Ask HN: Has anyone tried alternative company models (like a co-op) for SaaS?
116 comments
I work at a worker-owned IT company that has offices in three states and has been in existence for 20 years. We do not provide any kind of SaaS service but I can assure you it is possible! My suggestion is to reach out to the Tech Worker Coop Peer Network for the USFWC:
https://www.usworker.coop/programs/peer-networks/
They will probably have ideas. Good luck!
PS an LLC is definitely a good way to go, but some states (e.g. NY, MA, CA, MN, etc) have dedicated worker coop company types you can create.
https://www.usworker.coop/programs/peer-networks/
They will probably have ideas. Good luck!
PS an LLC is definitely a good way to go, but some states (e.g. NY, MA, CA, MN, etc) have dedicated worker coop company types you can create.
You might be interested in Subvert, a group of people (formerly?) from Bandcamp that are now founding a worker-/artist-owned version of Bandcamp and launching the platform soon. They basically want to avoid running into the same issues that came with Bandcamp’s recent ownership changes and the instability and worker-facing hostilities around it.
They also published a magazine explaining their thinking behind the setup, etc. – you can find out more on their website: https://subvert.fm/
Could be interesting to check out, even if just for inspiration or fun.
They also published a magazine explaining their thinking behind the setup, etc. – you can find out more on their website: https://subvert.fm/
Could be interesting to check out, even if just for inspiration or fun.
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I established a limited liability company (LLC) for a business venture initiated with friends. My objective was to ensure that all contributors received a fair share of the equity while maintaining a simplified structure for tax purposes. Additionally, I wanted to ensure that equity shares did not confer voting rights, functioning instead as profit-sharing interests. Legal counsel assisted in structuring the entity as a single-member LLC, where I am the sole owner, with profit-sharing units allocated to other contributors. This arrangement entitles contributors to a defined percentage of the company’s profits and proceeds from events such as a sale of the company.
My only regret is that I spent a lot of money on legal fees and the company ended up not being profitable so a lot of the work went to waste. But now I can re-use the structure again if I wish to create a new venture.
My only regret is that I spent a lot of money on legal fees and the company ended up not being profitable so a lot of the work went to waste. But now I can re-use the structure again if I wish to create a new venture.
I wish more people know about profit sharing interests.
I was a part of a startup that offered profit sharing interests. When I joined the profit was X and left it was Y. I received a check for my percentage of the growth in profit. It felt pretty fair.
There was a relatively direct incentive to impact the company bottom line and I didn’t have to wait for the company to exit to get compensated.
I was a part of a startup that offered profit sharing interests. When I joined the profit was X and left it was Y. I received a check for my percentage of the growth in profit. It felt pretty fair.
There was a relatively direct incentive to impact the company bottom line and I didn’t have to wait for the company to exit to get compensated.
Specifically, annual profit not valuation? So if the company had not become more profitable, you get nothing?
Not OC but yes that’s what profit sharing is. You see it in businesses where investment back into the business doesn’t yield much, like sales or recruitment companies, so better to redistribute the profits back to the shareholders, the employees being a major shareholder.
You do this if the founder is not trying to hyper grow and sell the company but is rather content with dividend producing asset.
You do this if the founder is not trying to hyper grow and sell the company but is rather content with dividend producing asset.
That's interesting, but I was thinking something possibly even farther. That the members of the co-op are the people that pay for the SaaS itself. Essentially the yearly fee is "dues" towards the organization.
Technically this is a consumer cooperative rather than a worker cooperative model.
But what you described truly is the most direct way to align the interests of stakeholders/users with the direction of the company/product. A downside I think in this case is that it becomes even more imperative to know who your “customers” are, as pivoting will be quite difficult.
But what you described truly is the most direct way to align the interests of stakeholders/users with the direction of the company/product. A downside I think in this case is that it becomes even more imperative to know who your “customers” are, as pivoting will be quite difficult.
Perhaps this is closer to Vanguard's ownership model, i.e. that Vanguard is an investment management company that is owned by its funds' shareholders?
I definitely think there is a way to make this viable at small scale in a tech/SaaS context. But to survive and grow to larger scale, I think you basically have to ensure your business following this model is not "too profitable" or else someone will want to crush and replace you, and hoard the profits for themselves.
It's kind of forgotten about now, but it's a bit of a minor miracle that Vanguard's unusual structure survived the early days, then grew to become an investing behemoth. I suppose the reason nobody tried to kill Vanguard to steal their customers is because the business model was pretty boring and profits were unsexy enough that others just let them do their thing (I mean, low cost index funds, and the boring type of customers attracted to them? Talk about a ceiling on profits, compared to what a more adventurous fund manager could make elsewhere selling a typical 2-and-20 deal to greedier customers...).
I definitely think there is a way to make this viable at small scale in a tech/SaaS context. But to survive and grow to larger scale, I think you basically have to ensure your business following this model is not "too profitable" or else someone will want to crush and replace you, and hoard the profits for themselves.
It's kind of forgotten about now, but it's a bit of a minor miracle that Vanguard's unusual structure survived the early days, then grew to become an investing behemoth. I suppose the reason nobody tried to kill Vanguard to steal their customers is because the business model was pretty boring and profits were unsexy enough that others just let them do their thing (I mean, low cost index funds, and the boring type of customers attracted to them? Talk about a ceiling on profits, compared to what a more adventurous fund manager could make elsewhere selling a typical 2-and-20 deal to greedier customers...).
So you mean a customer? Why do you want them to own it? Just open source it if you want to share without building a business.
Customer owned co-operatives are an established business model. First one was founded in Rochdale, England, in 1844, and is still operating today as a convenience chain called simply "Co-op", across the UK.
The main advantage to this is that it gives customers incentive to support the business financially, not just take the assets. You can still have cashflows in way that don't exist in open source models, and around products that can't be open sourced (like loafs of bread, pints of milk, as per the Co-op model).
The main advantage to this is that it gives customers incentive to support the business financially, not just take the assets. You can still have cashflows in way that don't exist in open source models, and around products that can't be open sourced (like loafs of bread, pints of milk, as per the Co-op model).
SWIFT is the cooperative of banks, for instance.
Open source just gives away the code, without setting up resources for the people who work on it. If I charge for the service, which is owned by the members, I could presumably pay upkeep (hosting, dedicated workers...etc).
As far as I know this is how places like REI or some groceries work. They are essentially customer owned. I'm not an expert in this, which is why I was asking for advice.
