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A Technology Freelancer's Guide to Starting a Worker Cooperative [pdf] (techworker.coop)
463 points by johnfactorial 9 days ago | hide | past | web | favorite | 82 comments





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). 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) 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)


Has anyone looked into creating a cooperative data labeling service similar to Scale AI, except where labels are owned by the people who created them? Perhaps this might even increase label quality by aligning the interests of the labelers with the people who use them?

I'm very interested in answers to this question as well. I'm working near this space and have a lot of thoughts on what such a service would need to be successful, at least for image tasks. I think it could offer real value to the work forces that complete data labeling tasks, cutting out middleman companies with worker-owned labeling and marketplace software tools.

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?

I'd contact Richard D. Wolff about what to do next.

https://www.rdwolff.com/contact2


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

SF. We are a fully remote company though.

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

Which country ? you probably want to talk to the local coop movement in your country about how they are setup

I'm already in touch with the folks at usworker coop. Just attended their seminar on Friday.

This sounds rad! Feel free to reach out if you want to chat about it joseph at tribeworks.io

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.savvy.coop/, among others. For more details about Platform Cooperatives, see https://platform.coop/, https://ioo.coop/ and https://start.coop/

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.


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

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

Well said. Alternativ ownership models are no panacea and definitely not a guarantee of good software.

Thanks for mentioning this.

As I look at things like Uber and YouTube and Twitch, it reminds me of a friend's definition of Web 2.0: "You do all the work, we take all the money." Given the history of business, there's no reason to think VC-funded platforms will do anything other than extract maximum cash. Great for VCs and execs, not so great for the people doing the work.

I've been thinking about what those companies might look like if they were truly centered on workers and creators from the get go. Sounds like the platform coops are thinking along the same lines.


How do platform coops differ from traditional member-owned coops? Or is it just a specialized type of member-owned coop?

Platform cooperatives in my opinion are just another name for a cooperative who conducts the bulk of their business online. this can be a worker cooperative (https://www.upandgo.coop/), a multi-stakeholder cooperative (https://www.savvy.coop/) or even a producers cooperative (stocksy.com). I think the term is actually a bit arbitrary. The more important thing to think about is a) who owns the equity, b) how does the business make money c) how do the members participate.

Why do you need a new term?

Well _I_ don't need a new term lol. The term was popularized by folks at the New School who brought people together under the name platform.coop. I actually think it is a bit problematic, because it creates a false narrative around the utility of a service. My biggest fear is people saying we should just make a "co-op version of X company". I think that doesn't really work in real life. Cooperatives are businesses first and foremost. They exist in the market and are not immune to market factors including competition. I would much rather people think about the value they are bringing to people first then build a structure around it that matches the value. IE basic stakeholder theory but baked into every facet of a business (including it's equity structure).

Why doesn't the phrase "we should make a co-op version of X company" fit well with the platform coop model? Or rather, the focus on employee happiness is a product all its own. Just like consumers are willing to pay higher prices for "organic" produce, simply being a coop is a product feature.

Yes, competition (from corporations) means it's not enough to say "we're a co-op" if the product doesn't actually work, but well-funded corporate competition could clone any feature that isn't linked to a more egalitarian equity structure. My "co-op for Doordash but we don't steal tips" is far harder to copy, business-wise than "co-op for Doordash, but with a 'food me now' button that picks food for me".


Sorry maybe I wasn't clear. I don't mean to say that there should not be a focus on member (employee or otherwise) happiness. Actually quite to the contrary. Co-ops do a much better job of aligning incentives for all stakeholders (especially worker-coops in the case of employees) and most track engagement as a business metric. I totally think that simply being a cooperative makes the business model more defensible, I just think it is not the only differentiator needed. So if you are a b2b saas business that just so happens to be structured as a worker-coop or a media outlet that is owned by media producers (https://en.wikipedia.org/wiki/Associated_Press). It just boils down to designing around a business case first, then adding the layer of mutual aid.

In a coop version of doordash the people doing the deliveries would be both employees and members there would be no such thing as individual tip.

Not quite sure you know how coops work - its not just a nice trendy name to put over yet another exploitative "gig" economy


Not sure why you felt the insult was necessary, but yes, that exactly!

Co-op doordash turns the entire concept of tipping on its head, contrary to traditional corporate governance, which has incentive to funnel money to a CEO and a board, compared to a more egalitarian co-op structure.


Um that's a consumer coop and they have been around from almost the start.

What's the difference between a platform coop and a worker coop?

Very little lol. I actually submitted a talk to conference.coop titled "Platform Cooperativism AKA A Worker Co-op with a Website."

But like any cooperative you can expand your membership to include any stakeholder. Users, workers, customers, investors, etc. It is mainly about aligning ownership incentives and control/voice according to whatever the design goals are of the company.


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/ which lists many such co-ops. You can find their chat board at https://community.coops.tech/ Also, in the U.K. 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.


I'm also a member of a tech cooperative in the UK - indeed I've been part of two: - Outlandish - https://outlandish.com/ - Common Knowledge (which I founded) - https://commonknowledge.coop/

I was also at the founding of CoTech (a UK network of tech cooperatives). Common Knowledge are a member.

Happy to answer any questions here or hit me up at alex at commonknowledge.coop for anything further.

In the UK the process of setting up a simple co-operative takes about a month. It's filling in a set of forms on top of a normal company registration and applying to Co-operatives UK for accreditation. Basically no sweat.


