I've worked in "co-op adjacent" styles all my life. We'd typically have 3 or 4 folk as owners, but with additional employees.
The key restriction I see is the difficulties in large-group decision making. 4, or 3 seems to work well, but more than that it seems to flounder.
Every decision comes with upsides and downsides. So risks have to be taken, but in large groups the most common option is "status quo". You see this play out all the time in large companies with big boards and deep management all the time. It ends up stagnating because there's always the "safe" option which means trailing behind.
Of course it can work. But it's not common.
In a truly cooperative everyone gets a say. And most people are risk adverse. Ultimately it tends to collapse under its own inaction as those who are accepting of more risk go elsewhere.
Electing top management is also a weak approach because it becomes very political and seldom elevates merit.
People have different goals, some want long term job security, some want short-term rewards, and so on. The more people you add the harder doing anything becomes.
In other words a cooperative succeeds when it has a very clear set of goals and ambitions and only accepts people who are tightly aligned with those. It's a very difficult structure to be successful at.
Not a co-op, but similar: I'm working on an owner-operated SaaS incubator[0]. A few of us are pooling our own money to buy, operate, and grow a small SaaS company together. We're currently in the diligence phase.
It's an experiment and could fail spectacularly. But if it's successful then we'll finally own our own success and build wealth for ourselves, not VC or PE funds.
In the past: everyone wanted the easy money. There’s probably a good opportunity for this now given tech layoffs and the pivot to AI. The best model is probably a variant of FOSS + paid support/consulting/hosting. I think I came across a couple of co-ops doing this in the past but they didn’t heavily advertise their structure.
Nobody will get rich from it but you could build a decent life.
I think as long as you need some capital then co-op is not for you. You have to make sure that you already have a sound business, but most likely you will work alone as a LLC.
Small companies don’t need to work together for the economies of scale. There are companies called PEOs including YC company Rippling.
Basically you are “co employed” by your company and the PEO. For all day to day stuff, you work for your company, for the purposes of taxes, insurance, etc you work for them.
When it comes to software specifically, there are a couple advantages of capitalist ownership:
1. Access to cash. While software does not require much physical capital (factories, equipment, raw materials, etc) those with capital have easier access to cash and can therefore scale much quicker.
2. Intellectual Property. In software industry, workers do not just use capital to make finished goods. They produce new capital out of their imaginations and that capital (which lasts 120 years, never breaks down, never deteriorates) is typically owned those who put up the cash. That makes their advantage grow over time.
None of that is insurmountable, but we are a long way from having the organization or political support to overcome them.
I've worked in "co-op adjacent" styles all my life. We'd typically have 3 or 4 folk as owners, but with additional employees.
The key restriction I see is the difficulties in large-group decision making. 4, or 3 seems to work well, but more than that it seems to flounder.
Every decision comes with upsides and downsides. So risks have to be taken, but in large groups the most common option is "status quo". You see this play out all the time in large companies with big boards and deep management all the time. It ends up stagnating because there's always the "safe" option which means trailing behind.
Of course it can work. But it's not common.
In a truly cooperative everyone gets a say. And most people are risk adverse. Ultimately it tends to collapse under its own inaction as those who are accepting of more risk go elsewhere.
Electing top management is also a weak approach because it becomes very political and seldom elevates merit.
People have different goals, some want long term job security, some want short-term rewards, and so on. The more people you add the harder doing anything becomes.
In other words a cooperative succeeds when it has a very clear set of goals and ambitions and only accepts people who are tightly aligned with those. It's a very difficult structure to be successful at.
Not a co-op, but similar: I'm working on an owner-operated SaaS incubator[0]. A few of us are pooling our own money to buy, operate, and grow a small SaaS company together. We're currently in the diligence phase.
It's an experiment and could fail spectacularly. But if it's successful then we'll finally own our own success and build wealth for ourselves, not VC or PE funds.
[0] https://www.notion.so/notventurescale/Wild-Built-Incubator-2...
In the past: everyone wanted the easy money. There’s probably a good opportunity for this now given tech layoffs and the pivot to AI. The best model is probably a variant of FOSS + paid support/consulting/hosting. I think I came across a couple of co-ops doing this in the past but they didn’t heavily advertise their structure.
Nobody will get rich from it but you could build a decent life.
Edit: found a list, posted here https://news.ycombinator.com/item?id=47364221
I think as long as you need some capital then co-op is not for you. You have to make sure that you already have a sound business, but most likely you will work alone as a LLC.
Small companies don’t need to work together for the economies of scale. There are companies called PEOs including YC company Rippling.
Basically you are “co employed” by your company and the PEO. For all day to day stuff, you work for your company, for the purposes of taxes, insurance, etc you work for them.
https://www.rippling.com/products/hr/peo
Software don't scale like agriculture (where coop thrives).
10 organized farmers function like a big efficient farm.
10 app creators won't be the same as 1 huge platform.
When it comes to software specifically, there are a couple advantages of capitalist ownership:
1. Access to cash. While software does not require much physical capital (factories, equipment, raw materials, etc) those with capital have easier access to cash and can therefore scale much quicker.
2. Intellectual Property. In software industry, workers do not just use capital to make finished goods. They produce new capital out of their imaginations and that capital (which lasts 120 years, never breaks down, never deteriorates) is typically owned those who put up the cash. That makes their advantage grow over time.
None of that is insurmountable, but we are a long way from having the organization or political support to overcome them.
Some games company's have been - Motion Twin for example. I'm sure they exist in Tech too, but that's just a feeling.