As far as I know this is how places like REI or some groceries work. They are essentially customer owned. I'm not an expert in this, which is why I was asking for advice.
I don’t believe this is a great representation of REI. My understanding of REI, as a member, is that rather than holding shares, I receive a dividend relative to what I spend in each year, and I have access to certain perks, but I cannot elect board members and I cannot earn any additional power through working or volunteering labor for the organization
REI Board elections are open to all members. In the last election the REI union recommended not voting for all of the incumbent board members due to their hostility towards the union.
However I believe the board nomination process used to be open, but now only board members can nominate people for a board seat
However I believe the board nomination process used to be open, but now only board members can nominate people for a board seat
The person directing you to the tech coop peer group is a spot on. There are many ways of doing this, but IMHO it ultimately comes down to writing bylaws for an organization that dictate how resources are accumulated and distributed, and evaluating the associated incentives and dynamics generated by those rules.
This is a beautiful vision, but I think it would be hard implement in practice. I’m trying to imagine how a pitch like this might work. Do you offer the customer/members some kind of profit sharing? A discount on future services?
Given that customers often want to avoid lock-in on any purchasing decision, it seems hard to build a service that has a larger up front psychological and legal commitment. I love the idea of getting bonus points in life for building structures with collaborative ownership, but realistically most people and businesses only want a simple “buy a service that I can cancel” relationship.
That said, I'd love to see someone try it! I think it could work well in a niche environment, or something like a Kickstarter where people feel they helped bring something into being.
Given that customers often want to avoid lock-in on any purchasing decision, it seems hard to build a service that has a larger up front psychological and legal commitment. I love the idea of getting bonus points in life for building structures with collaborative ownership, but realistically most people and businesses only want a simple “buy a service that I can cancel” relationship.
That said, I'd love to see someone try it! I think it could work well in a niche environment, or something like a Kickstarter where people feel they helped bring something into being.
I think my (and other) Community Supported Agriculture (CSA) farms would disagree with you.
I buy shares in the farm per my needs. The CSA takes my money and buys seeds, fertilizer, etc. I get discounted (100% :-) products from them throughout the growing season. They also sell their goods at farmers' markets, do deliveries, etc. My CSA has been growing for years. They're a part of a larger co-op org that spans the NE US, IIUC.
So yes, the "beautiful vision" can be, and is, implemented. Even in tech; I'm sure you've heard of neighbors getting together and building their own local networks because the local ISP won't service them.
I buy shares in the farm per my needs. The CSA takes my money and buys seeds, fertilizer, etc. I get discounted (100% :-) products from them throughout the growing season. They also sell their goods at farmers' markets, do deliveries, etc. My CSA has been growing for years. They're a part of a larger co-op org that spans the NE US, IIUC.
So yes, the "beautiful vision" can be, and is, implemented. Even in tech; I'm sure you've heard of neighbors getting together and building their own local networks because the local ISP won't service them.
I love it when tech people are like "this isn't remotely possible", and it's like... happening at the farmer's market already lol.
And credit unions, and mutual insurance companies, and on and on. I love this commenter who cannot imagine a customer that has an ownership stake in a business or why anyone would want that. No time to think, too much uninformed posting to be done:
https://news.ycombinator.com/item?id=42748956
https://news.ycombinator.com/item?id=42748956
We’re talking specifically about a SaaS app in this post. I’m well aware of this working at small local levels, and even mentioned in my comment that it might work in niche environments, but I have a hard time believing it would work for a disconnected SaaS app, where there isn’t some larger form of Community bonding people together.
This is exactly how Vanguard works.
>As far as I know this is how places like REI or some groceries work. They are essentially customer owned. I'm not an expert in this, which is why I was asking for advice.
I wouldn't say they work well, though, given the state of REI and grocery customer cooperatives.
I wouldn't say they work well, though, given the state of REI and grocery customer cooperatives.
I would be careful here and think through the governance well, as the time goes those nice customers may end up being bought by your competitor who would want to do everything in their power to destroy your project
While People change, companies change even more as "good people" may leave and even "good owners" may sell the company, in additionally to changing themselves
While People change, companies change even more as "good people" may leave and even "good owners" may sell the company, in additionally to changing themselves
Any chance you'd share the docs for that?
I think the co-op structure makes more sense if your business is local.
For example, I’d love to have a local alternative to Uber/Doordash that was a co-op owned by the drivers and the customers together. 95% of my taxi trips and food delivery are within my home town. I’d love to support a company owned by the drivers who live here, instead of a massive multinational.
Co-ops are pretty successful in many European countries. In Finland, both the largest bank and largest grocery store chain are national co-ops owned by customers. It’s a model that can scale far, even though the big co-ops do develop internal politics very similar to any traditional corporation.
For example, I’d love to have a local alternative to Uber/Doordash that was a co-op owned by the drivers and the customers together. 95% of my taxi trips and food delivery are within my home town. I’d love to support a company owned by the drivers who live here, instead of a massive multinational.
Co-ops are pretty successful in many European countries. In Finland, both the largest bank and largest grocery store chain are national co-ops owned by customers. It’s a model that can scale far, even though the big co-ops do develop internal politics very similar to any traditional corporation.
I agree with the idea of supporting local non-huge businesses that still (need to) for their customers. But I think the coop concept works for more spread-out organizations as well, especially when it comes to digital services. As you mentioned, some big organizations like banks and grocery stores (that operate country-wide or even internationally) exist in Europe. There are also remote-first design/tech cooperatives around.
I’ve heard of such models, but the problem is apparently maintaining quality (from the people I know who have tried this).
Drivers often need firing. How would a co-op approach that?
Drivers often need firing. How would a co-op approach that?
> Drivers often need firing.
Do they? The taxi companies in my small tourist town don't seem to have problems with reliable drivers. Makes me think that there is a retention problem with Uber-style work environments more than an inherent problem with people who drive for a living.
Do they? The taxi companies in my small tourist town don't seem to have problems with reliable drivers. Makes me think that there is a retention problem with Uber-style work environments more than an inherent problem with people who drive for a living.
Let me speak as someone who was a delivery driver for over 10 years for an array of different restaurants.
With advent of ubiquitous GPS navigation came a wave of some the dumbest most functionally inept people I have ever encountered. There was a time when you had to be able to read a map and plan routes. But as soon as GPS showed up, anyone who could drive and enter and address in their phone was good to go making way more than other high school dropout work.
