Jonny Gordon-Farleigh: Stocksy United is a stock photography multistakeholder co-operative launched in 2013. This was a return to the sector after having been part of iStock, another stock photography provider. You initially considered setting up a trust, but opted for the co-operative model instead. Could you explain the decision to set up a co-operative?

Brianna Wettlaufer: After coming back into the sector, our goal was to put power back into the hands of artists. It was about giving people the control over their careers that had been lost at companies who were bullying them, where they had no rights over how their images were being sold, and were seeing their revenues clawed back. It was about the whole question of artistic integrity, which is an offshoot of the health of the community. Our goal was to bring that back into the fold, which existed in the early days of iStock but, as it scaled and was bought by Getty Images, was lost as priorities changed.

So knowing that we wanted to do that, we looked at nonprofits and a series of other business models. But at the end of the day, the co-operative model answered all of the questions. And with the legal background to ensure that we made these things happen, it wasn’t a long period of time for us to realise that it was the solution for our organisation. I think as Canadians we are more culturally aware of the model and Canadian laws are a bit easier to adapt for an online tech company.

JGF: Your co-operative has three membership classes: founders, staff and artists. What rights do these individual classes have within a multistakeholder co-op?

BW:  Class A is founders, and also our advisors. This class is a maximum of five people, and right now we have three people. Their purpose is high-level business operations. Class B is staff, capped at 20 presently, with all positions filled.

JGF: Why are they capped?

Nuno Silva: It was determined by the original by-laws. When we were deciding on how many shares to issue for each class, we had to put a number to it. So when we first started, 20 seemed like a reasonable number.

BW: Honestly, there is not much difference between the rights of each class, basically the class indicates the level at which they are giving guidance to the organisation. 90% of the dividends is awarded to Class C, and 5% goes to Class A and Class B. Currently, it is divided equally. It is pretty simple. Overall, it is pretty simple in terms of our governance.

Class A, currently, is Bruce Livingstone, a co-founder, Brent Nelson, another co-founder. Many of us have worked together as experts in our domain for a really long time. In terms of governance for the company, it is a very close collaboration. There are not many gaps or surprises, where people are having to do resolutions to correct the course that we’re on. We want to make sure everyone is being heard in the company, so everyone feels good about the decisions we’re making, having additional governance laws or different laws about participation, doesn’t make any sense as it just creates more bureaucracy, which we are working really hard to avoid as we scale.

JGF: Multistakeholder models are becoming more popular, but more stakeholders means more governance costs, potential delays, and difficulties. How do you manage stakeholder participation so that it is both meaningful and also allows you to remain competitive?

BW: It has definitely been a process, and we’re still trying to find the right balance. We take the ethos of being a co-operative very seriously—empowering everyone from the inside out and ensuring that we’re being transparent and collaborative. But when you take that to too much of an extreme, not only is not functional, it is not enjoyable for the people in the organisation. We’ve found that it is one thing to empower people in what they’re doing, and another thing to expect everyone to operate at an executive level and carry around the stress that comes with that position—to be expected to come up with ideas and solutions, when it is not what they are particularly interested in doing.

There is nothing wrong with people focusing on their jobs, or particular areas. So our goal is that those within the organisation can provide enough research and information to justify the decisions we make for the business, so we’re transparent as possible, identifying why and what we’re doing, and the reasons for the solutions we propose.

So moving forward that’s the platform we want, constantly asking the membership if there is anything we missed, then integrating their feedback. Our priority is maintaining an open conversation, but not so democratic that it is not functional across the different skillsets of how we lead the company, or being blocked by a vote-by-committee approach We keep everyone involved, and by doing that, if there is a difference of opinion, it builds this constant trust between those involved. As we scale, we’re trying to figure out how to make these conversations more meaningful again, trying to segment the groups we’re engaging, the process of how we bring out new features on our website, and how we bring people into the testing process to support its refinement and adaptation.

NS: One advantage of having artists as co-owners means we can be really transparent. We don’t have to hide information from our members, we can release financial data, we can talk about confidential contract negotiations, we can get them involved from very early stages, open the books to them so they can have educated and informed responses. Whereas, if were a private company we would be much more guarded about the information we share with the artists. Thankfully we don’t have to do this.

