I suggest anyone asking legal questions states where they are? While the
principals are the same, legal options will differ massively between
countries.

~~~
lifeisstillgood
Would be interested in hearing more - I think IR35 changes in April are going
to make co ops an interesting option.

~~~
brianhorakh
Ir35?

~~~
lifeisstillgood
IR35 is a Inland Revenue Rule 35 (1999)
([https://en.m.wikipedia.org/wiki/IR35](https://en.m.wikipedia.org/wiki/IR35)).

It basically prevents one person "contractor" companies from acting like
employees but getting paid like a business and so somehow avoiding tax. If the
HMRC thinks your contract with BigCo means you are a "disguised employee" then
they will ask you for your missed back taxes.

But on April 2020 they will stop asking me for my back taxes and will instead
ask the client for whom I work (ie BigCo). As such BigCos across the UK are
unwilling to face years of potential back taxes and will from April 2020 do
some combination of

\- state every freelancer / contractor working for them is really a disguised
employee so that the employee's company must pay the equivalent income tax /
NI

\- let go of their contractors en mass

\- push their contractors to major suppliers like Accenture

\- move their UK based work off shore to NYC / Paris / Mumbai

Basically combined with Brexit, UK tech jobs are going to disappear / take a
25% haircut or go abroad.

It's not looking good.

------
stakhanov
I think the upside is mostly to do with doing projects for clients who aren't
themselves in the tech industry and who don't really care how their projects
are implemented and who implements them.

When doing tech work for tech businesses you will often find that they already
operate their own network of tech contractors and membership in such a network
basically implies being a lone-wolf freelancer character for a number of
reasons (a) They work with people not headcounts. They will do extensive
individual vetting to decide who they work with, and after deciding they want
to work with you won't allow you to switch yourself out for another personnel
resource. (b) They will want to keep each individual contractor's bargaining
power in check, so even when they need more than one headcount, they might
think twice about picking up a headcount greater than one from something
that's already self-organizing as a business entity of some kind.

Also, I feel quite strongly that if, in practice, there is a client
relationship that you have 100% ownership of, then you want to make sure that
this is also the case on paper, rather than having an indirection where you
are 1% of some coop and 1% of that coop's revenue happens to be your client.
-- And much of the upside described here can also be realized through a
consortium of sole traderships (or otherwise 1-person businesses), rather than
through a coop.

~~~
zonidjan
Yeah, I would think the biggest benefit here would be insurance/benefits (and
possibly taxation) related, which doesn't seem to be mentioned at all.

~~~
stakhanov
If you want to be taxed and treated for insurance purposes like an employee,
you can always incorporate as a sole-person Inc or Ltd or GmbH and hire
yourself as the sole employee. Granted: There are some overheads having to do
with annual accounts etc where it would be beneficial if those overheads could
be distributed over more than one employee, but the more you earn the less
that will matter in proportion to your earnings.

But, on the whole, you will have more opportunities at saving on taxes as a
business than as an employee and more opportunities to "slip through the
cracks" of the system when your business is so small that the tax authorities
can't be bothered paying as close attention to it as they otherwise would.

~~~
servercobra
There’s definitely some overhead but it’s not terrible. I actually have a
startup called Hyke setup and manage mine for a decent monthly fee. My company
is a single member LLC which employs me for a “reasonable” salary and then I
take the extra profit as a distribution. One huge benefit is the distribution
is only taxed at the employee side of FICA taxes (whereas I pay my half and my
company pays the same on salary, same as a freelancer normally pays both
sides) saving me a decently large amount of money. It more than covers what I
pay Hyke and extra fees, even without getting into healthcare or anything.

------
EGreg
What if we replaced reliance on giant corporations with an actually efficient
free market in software, content and services?

GitHub/npm (centralized) has been the closest so far for software, and the Web
(decentralized) has been the closest for content. But what if we could go
further and implement XANADU 2020?

We would at minimum need a globally distributed utility token to allow value
transfers without needing to mess around with merchant accounts and
international payments.