The biggest issue though is drug addicts. Lots and lots of drug addicts. It's an easy money job that you can smoke up/snort up/shoot up while doing. These guys are shameless and will be high off their ass driving around.
With advent of ubiquitous GPS navigation came a wave of some the dumbest most functionally inept people I have ever encountered. There was a time when you had to be able to read a map and plan routes. But as soon as GPS showed up, anyone who could drive and enter and address in their phone was good to go making way more than other high school dropout work.
The biggest issue though is drug addicts. Lots and lots of drug addicts. It's an easy money job that you can smoke up/snort up/shoot up while doing. These guys are shameless and will be high off their ass driving around.
“Drivers often need firing.” – is that a given fact or would a small coop perhaps do better selection and/or training of drivers to create a high retention? This is a recurring scheme of cooperatives as well: longevity and people-centric thinking. While the standard business might toss out people without thinking twice, coops might approach these kinds of issues with more creativity and resourcefulness.
> would a small coop perhaps do better selection and/or training of drivers to create a high retention?
This is wishful thinking. They might reduce the amount of firings needed, but you can't spot in advance all the people who will slack off or cause problems given the chance. Not unless you're a literal god.
This is wishful thinking. They might reduce the amount of firings needed, but you can't spot in advance all the people who will slack off or cause problems given the chance. Not unless you're a literal god.
It’s not just about hiring people who care to begin with, but caring for the business is much more natural if you’re a co-owner and can directly benefit from the organization’s success. Compare that to the gig economy where workers are worn down, paid as little as possible, and thrown out at a whim. In worker-owned businesses, workers are more motivated and more retained (there are also studies around this, afaik).
That "caring" a coop member has gets prioritized after addiction, health issues, family obligations, and so on.
You still need a mechanism for dealing with workers that e.g. just don't show up. You also need that mechanism for co-owners of an LLC, and so on.
You still need a mechanism for dealing with workers that e.g. just don't show up. You also need that mechanism for co-owners of an LLC, and so on.
That literally does not address my point at all. By including words like "more" rather than "always" you're basically admitting that there are non-zero circumstances where workers don't care or don't stay, which is all the point I made. You could justifiably quibble with "often", but you absolutely will not get away without a firing process.
I’m not saying these problems are non-existent in co-ops, but that the underlying attitude and mechanisms (co-ownership, more communication on eye level, generally smaller scope) help making co-ops more robust for these situations of “mismatching expectations”. Of course, people might need to leave or get kicked out of co-ops for various reasons and there are ways to manage that as well.
It’s also not a competition about who can win the argument: I think we’re both making our points and it seems like you have a more pessimistic (realistic?) idea of who the workers are. My experience with co-ops is anecdotal, of course.
It’s also not a competition about who can win the argument: I think we’re both making our points and it seems like you have a more pessimistic (realistic?) idea of who the workers are. My experience with co-ops is anecdotal, of course.
If you don't have a large pool, you can't provide convenience.
When I order an Uber, I want it now. I won't be waiting 1hr for it.
When I order an Uber, I want it now. I won't be waiting 1hr for it.
As a counterpoint, living in a remote area, scheduling a ride 1h in advance is a lot better than not having a ride at all; that would be plenty to e.g. drop my car off at a mechanic / pick it up, without begging for rides.
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Co-ops, employee owned businesses, and credit unions are antithetical to American ruthless capitalist exploitation. They are economically "inefficient" since they don't maximize the exploitation of their customers.
Also, what good products do any of these groups make (besides credit unions which are superior to traditional banks)? Sure I can go to winco for cheap groceries, but REI isn't exactly the bastion of quality that its buyers pretend it is (their stuff is cheap crap).
The sad reality is that if you, the customer, want a good product, you want the company who makes it to exploit its workers. This is also the real reason why unions died in America. All the US car companies are unionized and that famously caused US company workers circa the late 70s and 80s to be literally drunk/high on the job all the time (see https://en.wikipedia.org/wiki/Fremont_Assembly) Meanwhile most Japanese car factories aren't unionized, and you get literally the most reliable and best fit/finish in the industry from doing it.
Also, what good products do any of these groups make (besides credit unions which are superior to traditional banks)? Sure I can go to winco for cheap groceries, but REI isn't exactly the bastion of quality that its buyers pretend it is (their stuff is cheap crap).
The sad reality is that if you, the customer, want a good product, you want the company who makes it to exploit its workers. This is also the real reason why unions died in America. All the US car companies are unionized and that famously caused US company workers circa the late 70s and 80s to be literally drunk/high on the job all the time (see https://en.wikipedia.org/wiki/Fremont_Assembly) Meanwhile most Japanese car factories aren't unionized, and you get literally the most reliable and best fit/finish in the industry from doing it.
"In fact, there are about 30,000 co-ops in the U.S., which account for more than $3 trillion in assets, more than $500 billion total revenue, and more than 2 million jobs, according to figures from the National Cooperative Business Association."
https://www.businessinsider.com/co-ops-business-plan-2011-10
https://www.businessinsider.com/co-ops-business-plan-2011-10
Fwiw- REI is not a workers coop, it is owned by its customers who have a say in the operation in proportion to how much they spent. So in theory at least your interests are aligned.
I'll also add that if the excess profits are going to shareholders than I do not care about the labor savings a company gets by exploiting their workers.
I'll also add that if the excess profits are going to shareholders than I do not care about the labor savings a company gets by exploiting their workers.
I developed a SaaS business to fund a nonprofit foundation, which is a little different from your situation.
The key thing was to keep the SaaS-y bit as boring as possible, which meant a corporation. This is in Europe but the equivalent would be Delaware C corp.
Shares in the corporation were then given to the wrapping organization (in my case the foundation, but this could be more-or-less any legal structure that can have assets). Downside is two sets of accounts, upsides are that M&A gets a ton easier later on, and taking on employees is simple and not colored by the legal quirks of the parent organization. The potential complexity of SaaS accounting (revenue recognition, R&D credits, etc) is also kept inside a simple, normal corporation which every CPA is super-familiar with, so you're not consulting niche experts every time something new comes up.
I advise a quick consult with a tax lawyer before doing anything, because it's easy to say you'll deal with this later but some changes have unforeseen implications if not done at the outset. (I punted on some of the setup for a year while I focused on finding product/market fit, and that turned out to be a mistake that the lawyers had to fix at some cost. A year more and it might have become unfixable.)
