The alternative to Death Star Platforms: Platform Cooperatives

This is a follow up to our excerpts on November 8 about the emergence of Death Star Platforms like Uber and AirBNB.

Excerpted from Neal Gorenflo:

“Below are five things platform coops must do to beat Death Stars platforms.

1. Incubate the Templates

It will take focused, well-resourced, and consistent effort to work out the interrelated legal, financial, and organizational challenges of forming platform coops. Platform coops aren’t an incremental step up from typical startups, they’re a transformational leap. The path is currently uncertain, expensive, and time consuming. For instance, Loconomics has been working on their structure for going on two years, and aren’t even in beta yet. A better way is needed. Platform coops need to face this challenge together with long-term support of a stable anchor institution, like a university. This high barrier to forming platform coops must be lowered or this new movement will die in its crib.

Part of the magic of tech startups is that there’s a well understood organizational structure, financing method, and developmental path for entrepreneurs to use. In other words, there’s a template. Platform coops need templates too, but ones which support a diversity of organizational patterns. What’s needed is a small number of incubators in different global cities working together to give birth to the first wave of platform coops. The trick is to get the first few platform coops off the ground, and then develop a global ecosystem that encourages replication of working models across industry verticals and geographies.

2. Offer a better service at a competitive price

Let’s not forget business fundamentals. Platform coops must offer a better service at a competitive price to beat Death Stars. A lot hinges on simply executing better day in and day out, but strategy plays a big role too. The key strategic challenge is figuring out how to leverage platform coops’ social mission, democratic structure to help them compete. User ownership and control offers inherent advantages that stem from a more engaging and empowering relationship to other users and the enterprise itself. For instance, platform coops could attract more loyal users at a lower cost than Death Stars by offering user-ownership. All else being equal, user-owners will likely deliver better service than 1099 contractors. Platform coops may be able to create a deeper community experience than Death Stars, which routinely feign community ethos for profit. The social mission of platform coops could help them access less expensive labor and capital like traditional cooperatives. They could also gain a cost advantage by developing a common software infrastructure or using open source platforms by ShareTribe and GNUsocial.

3. Take Cooperation to the Next Level

It goes without saying that platform coops should cooperate, as that is standard operating procedure in the cooperative world. In fact, it’s number six of the sector’s widely embraced Rochdale Principles. However, platform coops should take cooperation to the next level to exploit a potentially decisive competitive advantage over Death Stars. Death Stars’ closed nature which make it nearly impossible for them to engage in the deep collaboration between cooperatives seen in regions like Quebec, Canada, Emilia-Romagna, Italy, and Basque Country, Spain. Clusters of small to medium-sized cooperatives in these regions often compete successfully against large multinationals through networking, formal collaborations, and shared infrastructure such as market research centers, banks, and universities. These cooperatives collaborate in a much deeper way than tech companies. In fact, they act almost as if they’re one organism.

Platform coops must act similarly. For examble, the replacement for Airbnb shouldn’t be another centralizing global platform even if it’s a cooperative. It should be a federation of locally-owned cooperatives that are interconnected technologically (Fairbnb!). GNUsocial’s microblogging platform is an example. Each node is on a different server, but users can interact across nodes. The advantage is a much more resilient, user-controlled, distributed infrastructure. At Somero 2015 last month, GNUsocial took a big leap by unveiling the alpha version of a hospitality module called GNUbnb.

Platform coops can share much more than software including data, digital reputation, knowledge, marketing, public relations, legal, lobbying, and physical space. And share all of this on a global basis — as Michel Bauwens’ open coop proposal advises — and across industries. Cities should get in on the action too. They should cooperate with each other and with platform coops to mold the sharing economy in the public interest as Janelle Orsi of the Sustainable Economies Law Center recently suggested.