Here is a progressively more detailed architecture of what something like that
would look on a large scale:

[https://qbix.com/whitepaper/whitepaper.html](https://qbix.com/whitepaper/whitepaper.html)

If you read it, please share your thoughts and feedback - whether you like
some things or would want improvements in other things. Especially interested
in whether there is something we missed and the system absolutely won’t work
(eg why would companies pay for open source software if they can just clone it
and even distribute their fork and have their fork compete with it.)

I am a big fan of putting my money where my mouth is, so we are actually
building this ecosystem.

------
mkolodny
To anyone who has been part of a worker cooperative:

Does the amount of money different people make in your cooperative seem fair?
How do you handle situations where one person seems to contribute a lot more
to the cooperative than others (say they bring in bigger clients, or they're
more skilled)?

~~~
adzicg
I’m part of a four-person consultancy and we have a transparent deal on profit
sharing for projects, depending on who does what part. We adjust the deal
every few years when the nature of work changes, so it’s an ever evolving
thing, but my feeling is that as long as everything is transparent, and can be
changed if someone feels it’s getting unfair, people will be happy.

------
TheMagicHorsey
I think cooperatives are very important. Open source development is a kind of
cooperative effort ... without the formality.

Having said that, human organization issues are often the downfall of
cooperatives for highly compensated and highly skilled labor.

One of the reasons programmer cooperatives don't last more than 2-4 years is
because the best ones bring in the best clients, and the other programmers
start to free ride. Apart from this, the best programmers also often get
poached by other organizations ... either through employment or through direct
contracts.

In practice, I think the biggest value cooperatives bring in a country like
the US is that they can provide healthcare and retirement plans through scale,
which would not be available to an independent freelancer.

The explosion of online communities and meetups in the last decade has made
the other benefits of cooperatives (like camaraderie, reputation management,
client sourcing, and knowledge sharing) less valuable.

------
MCKapur
Holy shit this is awesome, thanks so much. I'm starting a creator
collective/technology studio and this is a great resource.

------
yalok
I didn’t find anything about health insurance in this doc - is it possible to
get a group plan for such a cooperative? Individual insurance plans are
usually 20-30% more expensive...

~~~
shaunxcode
This is precisely why universal health care is such an exciting proposition! I
think if we get it there will be a massive influx of alternatives to
traditional job complexes/remuneration models.

------
mbeex
The document is 10 years old. Many things have changed. I'm not a US citizen
(apparently the target group), but somehow I doubt that such an old text would
adequately reflect this.

~~~
johnfactorial
I would love to know more, anything specific that has changed which you think
will render some of this old text obsolete?

~~~
mbeex
Commissioning and procurement have changed a lot here in Germany, accompanied
by stricter and even nonsense regulations regarding for example disguised
employment (Scheinselbstaendigkeit), a problem even in other jurisdictions
(IR35 in GB for example).

As I wrote, I don't know the current situation in the US well enough to deduce
more than guesswork from it. Here, at least, it has a great impact on
someone's choice of the right organizational form. Cooperatives are not out of
the question, but you have to consider some newer factors to do it right.

------
jawns
If anybody has already done the ground work and is looking for people to join
an existing worker cooperative, please post here as well!

Or if you know of any resources that help you find others with whom you might
start a co-op, that would be great. (If that doesn't exist, I might be able to
help. It shouldn't be too difficult to spin up an interest form that might
help people connect.)

~~~
Co_Reentry
I am part of a cooperative called Tribe Works
([https://tribeworks.io](https://tribeworks.io)). We are currently in beta but
definitely looking for new members!

------
mprev
I was involved, briefly, in the worker cooperative scene in the late 90s in
the UK. One was an ISP but the rest I interacted with were non-tech.

I loved the idea but the practice always seemed so far from the ideal. What I
saw were one or two people in a cooperative make things happen (whether
through initial founding, finding business, doing the boring stuff that make a
business actually happen, or simply doing customer work) and then others would
put in a similar amount of effort to a normal job but get an equal share in
the rewards as the one or two people driving the whole thing.

I'm not saying that typical businesses today are ideal or fare. However,
worker cooperatives seemed no less fair than other forms of business; it's
just that they were unfair in different ways.

I'm still a fan of the co-op model but it brings with it its own set of
challenges.

------
bloudermilk
Great to see this posted here! I read this and several books about
cooperatives last year with the intention of growing my small software
consulting business into a cooperative. If anyone is interested in this topic
and wants further reading, let me know!

------
conbandit
What is the long term growth strategy for worker cooperatives? How do you
scale them?