The key thing was to keep the SaaS-y bit as boring as possible, which meant a corporation. This is in Europe but the equivalent would be Delaware C corp.
Shares in the corporation were then given to the wrapping organization (in my case the foundation, but this could be more-or-less any legal structure that can have assets). Downside is two sets of accounts, upsides are that M&A gets a ton easier later on, and taking on employees is simple and not colored by the legal quirks of the parent organization. The potential complexity of SaaS accounting (revenue recognition, R&D credits, etc) is also kept inside a simple, normal corporation which every CPA is super-familiar with, so you're not consulting niche experts every time something new comes up.
I advise a quick consult with a tax lawyer before doing anything, because it's easy to say you'll deal with this later but some changes have unforeseen implications if not done at the outset. (I punted on some of the setup for a year while I focused on finding product/market fit, and that turned out to be a mistake that the lawyers had to fix at some cost. A year more and it might have become unfixable.)
Reach out to the NWCDC (https://nwcdc.coop/) or NCBA (https://ncbaclusa.coop/) for resources on how to draft bylaws and structure a worker-owned business that meets your needs. In my experience, they're extremely passionate, knowledgeable and helpful.
Thanks. I didn't know about either of these groups.
I am co-founder of a residential trash collection cooperative: seegull.org I started in 2022. Bought a trash truck last year and we start picking up earnestly in May. We’re both part time cause we don’t have enough business yet to be full time.
No two cooperatives operate exactly the same and you should think about it more like a family than a business. It’s not a purely transactional thing I’m not keeping track of inflows and outflows because I don’t have anybody else to report to other than my cofounder and we treat it like a family business.
Really the only thing you have to keep in mind is that the single thing that makes you cooperative is that there is no distinction between worker and owner.
Depending on your state there are some obscure tax codes that make your org legally a “cooperative” but that doesn’t really mean anything because you’ll be taxed on revenue like everyone else
So you could set it up as an LLC and then within that LLC you run it as equal distribution based on whatever the cooperative agreement is between all the parties.
In our case there is no equity, there’s no assignment of shares, there’s nothing to cash out. Revenue comes in and is used for operations and then distributed to whomever did the work.
For a SaaS because capex is low you have a ton of options, but again if people join your org who want to make money or get rich, then the cooperative will eventually just turn into another company.
One of our new marketing efforts is: we have a brief weekly ops call that we’re just sharing only two so far: https://open.spotify.com/show/4jekdwCcjWKYJd7NSh6KlA?si=eFEI...
At the end of the day a cooperative is about creating an alternative and equitable social group of mutually supportive people, and the way you sustain it is secondary but important
If you start it as a money making enterprise then you will eventually turn into fully into a money making enterprise
However if you start as a social group that has a reason for existence more deeply rooted than financial gain, then you might actually have something that survives.
No two cooperatives operate exactly the same and you should think about it more like a family than a business. It’s not a purely transactional thing I’m not keeping track of inflows and outflows because I don’t have anybody else to report to other than my cofounder and we treat it like a family business.
Really the only thing you have to keep in mind is that the single thing that makes you cooperative is that there is no distinction between worker and owner.
Depending on your state there are some obscure tax codes that make your org legally a “cooperative” but that doesn’t really mean anything because you’ll be taxed on revenue like everyone else
So you could set it up as an LLC and then within that LLC you run it as equal distribution based on whatever the cooperative agreement is between all the parties.
In our case there is no equity, there’s no assignment of shares, there’s nothing to cash out. Revenue comes in and is used for operations and then distributed to whomever did the work.
For a SaaS because capex is low you have a ton of options, but again if people join your org who want to make money or get rich, then the cooperative will eventually just turn into another company.
One of our new marketing efforts is: we have a brief weekly ops call that we’re just sharing only two so far: https://open.spotify.com/show/4jekdwCcjWKYJd7NSh6KlA?si=eFEI...
At the end of the day a cooperative is about creating an alternative and equitable social group of mutually supportive people, and the way you sustain it is secondary but important
If you start it as a money making enterprise then you will eventually turn into fully into a money making enterprise
However if you start as a social group that has a reason for existence more deeply rooted than financial gain, then you might actually have something that survives.
Man, I love HN so much. This is really freaking cool. I have an app idea related to cleaning up litter. This makes me want to build it even more. Thanks for posting.
I've looked at this for years, and have my (basically defunct) attempt at it over at mutual.email - the idea was customer owned email (+etc) service.
The main idea was to make a service covering people's "workspace" needs (comms, documents, collaboration etc) which would place things like data governance under end user control, mostly on the assumption that given the choice, people would never agree to having their data mined by eg, Google.
In practice I wasn't really ready for it, but doing this kind of thing as a co-operative society with worker or member ownership is a fabulous idea and one I'd love to see come to fruition.
A lot of the pitfalls I've seen from surveying not just my own attempt but other people's is that getting your initial collaborators on board is hard, and keeping a culture that promotes change rather than stagnation is even harder. Lots of coops in the email and hosting space show this: they'll sweat hardware way past when it is economical or sensible to do so, and are generally averse to raising cash to invest in the business. Customers go to them and pay a premium because they want something "ethical", which lets them off the hook for being uncompetitive. The spiral continues, tightening until the service is so poor and prices so high that literally nobody wants it anymore. My suggestion is whatever you do, avoid that situation: investment starvation kills coops.
The main idea was to make a service covering people's "workspace" needs (comms, documents, collaboration etc) which would place things like data governance under end user control, mostly on the assumption that given the choice, people would never agree to having their data mined by eg, Google.
In practice I wasn't really ready for it, but doing this kind of thing as a co-operative society with worker or member ownership is a fabulous idea and one I'd love to see come to fruition.
A lot of the pitfalls I've seen from surveying not just my own attempt but other people's is that getting your initial collaborators on board is hard, and keeping a culture that promotes change rather than stagnation is even harder. Lots of coops in the email and hosting space show this: they'll sweat hardware way past when it is economical or sensible to do so, and are generally averse to raising cash to invest in the business. Customers go to them and pay a premium because they want something "ethical", which lets them off the hook for being uncompetitive. The spiral continues, tightening until the service is so poor and prices so high that literally nobody wants it anymore. My suggestion is whatever you do, avoid that situation: investment starvation kills coops.
