This is a living document that will be updated and edited.
Who is this for: founders of new startups, companies, organizations, and institutions.
For the past month, I've been talking to founders, workers, and academics about what to do about our current predicament: capitalism and tech sucks. Venture capital as a tool is a breadth-first-search for new markets to disintermediate, and in the process, a few broken eggs and fractured labor rights are just the accepted cost of doing innovation at the pace of capital.
If you can look at the practices of companies like Facebook knowingly putting user data at risk, Amazon's repeated labor violations or immigration abuse, or Uber and Lyft's recent driver strikes, and not think that something is deeply broken, then perhaps you are broken. Indeed, there's a lot of guilt to go around Silicon Valley right now - some of it manifesting in activism and some of it in the flight of participants who no longer want any part of the complex web of politics and money. In my dad's day, it used to be you could just have a company slogan like "Dont be evil", and that would be good enough to trick or distract everyone from the systemic or structural causes of evil. Now, it's impossible to look at even well-intentioned tech and not see how evil all of it could become.
I don't think tech is inherently evil, because I don't think people are evil. I think people do the best with the tools that they are given. So we need better tools, and better options.
And there are some now appearing. New vehicles for capitalization that operate on longer time frames or shorter distances are off the ground and into their 1st or 2nd funds. Co-op's are spreading like crazy in Europe and replacing outside companies that burn and churn. The point is, you can feel the tendrils of founders moving outwards trying to find new alternatives and ideas. It's about time we opened up and experimented a little.
The goal of this is to provide a way to help fix the disparity between the power of capital and the power of communities, of shareholder power and worker power, to make it so that a company that exploits labor can't exist.
Massive societal changes, like the one from feudalism to capitalism, didn't happen overnight - they came in fits and starts with experimentation at all levels.
My hope is that one day, we can have a simple communal playbook for how to launch a new thing - much in the same way we use Clerky or standard doc's today to enforce a cultural standard of expectations. The reality is, most founders don't want to think about this stuff. They just want to do the right thing, and move onto the next most important challenge.
The first idea is to tackle the concept of worker ownership, which means that all members of a corporation or firm are entitled to a share of the firm.
In certain industries, like tech, it is standard to set up a stock option plan, where contingent on a future liquidity event workers could earn a share of the pay day. In other industries, the way to adopt worker ownership is through an ESOP (Employee Stock Ownership Plan). Originally devised in the 1950's in San Francisco, ESOPs were seen as a way to promote the ownership society of American citizens by giving workers the chance to own the firms where they employ their labor.
After their initial adoption with the passage of tax reforms to incentivize American corporations to adopt ESOPs, tens of thousands of ESOP trusts were set up representing over 10 million workers holding over $1.3 trillion in assets.
Worker ownership is a spectrum with stock options (the right to purchase shares) on one end, and worker co-ops on the other (where every worker owns an equal share). ESOPs typically vary in the middle from 1 to 100% ownership, but not always in equal distribution.
ESOPs and worker ownership as a whole serve two main purposes in a company: delayed compensation for workers and succession planning.
First, whether it is through an ESOP trust or a stock option grant, workers who own shares are able to grow their wealth through their labor income and their capital income, whether through dividends on the capital or selling it back to the company to realize capital gains.
Second, worker ownership helped to spread the capital across a group of workers that could help ensure that a company could continue the spirit and culture of the firm. This other benefit is that it helps to prevent hostile takeovers.
The other dimension that new companies can improve is to increase worker participation in management decisions and in corporate accountability. The main methods here are in new corporate designations like Public Benefit Corporations that have public charters and accountability reporting standards, and unions.
Worker control directly means decision-making ability and the mechanisms that participants have to exert control in a company's decisions. Having a seat at the board room table is one way (e.g. a board seat dedicated to a democratic representative of workers), but it can still be susceptible to internal politics.
A Public Benefit Corporation allows a company to elevate a social mission and charter to same level as growth in shareholder value, but its weakness is that it is new and this standard hasn't been legally tested in court yet.
Other methods of growing worker control are organizing labor through collective bargaining or a union, not necessarily always for wages but maybe for decision to bring on new clients or projects. Google workers recently organized a strike in response to workplace conditions. Reach is a political canvassing app where workers decide on each new political campaign who wants to use the app.
Lastly, a more typical way is to incorporate workers and other stakeholders into the user-focused design process, ensuring that workers and users drive real decisions.
Customers are just one group of people who could patronize your business or organization.
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