~~~
smadge
A lot of people are saying that you don’t have to grow workers coops and they
can (with the implication that they should) remain small. A counter example is
the Mondragon Corporation, which is a worker coop/federation of worker coops
which employs 75,000 people.

~~~
sespindola
Also here in Argentina we have Banco Credicoop, which is a credit union with
more than 670,000 members.

[https://en.wikipedia.org/wiki/Banco_Credicoop](https://en.wikipedia.org/wiki/Banco_Credicoop)

------
droptablemain
Excellent. I've been longing to start a small/lean cooperative for years.
Looks like a solid resource. Now if I could just find some partners...

------
cat199
cooperatives seem great.

relatedly:

not sure why we don't create 'partner firms' a-la attorneys - the model seems
a good fit.

------
EGreg
Finally, there is talk of economic models in software development!

Valve software is an example of a software developer’s “cooperative” though
you’d probably call it anarcho-syndicalist, instead of socialist. They wrote a
great blog about it:

[http://blogs.valvesoftware.com/economics/why-valve-or-
what-d...](http://blogs.valvesoftware.com/economics/why-valve-or-what-do-we-
need-corporations-for-and-how-does-valves-management-structure-fit-into-
todays-corporate-world/)

The Internet has disrupted many economic models and affected society and even
democracy (journalism, social networks). Automation reduces the demand for
human labor. We have to have conversations about better solutions.

At my own startup, we constantly explore the intersection of technology,
sociology and economics. Years ago, we explored proper compensation models
using the socialist (not communist) principle “from each according to their
ability, to each according to their _contribution_ ”

[https://qbix.com/blog/2016/11/17/properly-valuing-
contributi...](https://qbix.com/blog/2016/11/17/properly-valuing-
contributions/)

And now, we are working on a utility token to power a decentralized “free
market” of web software that emphasizes collaboration and re-use over
competition and duplication. Would be happy to get feedback on the actual
implementation and economics, as we will be going live with it soon. Here is
the link:

[https://qbix.com/whitepaper/whitepaper.html](https://qbix.com/whitepaper/whitepaper.html)

 _PS: to the downvoters: The above is open to feedback and revision. Instead
of simply downvoting, why not click the link and read it, and offer a scathing
critique? Again, we are trying to make sure this leads to an efficient and
fair market in software development, and if we missed something, we would
appreciate any feedback that involves words :)_

~~~
0xcde4c3db
Part of the downvotes might be related to the fact that there's been a lot of
skepticism/cynicism/backlash around Valve's allegedly flat management
structure. Multiple ex-employees have said that while there are no formal
"boss" roles, the company has evolved a _de facto_ manager class with whom one
must ingratiate themselves to even have a semblance of job security, let alone
materially affect the direction of the company.

[https://www.pcgamer.com/ex-valve-employee-describes-
ruthless...](https://www.pcgamer.com/ex-valve-employee-describes-ruthless-
industry-politics/)

[https://www.wired.com/2013/07/wireduk-valve-jeri-
ellsworth/](https://www.wired.com/2013/07/wireduk-valve-jeri-ellsworth/)

[https://news.ycombinator.com/item?id=20099167](https://news.ycombinator.com/item?id=20099167)

~~~
EGreg
OK, I had mostly mentioned valve first out of humility, but I think _our
company_ Qbix is trailblazing much more interesting economic models. Please
take a look at the whitepaper, and would like some feedback.

------
danceparty
Important things that are actually accomplishable.

------
dylanler
This is an interesting idea. I wonder how this will coexist with UBI. Someone
tweet this to Andrew Yang!

------
whalesalad
Sounds like a recipe for disaster.

~~~
dang
" _Please don 't post shallow dismissals, especially of other people's work. A
good critical comment teaches us something._"

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