Hey Dave,
Glad you're still doing cool things :)
Read the Docs is pretty much all open source, including the billing code (https://github.com/readthedocs/readthedocs.org/blob/main/rea...), but we are structured like a normal company, with some custom bylaws that protect the OSS codebase if ownership changes hands. We haven't found anyone else setting up a competing instance or anything, but that might also be because the product is kind of niche.
I kinda love the idea of having people in the community that use the service have some kind of ownership over the platform. It would likely lead to longer term loyalty of the userbase, which would help keep the project sustainable and avoid the enshittification cycle.
We've played around with sharing ad revenue that we generate on documentation pages split with the projects, which is partially a win/win way of sharing in the upside of success.
Anyway, I don't have a great answer here, but wanted to say hi, and give a bit of context from our place in the world.
PS: You might also talk with the folks here: https://zebrasunite.coop/ -- they are structured like a co-op and mostly come from the tech/design community.
Glad you're still doing cool things :)
Read the Docs is pretty much all open source, including the billing code (https://github.com/readthedocs/readthedocs.org/blob/main/rea...), but we are structured like a normal company, with some custom bylaws that protect the OSS codebase if ownership changes hands. We haven't found anyone else setting up a competing instance or anything, but that might also be because the product is kind of niche.
I kinda love the idea of having people in the community that use the service have some kind of ownership over the platform. It would likely lead to longer term loyalty of the userbase, which would help keep the project sustainable and avoid the enshittification cycle.
We've played around with sharing ad revenue that we generate on documentation pages split with the projects, which is partially a win/win way of sharing in the upside of success.
Anyway, I don't have a great answer here, but wanted to say hi, and give a bit of context from our place in the world.
PS: You might also talk with the folks here: https://zebrasunite.coop/ -- they are structured like a co-op and mostly come from the tech/design community.
Hey Eric! I think of you whenever I open Python documentation and see some of my old work!
That's good to know that at least I'm not crazy for also open sourcing the billing code. I feel less worried.
That's good to know that at least I'm not crazy for also open sourcing the billing code. I feel less worried.
I predict this will be the future for many industries.
Shifting to worker cooperatives and innovation on the business ownership side.
Imagine Amazon as a coop?
Shifting to worker cooperatives and innovation on the business ownership side.
Imagine Amazon as a coop?
There's a lot of potential and precedence even if there isn't much discussion. It's clear that while people may not always like the market for needs like housing and healthcare, they strongly prefer it for consumer goods and services. A cooperative is a way to engage with the market without running into the problems of large for-profit enterprises.
The hard parts are:
1. capitalization - once you have investors who have more say than employees, it's no longer very cooperative
2. legal - the structures for for-profit or hierarchical non-profits are well defined and there are any number of experienced law firms that can help structure a business, while for a cooperative not so much
3. structural - there are a thousand books published every year about for-profit businesses. There are comparatively few about starting and running a cooperative. Although the latter have more signal than the noise of the former.
These aren't insurmountable problems, though. They've been solved before.
| Amazon as a coop
A cooperative Amazon would probably work best as a federation of cooperatives.
The hard parts are:
1. capitalization - once you have investors who have more say than employees, it's no longer very cooperative
2. legal - the structures for for-profit or hierarchical non-profits are well defined and there are any number of experienced law firms that can help structure a business, while for a cooperative not so much
3. structural - there are a thousand books published every year about for-profit businesses. There are comparatively few about starting and running a cooperative. Although the latter have more signal than the noise of the former.
These aren't insurmountable problems, though. They've been solved before.
| Amazon as a coop
A cooperative Amazon would probably work best as a federation of cooperatives.
I was a co-owner of the Park Slope Food Coop, I believe the countries oldest and largest cooperative grocery store.
We have about 18,000 owners, everyone had to work a 4 hour shift every month, and we did something like $50MM in annual revenue competing directly with whole foods.
We would also provide training, startup capital and member labor to people who wanted to start their own coop.
I always felt like a well organized group could take over the PSFC and create a new tech model and then scale from within the existing democratic infrastructure.
We have about 18,000 owners, everyone had to work a 4 hour shift every month, and we did something like $50MM in annual revenue competing directly with whole foods.
We would also provide training, startup capital and member labor to people who wanted to start their own coop.
I always felt like a well organized group could take over the PSFC and create a new tech model and then scale from within the existing democratic infrastructure.
Tom Thomison has been making alternative formation/governance models his life's work: https://www.encode.org/powershift-ecosystem
One of the many mechanisms they developed is the "Dynamic Equity Framework" where ownership is designed to be fluid and adaptive. Contributions of work, capital, or other resources translate into ownership stakes in fair, transparent ways, avoiding traditional hierarchical accumulation of power.
One of the many mechanisms they developed is the "Dynamic Equity Framework" where ownership is designed to be fluid and adaptive. Contributions of work, capital, or other resources translate into ownership stakes in fair, transparent ways, avoiding traditional hierarchical accumulation of power.
I'm also very interested in alternative company/governance models. To me, the traditional company structure seems fairly effective but I don't like the feeling of being an employee. There's an ownership/power dynamic that feels inhumane but fixable.
Before suggesting anything, it would be useful to understand your goals with a co-op structure. What are you trying to improve over the status quo delaware c corp that stripe atlas will setup? Are you planning to take investment?
In terms of solutions, Flexile is an implementation I don't see mentioned yet: https://flexile.com
It seems to be geared towards software companies that might not need everyone as a full-time worker. Not sure how many of these there are. It's by the Gumroad founder.
Before suggesting anything, it would be useful to understand your goals with a co-op structure. What are you trying to improve over the status quo delaware c corp that stripe atlas will setup? Are you planning to take investment?
In terms of solutions, Flexile is an implementation I don't see mentioned yet: https://flexile.com
It seems to be geared towards software companies that might not need everyone as a full-time worker. Not sure how many of these there are. It's by the Gumroad founder.
I founded and run a SaaS technology company for publishers. I think there's a rich vein here that hasn't really been explored.
[Outpost](https://outpost.pub)
We work with pubs like 404Media and Platformer
Incorporated in California.
Happy to answer questions
[Outpost](https://outpost.pub)
We work with pubs like 404Media and Platformer
Incorporated in California.
Happy to answer questions
A 49% employee, 49% customer (b2b or subscription), and 2% CEO/CFO model seems better for a long-term sustainable company, especially for companies providing critical services like Mozilla, Proton, Chrome (if it were divested),etc..