4. Create an Ecosystem to Distribute Wealth

Silicon Valley arguably creates and concentrates more wealth than any place on earth. Behind this phenomenon is a powerful ecosystem that includes Stanford University, the biggest venture capital firms in the world, an enterprising culture, top notch professional services, and more. This ecosystem birthed the Death Stars, and they’ve benefited greatly from it. Platform coops need a similarly powerful ecosystem to compete, but one that distributes wealth instead of concentrating it. That’s a tall order, but platform coops may have natural allies in creating such an ecosystem including city governments, unions, nonprofits, universities, the free and open source software movement, and social investors like credit unions, social venture funds, and foundations. It took many decades for the Silicon Valley “miracle” to unfold. Similarly, it’ll take an ecosystem to raise this movement.

5. Build a mass movement

Platform cooperatives have the opportunity to channel the huge amount of negative sentiment around Death Star platforms to power their movement. They can also move into the slipstream of awareness Death Stars are creating about the sharing economy to surge forward. However, the movement must be reframed in at least three ways to take advantage of these powerful forces.

First, platform cooperativism must become a populist, trans-partisan movement. If Platform Cooperativism is the coming out party for the cooperative Internet, then it’s a lopsided one. The guest list reads like the line up for New York City’s liberal all star team. That said, I give them credit for a long list of partners including Shareable. That’s a good start at building a movement; they only need to reach across the aisle more going forward.
Second, it must shift emphasis from moral arguments for platform coops to practical ones which convince ordinary folks that the vision is feasible. Hope is essential! Like traditional cooperatives, platform coops could offer inherent competitive advantages, including superior cost structure, better working conditions, higher pay, better reputations, resilience, and alignment between value creators and rewards. In fact, sharing ownership and control with users may become a necessity, as Brad Burnham of Union Square Ventures has argued, for platforms to compete for customers as other advantages are leveled by the market.

Lastly, the emphasis must shift from platform coops formed by providers to a multi-stakeholder model that could include providers, customers, founders, investors, geographic communities, and nature. Provider-driven platform coops are a good start, but they will eventually run into the same problems that arise in any organization when one stakeholder group calls the shots. Investors are a normal part of the mix in traditional coops, so no reason they shouldn’t be here, especially with their power in check as one of many stakeholders.

So an epic choice is before us. Do we accept Death Star platforms’ boring, unresilient, monocultural domination? A domination that will be difficult to shake off once established. A domination that puts the world at each of our individual fingertips while disempowering us collectively. A domination that could permanently damage the richness, resilience, and capacities of our local communities, as Douglas Rushkoff suggests.

Or do we work together to build, as Charles Eisenstein would put it, the more beautiful world our hearts know is possible? A world where platform coops manifest the values of the commons in every community. Where our capacity to manage our resources together is deeply respected. Where polycentric control is a given. Where local laws, customs and cultures are honored. Where self-interest and common good are aligned. Where we are truly alive.”

Neal Gorenflo also adds a list of examples:

“Examples of platform coops abound. A wave is forming, but most examples are brave experiments at best. Shareable’s “Owning is the New Sharing,” lists many examples. There’s Loconomics, the cooperative version of task marketplace TaskRabbit. One of the most successful experiments is Enspiral Network, a New Zealand-based coworking community plus digital collective that allows hundreds of freelancers and social enterprises to work together for mutual benefit. Lazooz is the blockchain version of Uber where drivers mine digital currency by giving rides, while Swarm is the blockchain version of Kickstarter.

These examples represent three common developmental patterns for platform coops. First, there are legally-defined cooperative versions of sharing economy platforms like Loconomics. Second are hybrids like Enspiral Network, which aren’t legally cooperatives but operate on similar principles leveraging digital technology. Then there’s the most scalable option: blockchain-based platform coops like Lazooz. They leverage the same technology Bitcoin uses —a distributed digital ledger—to coordinate, govern, and compensate platform work on a democratic basis.

All of these paths are worth pursuing. As we do this, we must take care not to duplicate the organizational monoculture of Silicon Valley. However, it’s important to acknowledge that this movement will not produce viable competitors quickly. It took Silicon Valley decades to perfect the assembly line manufacture of startups. It shouldn’t take this movement that long, since Silicon Valley has paved much of the way. The movement can artfully adapt Silicon Valley startup methodology, business models, design, and its innovation ecosystem to launch a wave of platform coops.”