Oh, interesting! I was discussing how people might aggregate their data for their own benefit with someone from MIT. I would love to talk to some and see if this idea is valuable.

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

So I've only had time to skim read the intro but it looks like this is all about a worker's co-op of freelancers that carry on doing work on a Freelance basis for clients.

We aren't that - we are one company, with regular employees. Our clients make a contract with the company, not with any one of us, and the staff members that do particular work for a client may change, just like a normal company. (The fact those employees also hold a share and are directors doesn't alter the nature of our contracts with clients).

Will try to read more later.


Ir35?

IR35 is a Inland Revenue Rule 35 (1999) (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.


what about international coops?

people working together in different countries.


Usually cooperatives have to have a base in one country for legal reasons as (sadly) they need some kind of legal recognition.

But in a sense this makes no difference from remote first companies, like Buffer, 37signals or Automattic.


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.


that sounds like a downside of doing work for tech companies. i would certainly not want to be beholden to the whims you mentioned here. besides in some countries, not being able to switch out myself is part of the definition of employment.

what you describe here looks less like freelance consulting but more like staff augmentation for which large businesses exist.

i prefer to work on solutions, and neither people nor headcounts should matter.


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.

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.


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.

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

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.


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)?


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.

We usually work in pairs, and invoice 90% to the coop of the amount that was invoiced to the client. That way everyone manages their own risk, but we can still rely on others if we get stuck, share common practices, etc.

We have flat salaries at Common Knowledge. Our wager is the cooperative as a collective wouldn't exist without everyone working on it, so think it is more fair if everyone earns the same.

However, a lot of other cooperatives have different rates that work around a matrix of: hours worked, skill level and life need. These are democratically decided by the cooperative and tend to also have a pay ratio - e.g. the top earner can only earn 3x from the bottom.

DEV have a nice page on how they work this out - https://www.dev.ngo/join/pay-principles/


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.


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

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...

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.

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.

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

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.


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.)


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

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.


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!

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

There doesn't have to be one I don't think. Like a local farm co-op, it's meant to be sustainable so growth should be slow and natural, and should realistically find a maximum.

That means that certain products/services aren't a good fit. So I think if you are part of one and you have lofty aspirations for what you are working on, you should plan for the day you outgrow the co-op and need to hire a bunch of people.


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.

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


Thanks for the tip. That's really neat.

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


I like the idea of a coop for many reasons, one is that’s it’s not tied to the “must have a huge possibility for growth” any VC backed venture would have

I think the question was just how to handle more people joining. Or perhaps how to scale the practice across society. Both interesting questions IMO, even if not what GP meant.

Depends on your definition of "scale" but mostly the answer is - as others have pointed out - that they are not designed to "scale" in the way many people use that word.

However there are some co-ops who make platform software and questions of "scale" might apply there, so maybe some interesting reading? Check out https://www.loomio.org/ - their company handbook is online somewhere.


You don't. They are there to provide a human friendly system that supports it's members from birth to death.

I’d investigate https://en.wikipedia.org/wiki/Mondragon_Corporation for answers to these questions. It’s interesting for an answer precisely because (as far as I know) it’s an outlier in this space.

While mondragon is a great example of a "scaled" cooperative. There are other (somewhat smaller, but still meaningful) examples. Take Cooperative Home Care Associates (http://www.chcany.org) around 1500 homecare workers in NYC, or the Arizmendi bakeries https://www.arizmendi.coop/ that have 5 bakeries and other businesses all growing and providing living wage jobs in the Bay Area.

We chose to use a holding company model for our cooperative https://www.staffing.coop so that we could have many startups and conversions underneath one holding company worker cooperative.


Imho, The long term goals may be similar to what "normal" companies may have. Cooperatives are just means to an end but generally one may achieve lofty ambitions in any type of organization. The document sums up very nicely the pros and cons of cooperative targeting freelancers. The only thing one has to decide is wether one will reach sustainability in a normal company or in a cooperative - the journeys are two different wild adventures.

In terms of scaling: You may either form a network or join one. I'm part of Europe based digital cooperative and we're starting to do just that https://medium.com/camplight/accelerating-a-global-movement-... :)


Local cooperatives can form networks which operate similar to a conglomerate business, with the network helping to bring in business and direct it to participating coops, or even form supply chains where local coops are providing goods and services to each other.

This allows the complex efficiencies of a capitalist corporation, but allows the people doing the work to retain direct control over their local workplaces and not be beholden to investors.

Mondragon in Spain is the most famous example of this.

As such networks develop, starting a new cooperative venture may become more attractive to some entrepreneurs than a traditional startup, which in turn drives growth of the network.


Cooperatives are a self organizing network effect scaling pattern. They self scale because members are intrinsically motivated to join, humans are pack animals and we like to work together in a village. Very few people want to be entirely alone.

Capitalism is actually very unhealthy from a mental health perspective, so the cooperative model creates the safety net opportunity to take risks and try new things.


You don’t. If you want to grow you either convert into a partnership with the normal up or out mechanism where the only people with a vote are the partners or elsewhere into a for profit company. Worker cooperatives are by and for the day ideologically committed.

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...

cooperatives seem great.

relatedly:

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


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...

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...

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

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 :)


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.wired.com/2013/07/wireduk-valve-jeri-ellsworth/

https://news.ycombinator.com/item?id=20099167


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.

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

Important things that are actually accomplishable.

Sounds like a recipe for disaster.

"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




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