That aside, I think it's important to codify into the incorporation charter or a company as well as share holder agreements that the company will never go public. Or perhaps have a clause that forces dissolution of the company and sell of assets if an IPO ever went through. It makes sense for some companies to be publicly traded but if your intent with a company is to do the public, your employees or customers good, instead of a pure profit play, then even the possibility of an IPO is cancerous.
That aside, I think it's important to codify into the incorporation charter or a company as well as share holder agreements that the company will never go public. Or perhaps have a clause that forces dissolution of the company and sell of assets if an IPO ever went through. It makes sense for some companies to be publicly traded but if your intent with a company is to do the public, your employees or customers good, instead of a pure profit play, then even the possibility of an IPO is cancerous.
I’ve been curious to try starting an Aftok: https://aftok.com/
Yes, I've made LLCs with friends primarily in a profit sharing capacity according to work done as contractors, ie if the company got a client, the ones who worked on that particular project get a split of the profits after company expenses were taken into account.
I've also made and worked on some fully open source projects where the entire stack was open. I don't believe in those source avaliable licenses because you either believe in your abilities on the business side or you don't; if someone can take the exact same product and market it way better, then you honestly deserve to go out of business.
I've also made and worked on some fully open source projects where the entire stack was open. I don't believe in those source avaliable licenses because you either believe in your abilities on the business side or you don't; if someone can take the exact same product and market it way better, then you honestly deserve to go out of business.
Can you elaborate more on how the expense split maths worked? Also why would the contractor wish to keep getting the business through the coop. Once they have the business, isnt it in their interest to make a direct deal for the next instalment of work?
Because we're all friends and we only split the money for the projects that we all worked on, projects that need, say, #X engineers, #Y designers etc, and so we split the funds. If anyone gets their own contract, by all means, they can get paid directly, but usually companies might hire us as a team.
A lot of people on both sides are scared of the "direct deal" situation whereas in practice it is extremely uncommon.
When was the last time you asked a Uber employee for their phone number?
When was the last time you asked a Uber employee for their phone number?
uber is not repeat business. Some platforms with repeat business like upwork see this a lot
I don't think that applies.
A lot of people user Uber everyday. Not everyone uses Upwork more than once.
A lot of people user Uber everyday. Not everyone uses Upwork more than once.
I recommend the book: Reinventing the Organization. It has case studies of alternative models around the world.
My first thought as well!
I’ve been thinking about this lately for my publish-by-email app, Pagecord (https://pagecord.com). I’ve made it open source (https://github.com/lylo/pagecord) but I’ve been thinking it would be really cool if paying customers had a stake in it somehow. The Subvert model is interesting for sure.
It's definitely possible (I'm part of a new tech worker cooperative). Cooperatives can be many legal structures, though you need your bylaws to reflect cooperative principles (one member one vote, etc). Here's a list of tech coops if you'd like to know some others: https://github.com/hng/tech-coops
I'm happy to share more - I'll send you an email.
I'm happy to share more - I'll send you an email.
Hey, I'm looking to learn more about joining a tech coop.
Would like to get in touch to understand better (email is on my profile).
The DAO, decentralized autonomous organization, holds some promise for new types of cooperative business models. For example, you can define a governance structure that is appropriate for your business. Many DAOs are operating in the Web 3 space, often using Discord as the main communication platform, some with crypto-powered tokens that reward users and participants.
There are examples of successful DAOs, while others have stumbled - governance rules are hard to get right, and it can take a disproportionate amount of time for discussions, voting, admin, etc.
I think we're still in the early stages of the DAO concept and with new governance models and platforms to facilitate building and managing DAOs with best practices we'll start to see a lot more success in this area.
There are examples of successful DAOs, while others have stumbled - governance rules are hard to get right, and it can take a disproportionate amount of time for discussions, voting, admin, etc.
I think we're still in the early stages of the DAO concept and with new governance models and platforms to facilitate building and managing DAOs with best practices we'll start to see a lot more success in this area.
There are cooperative principles from a 1995 convention of the International Cooperative Alliance, key to filter policy and operations through to insure whatever you found can meet the definitions of cooperative ownership. There's supposed to be political democracy n this country, one person one vote but no economic democracy, we don't get to vote for the CEO running the company many of us work for because we don't have capital. Cooperative enterprise can be a way to push down ownership power to more people; employees and customers. It is not easy because people are not easy.
Co-ops are one member one vote. Google ICA cooperative principles to read up and get a base foundation. I second also going to the US Federation of Worker Cooperatives to learn more.
It can be a complex process to build a business enterprise that is equally owned by workers and even more challenging to try to keep it a going concern. Good luck!
Co-ops are one member one vote. Google ICA cooperative principles to read up and get a base foundation. I second also going to the US Federation of Worker Cooperatives to learn more.
It can be a complex process to build a business enterprise that is equally owned by workers and even more challenging to try to keep it a going concern. Good luck!
There are cooperative principles from a 1995 convention of the International Cooperative Alliance, key to filter policy and operations through to insure whatever you found can meet the definitions of cooperative ownership. There's supposed to be political democracy n this country, one person one vote but no economic democracy, we don't get to vote for the CEO running the company many of us work for because we don't have capital. Cooperative enterprise can be a way to push down ownership power to more people; employees and customers. It is not easy because people are not easy.
Co-ops are one member one vote. Google ICA cooperative principles to read up and get a base foundation. I second also going to the US Federation of Worker Cooperatives to learn more.
It can be a complex process to build a business enterprise that is equally owned by workers and even more challenging to try to keep it a going concern. Good luck!
Co-ops are one member one vote. Google ICA cooperative principles to read up and get a base foundation. I second also going to the US Federation of Worker Cooperatives to learn more.
It can be a complex process to build a business enterprise that is equally owned by workers and even more challenging to try to keep it a going concern. Good luck!
One thing I would be careful with is non-voting members in LLC can still take you to court and it is the great question whenever courts can see you being good Open Source citizen as someone who does not act in the interest of shareholders.
The good option I've seen which allows to grant some commercial interests to folks without letting them to interfere with shareholder rights is Phantom Shares or creating a separate company (SPV) where everyone has shares and which by operating agreement is voting as the founder, in this case it makes it harder for them to mess with your company.
In any case, be very mindful of lawyers you choose, many of them would operate with default assumptions which in US often means C-Corp in Delaware, designed to raise some venture capital and hence protect such investors, if your goals are different - make sure to talk them through.
