Cross-posted from Shareable.
Nithin Coca: Loconomics is a platform cooperative that allows service professionals working in areas like dog walking, home care, child care, massage therapy, and tutoring to connect and offer their services on a platform that they own. Founded by Joshua Danielson in 2012, Loconomics, which is based in San Francisco, California, aims to provide an alternative to investor-owned platforms such as Wagg (dog walking), Taskrabbit (gig work), or Handy (home cleaning). The company also just announced a collaboration with Doing What MATTERS for Jobs and the Economy, a program by California Community Colleges. The Loconomics platform will be used as part of a course on the gig economy, which will help bringing cooperative economic principles to students. We spoke with Danielson and Kyra Harrington, Loconomics’ Brand Marketing Manager, to learn more about Loconomics’ vision, their new partnership, and how a platform cooperative could empower service professionals and serve as a tool for economic empowerment.
Nithin Coca, Shareable: Where did the idea for Loconomics come from — and why did you feel it was necessary?
Joshua Danielson, Loconomics: In my 20s, I spent a lot of my money on services and I knew that the platforms, back then mostly temp agencies, often take 30-40 percent of people’s pay. Local services were something I believed in. The world’s full of products, while services are sustainable and personable. They enrich people’s lives in a way that products don’t. Ethos behind it is to do something that doesn’t increase wealth inequality. This is what many traditional businesses [with venture capital] end up doing.
We – Joshua and I – first met more than two years ago, and even then, Loconomics had been around for some time. Can you tell me about your progress, and the challenges you’ve faced in getting the platform cooperative set up?
Joshua Danielson: It’s taken much longer than expected, which is not atypical for any first-time entrepreneur. I started out neither having been a project manager nor having the technical expertise to move quickly. I’ve acquired a lot of those skills since then, and we’re able to execute things in a fraction of the time it used to take.
Loconomics started out as a benefit corporation, and our first round was a desktop version launched in 2012. It was bad timing. No one knew what a benefit corp was, nor did they care. It wasn’t true ownership, it wasn’t that differentiated from other platforms, and we didn’t have a mobile app. I began to wonder how this would look as a cooperative, but as most service professionals are freelancers, I didn’t know how that would work. I met Janelle Orsi with the Sustainable Economies Law Center, and she had been speaking out about the sharing economy/platform economy.
The conversion to a platform cooperative took a lot longer than expected because we wanted to do it right. The bylaws alone took over a year to write. Janelle has a lot of expertise and is in the cooperative movement. I let her lead, and I made sure to bring a healthy dose of business strategy to it, to ensure it was a sustainable platform, and we’d have staff that would want to work here.
What was the cooperative structure you ended up deciding on, and how does it work in practice?
Joshua Danielson: We officially converted in June 2014 to a California cooperative. We were a patronage based co-op at that point, with no shareholders. That means Loconomics is owned by workers and nobody else. We felt that keeping our focus on local services, and creating a platform that works for service professionals and clients has a lot potential to shift wealth inequality, so that gradually services can be booked without the middlemen.
Our revenue model is that service professionals will pay $20-40 for our ownership plans. With the $20 a month plan, they gain access to dividends, vote, can run for board, and get access to our sister platform where they can communicate, gain support, and have networking opportunities.
For $40, they also get access to scheduling software and new project management tools, in addition to being part of the cooperative. When there are profits leftover, they are entitled to dividends based on what they have paid into the platform. There are no commissions, and they elect the board, so they oversee the platform. Staff, like myself and Kyra, will be doing day to day activities — we are entrusted with the mission on their behalf. We’ve removed the traditional incentives and are self managed, have capped salaries, and don’t have a bonus system. Staff elect one board member, two are nonprofit appointed, and six members are elected by service professionals. We get dividends based on how many hours we work, but this will roughly end up being the same as a service professional member who paid their dues.
So, can Shareable readers find services on the platform right now?
Kyra Harrington: Right now we’re focusing on recruiting on service professionals. Just over the last year, we’ve found there are a lot of challenges they are coming up against. They are often by themselves and face challenges on their own. That’s why we’re trying to build community through our sister platform — Loconomomics.coop — where service professionals can congregate. There are a lot of professional advantages they get from joining coop.
Service professionals have created nearly 600 listings on the site so far — and as we transition out of beta and going to do a full push this winter to onboard new members.
Service professionals can be a huge category. Any specific fields or sectors you are focusing your outreach on?
Joshua Danielson: Currently we’re focused on handful of services that include self-care professionals, such as massage therapists, acupuncture, cleaning professionals, handymen, and also dog walkers, pet sitters, child care, and tutors. Existing platforms for dog walking and cleaning take commissions up to 40 percent. They also proved that service professionals are looking at these platforms to get services booked, so that shows demand.
Kyra Harrington: When you start talking about co-ops, people often have not heard about it. To focus our messaging, we’re focusing on what’s in it for them as a service professional. Our focus is on tangible benefits: software, marketing, community, and no commissions. No one is getting rich of your back. And we’re a platform co-op, so you have a voice in our future.
Joshua Danielson: Most platform workers don’t feel like they’re being taken advantage of. Not many people have done the math. We want to have the numbers to say that, for example, dog walkers on Loconomics earn X more than on Wagg. That works better than telling them they are being taken advantage of.
That definitely sounds like a stronger message. So, what are your goals further ahead — where do you hope to see Loconomics in the near and medium term?
Joshua Danielson: First goal is to reach financial sustainability, and that we can achieve with 2,000 member service professionals. That would give resources to hire staff, and ability to scale and build partnerships across the world. Scaling helps everybody through increased bargaining power and network effects.
Kyra Harrington: It’s about helping each other versus fighting each other for business. The co-op element allows members to get to know each other — and you are more likely to refer your clients to others via a trusted referral network. Loconomics also allows members to market their services collectively versus paying a platform to compete against each other.
Joshua Danielson: The power of the marketplace is that you can book different services with Loconomics. You might first find your dog walker, but when you are also looking for a massage, you can find that on Loconomics too. It’s another value proposition to any service professional: They’re likely to get clients from other professionals. Our cooperative business model lends itself to members helping each other in ways that other platforms cannot.
It may have taken longer than I thought it would, but we’re excited to get to that point. The financials back it up, and there’s a place for Loconomics in the market. We need to reach a critical mass to get the ball rolling faster, so we’d love for people to check us out and refer professionals who could benefit from the power of a co-op. We’re committed to reducing wealth inequality, and we feel ownership is the way to do that — ownership over the tools you use and the way that you access work.
Nithin Coca: I’d also love to hear more about your new partnership with California Community Colleges?
Joshua Danielson: Under the Doing What Matters for Jobs and the Economy Small Business Sector program, twenty-four colleges are participating in a Self-employment Pathways in the Gig Economy project starting February 2018. Students will create job listings as part of this program, and Loconomics will assist them in finding work opportunities, tracking their earnings, and supporting them in transitioning into the independent workforce as small business owners. This group of students is going to be introduced to cooperative platform ownership as an alternative to traditional gig economy platforms.
This Q&A has been edited for length and clarity. Header image courtesy of Loconomics.