The good option I've seen which allows to grant some commercial interests to folks without letting them to interfere with shareholder rights is Phantom Shares or creating a separate company (SPV) where everyone has shares and which by operating agreement is voting as the founder, in this case it makes it harder for them to mess with your company.
In any case, be very mindful of lawyers you choose, many of them would operate with default assumptions which in US often means C-Corp in Delaware, designed to raise some venture capital and hence protect such investors, if your goals are different - make sure to talk them through.
The folks at Muse discussed different ownership structures. I didn’t retain much from the podcast episode but I remember it was fun and informative:
https://museapp.com/podcast/4-partnership-freedom-responsibi...
https://museapp.com/podcast/4-partnership-freedom-responsibi...
The oldest technical assistance organization in the US for worker cooperatives is the ICA Group (originally the Industial Cooperative Association) dating from the late 1970s. They have all sorts of literature to help.
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I haven't done it but it looks like an ESOP something you might to look into.
Where I live, there are a number of co-ops. The procedure to register is clear and normal. https://business.vic.gov.au/business-information/start-a-bus...
A banker at a major Australian bank once suggested I take a coop model, so I am sure it is on the radar.
I think it is a great idea to have tech coops, and wish you well.
A banker at a major Australian bank once suggested I take a coop model, so I am sure it is on the radar.
I think it is a great idea to have tech coops, and wish you well.
You can always change it, so I would focus on not letting your product idea die until it’s on good footing. Then consult with some folks who have done this before.
https://sourcehut.org/ is a sort of coop open source project and a SaaS with an interesting model.
There is also https://opencollective.com/ which provides a platform for collective ownership of an online business.
There is also https://opencollective.com/ which provides a platform for collective ownership of an online business.
> There is also https://opencollective.com/ which provides a platform for collective ownership of an online business.
I don't think Open Collective "provides a platform for collective ownership", unless I missed something on their website and they've recently introduced some new offering.
As I understand it, they sidestep much of the legal process through the use of fiscal hosts to collect and disburse money.
I don't think Open Collective "provides a platform for collective ownership", unless I missed something on their website and they've recently introduced some new offering.
As I understand it, they sidestep much of the legal process through the use of fiscal hosts to collect and disburse money.
You should have a look to the book « Entreprenerd » by Bruno Lowagie. It is an interesting autobiography that explain the process where you are.
There's a lovely managed web and Nextcloud host here in Vancouver Canada that's a co-op. Had a really nice chat with their leadership. https://cantrusthosting.coop/
i'm trying to do this with https://bookhead.net and https://sweetclay.net. i'm prototyping the coop with sweet clay bc the business is a side hustle and good for experimenting. and then i'll apply it to bookhead since that business has more earning potential and i wanna get the membership stuff right before risking that. setting up the legal stuff takes money that i could use for other stuff that could maybe bring revenue, so it's tricky situation, especially if you need labor asap. and it takes time to research/design governance and equity etc.
i wish there was stripe atlas for coops if anybody would like to start a new cooperative. i emailed the stripe PM asking for this and they said it's not on their roadmap. businesses in america are designed to be organized as capitalist enterprises so there are some extra things a coop needs to do which takes time and money.
would be cool to make an open source "stripe atlas for coops" project and help other coops start up. i'm too busy right now but could do the project if i had some collaborators. email me [email protected] if you're interested in a project like this.
i wish there was stripe atlas for coops if anybody would like to start a new cooperative. i emailed the stripe PM asking for this and they said it's not on their roadmap. businesses in america are designed to be organized as capitalist enterprises so there are some extra things a coop needs to do which takes time and money.
would be cool to make an open source "stripe atlas for coops" project and help other coops start up. i'm too busy right now but could do the project if i had some collaborators. email me [email protected] if you're interested in a project like this.
I e-mailed you. Would love to collaborate.
Yes. That's essentially what I was looking for. A generic playbook for something like this.
see https://.start.coop and https://www.democracyatwork.info/co_op_resources
and the work of nathan schneider: https://nathanschneider.info/
and anybody talking about "platform socialism"
and the work of nathan schneider: https://nathanschneider.info/
and anybody talking about "platform socialism"
I work on a startup where the entire self-hosted SaaS is permissively licensed.
https://github.com/batteries-included/batteries-included https://www.batteriesincl.com/ https://www.batteriesincl.com/LICENSE-1.0
I started the company because I wanted to give the infrastructure team that FAANG companies have to smaller enterprises. Most of the best infrastructure is open source but too complicated to use or maintain. So we've built a full platform that will run on any Kubernetes cluster, giving a company a push-button infrastructure with everything built on open source. So you get Heroku with single sign-on and no CLI needed. Or you get a full RAG stack with model hosting on your EKS cluster.
Since most of the services and projects we're building on top of are open source, we wanted to give the code to the world while being sustainable in the long term as a team. I had also been a part of Cloudera, and I had seen the havoc that open core had on the long-term success of Hadoop. So, I wanted something different for licensing. We ended up with a license that somewhat resembles the FSL but fixes its major (in my opinion) problem. We don't use the competing use clause instead opting for a total install size requirement.
I'm happy to chat with anyone about this, my email is in my profile. Good Luck nd I hope it works for you.
https://github.com/batteries-included/batteries-included https://www.batteriesincl.com/ https://www.batteriesincl.com/LICENSE-1.0
I started the company because I wanted to give the infrastructure team that FAANG companies have to smaller enterprises. Most of the best infrastructure is open source but too complicated to use or maintain. So we've built a full platform that will run on any Kubernetes cluster, giving a company a push-button infrastructure with everything built on open source. So you get Heroku with single sign-on and no CLI needed. Or you get a full RAG stack with model hosting on your EKS cluster.
Since most of the services and projects we're building on top of are open source, we wanted to give the code to the world while being sustainable in the long term as a team. I had also been a part of Cloudera, and I had seen the havoc that open core had on the long-term success of Hadoop. So, I wanted something different for licensing. We ended up with a license that somewhat resembles the FSL but fixes its major (in my opinion) problem. We don't use the competing use clause instead opting for a total install size requirement.
I'm happy to chat with anyone about this, my email is in my profile. Good Luck nd I hope it works for you.
I think there's this one in France https://coopcycle.org/
I met some guys a decade ago at a tech meetup in silicon valley who did this. they all contributed like 5% and got themselves healthcare/dental and other benefits.
Hot take, but anything is likely to work, as long as there is demand for your product. Some might make less or more money than the conventional approach, but if people really need your product, they will do anything needed. So just focus on demand, imo.
You could give equity to those who contribute.
> You could give equity to those who contribute.
Once challenge with equity is that equity is the thing that is left over after you've distributed income and benefits. I've seen so many startups (some up-close) where those in charge are not working for equity, they are extracting all the value in the form of benefits and salary/bonus. The equity then ends up just a carrot for those at the bottom being leveraged to keep the cycle going.
Other misaligned incentives I've seen is company management paying low salaries but having a host of family/friends placed into figurehead wishy-washy roles in the company (again, extracting value misaligned with employees.)
I've also seen doctors practices where the doctor owns the facility and extracts above-market rents from the practice, leaving less for workers.
Once a company is in hyper-growth it is easier to find well-aligned incentives. However, before that, you really dont know unless you can see the salary/benefits of everyone (which obviously doesnt typically happen.)
Once challenge with equity is that equity is the thing that is left over after you've distributed income and benefits. I've seen so many startups (some up-close) where those in charge are not working for equity, they are extracting all the value in the form of benefits and salary/bonus. The equity then ends up just a carrot for those at the bottom being leveraged to keep the cycle going.
Other misaligned incentives I've seen is company management paying low salaries but having a host of family/friends placed into figurehead wishy-washy roles in the company (again, extracting value misaligned with employees.)
I've also seen doctors practices where the doctor owns the facility and extracts above-market rents from the practice, leaving less for workers.
Once a company is in hyper-growth it is easier to find well-aligned incentives. However, before that, you really dont know unless you can see the salary/benefits of everyone (which obviously doesnt typically happen.)
Equity is one thing. What really matters is voting rights.
More people should do this.
How does a co-op exit?
Exit to community is a form of exit specifically for coops. The exact structure of that is variable, but it can be something like a loan paid to the founders/stakeholders and paid back over time or just a crowdfund from workers and customers to take full ownership of the enterprise
Most people seem to want to do these models because of “compassion” and whatever else.
Why not just not be greedy af?
Is it really that hard to not raise VC, bootstrap, pay a fair salary, and then give bonuses?
You’d probably get a lot more done as the benevolent dictator (you’re the CEO) and ensure that while you run the business you’re doing something “nice”.
Even if you take VC money you really aren’t fucking anyone over. People join your company voluntarily. You take the biggest risk as the founder early on. Employees stand to make 1x to 50x on their options depending on when they joined and if you’re successful.
Even if you’re not, at least you paid them and it was all voluntary.
Let me know if I’ve totally missed the point. From my pov all this co op stuff is just noise and only works for something like a consultancy.
Why not just not be greedy af?
Is it really that hard to not raise VC, bootstrap, pay a fair salary, and then give bonuses?
You’d probably get a lot more done as the benevolent dictator (you’re the CEO) and ensure that while you run the business you’re doing something “nice”.
Even if you take VC money you really aren’t fucking anyone over. People join your company voluntarily. You take the biggest risk as the founder early on. Employees stand to make 1x to 50x on their options depending on when they joined and if you’re successful.
Even if you’re not, at least you paid them and it was all voluntary.
Let me know if I’ve totally missed the point. From my pov all this co op stuff is just noise and only works for something like a consultancy.
Your company's product will never be the best version of itself if your only business goal is to lead a VC backed mindless race to an IPO. Your company will almost always have to dilute it's value proposition to make more money to satisfy greater returns for shareholders.
If your only goal as a founder is to eventually sell out and make yourself a billionaire, this is fine. If you want to build something of long lasting quality/consistency, then exploring other business models isn't just noise.
When you're free of outside influence you're enabled to perfect your business offerings, or at least be consistent in what you offer, without worrying about greater and greater shareholder returns.
It's no coincidence that Craigslist looks the same as it did 20 years ago, Arizona Ice Tea is still 99 cents, and Chicfila has the best fast food customer service.
If your only goal as a founder is to eventually sell out and make yourself a billionaire, this is fine. If you want to build something of long lasting quality/consistency, then exploring other business models isn't just noise.
When you're free of outside influence you're enabled to perfect your business offerings, or at least be consistent in what you offer, without worrying about greater and greater shareholder returns.
It's no coincidence that Craigslist looks the same as it did 20 years ago, Arizona Ice Tea is still 99 cents, and Chicfila has the best fast food customer service.
Interesting idea! Co-ops for SaaS are rare but possible. Some groups pool resources for benefits like healthcare. For open-source, a time-gated license like FSL could work, but it risks forking. Maybe focus on the product first, then revisit the structure later.
it’s called a DAO
Why can't you just give your employees equity? If you want to make sure people have have ownership of their work that's a well understood model.
This gets difficult as more employees join. Typically companies set aside a portion initially, and then keep splitting that portion.
There are consumer-owner / member-owned co-ops where the people that purchase the service (say in a yearly subscription) end up as owners.
There are consumer-owner / member-owned co-ops where the people that purchase the service (say in a yearly subscription) end up as owners.
The purchase price usually doesn't get you ownership though, you buy shares (or whatever their equivalent name is) to become a member, which then entitles you to buy the services they offer.
How many people do you expect to join? Are you trying to solve a problem you'll never have? Even if you run out of shares you can always dilute your existing shares to add more people.
A coop is a degenerate form of what has been called a Fair Shares Commons[0] company structure.
https://graham-boyd.biz/fairshare-commons/
https://graham-boyd.biz/fairshare-commons/
Why a "degenerate form"? This just looks like a co-op that isn't locked to a single set of stakeholders (worker, customer), as the owner group.
Exactly (mostly).
Coop is historically a two interest cooperative structure (business+customer/employee/producer)
This model generalizes two to N and formalizes it.
Coop is historically a two interest cooperative structure (business+customer/employee/producer)
This model generalizes two to N and formalizes it.
I went through and set up the usual LLC, but was curious about how I could set it up to be a member or worker-owned company. Has anyone done anything like that from the beginning? Should I just worry about this later?
With licensing, the typical model has been to make your core permissive, and keep the hosting / billing application private. Has anyone made even that part of their SaaS open? I know that would make is really easy to fork the business, but was thinking something like a time-gated Functional Source License (FSL) might work?
I'm open to ideas. I don't see this discussed commonly on HN, so figured it was a good topic.