Illustration by Nick Taylor

JGF: A private company’s executives have the right to sell the company. Within your co-op, what control and rights does Class C have over a possible future sale?

BW: For us to move forward with a sale, it would have to go through a resolution process and be agreed on by the members. Full Stop.

You spoke about your background in the private sector. How much has it informed and enabled the business development of your co-op?

BW:  We are really lucky with the team that started Stocksy, bringing around 15 years experience in specialised areas. We had the developer who originally built iStock, we have marketing experience, and business development. All of us share the experience of knowing how to grow companies in the private sector into profitable companies, but all of us want to do that with about being horrible, or evil, and selling people out. I think that’s a big reason why we’ve been able to get traction so far, is that experience, but using it to support people.

JGF: You’ve said that being a co-op is a secondary, if not tertiary, reason why photographers apply to become members of Stocksy. This obviously means that Stocksy has developed a financially rewarding business model. But beyond better remuneration, what other advantages are there to being a member of the co-op for your photographers?

BW: I think as a whole, people want to work with companies that they can believe in, and feel good about working with. So that’s being able to trust the company we’re working with, its having access to ownership and opportunities for collaboration, knowing how the business runs. For artists it is knowing that they will also be treated as people, as individuals, that is really important. Second to that, the health of our community, and the inspiration and mentorship that follows from it. It is that we are always looking to create the best work we possibly can, which can sometimes be demotivating: ‘I can’t hit this bar, it is too high’, but when you hit it, you are really happy and you are doing it with a group of people who are likeminded and wanting to do great things. Basically, all the healthy things you look for in a career.

JGF: Do you think the quality of the community within the co-operative has enhanced the business?

BW: Definitely. I’ve been working with companies for the last 15 years where the underpinning of the product is the community. But 15 years ago, as Friendster and Facebook were just getting traction, there wasn’t value in communities, there was value in address books. But the approach or attitude towards communities was that they were just a lot to manage, an annoyance almost.

I came out of the community to work at iStock, so I’ve been on the other side. If you don’t have a healthy community working with you, you don’t have a product. And you have a PR nightmare!

JGF: Voting rights are an important part of workplace democracy, and you’ve developed your own platform for members to discuss and vote on proposals. With Loomio now being used by city governments and other institutions, tools that enable distributed group voting are obviously becoming more important. What is your experience of working with a distributed virtual membership and how might it inform others working on these scales?

BW: I don’t think we’ve nailed it yet, and there is still a long way to go. Our platform is still the same as the day we launched, it is very basic but following that, I wouldn’t worry too much about the quality of the tools you are using, as long as they do the things you need: a place for people to talk, a place for your co-op to distribute information, to participate and vote on the direction of the business. Overall, we’ve relied less on the resolution and voting features, despite taking the time to custom build one, because we spend a lot of time in the forums talking to people. Since we’re having a constant conversation with members and doing our best, any business move we suggest that affects them financially or the direction of the business, we ensure we educate members about why we’re proposing it. The resolution and voting tool doesn’t actually need to be there if you’re listening to members on a daily basis and integrating it into your decisions.

You can spend way too much time and money trying to make the perfect tool, when it is really about the quality of conversation on whatever platform you decide to use.

NS: We explored lots of third-party software, like Loomio, and while it is a great product, it had a lot of features that we just didn’t need. In our baked-in product, the product we developed, coupled with our forums, it was good enough for the immediate problems we were trying to solve. If we decide to make it more complicated, we might look elsewhere, but as Brianna said, having open conversations on a simple platform has been the most effective.

JGF: What have been the most challenging proposals?

BW: The membership cap. And we still don’t have a solution here. We proposed creating a non-membership class, but even though it had a majority vote, after going to many co-operative events, we were told it was a very frequent mistake being made by co-ops, as you’re introducing classes for how to treat people, and is the antithesis of being a co-operative. So we had to go back to the membership and say, we thought this might be the answer, but this is often what seems like an easy solution, it is not, and we don’t think we should move forward with this proposal. And it is not sure what we should do next.

NS It was hotly debated within the community, from both sides. And we did have a majority vote as Brianna says, but it wasn’t unanimous, and there were many people who were very vocal against the proposal, so it gave us pause to consider that there might be a better way to approach the issue and a new vote to be considered.

JGF: How many proposal come from each class? Is there a good mix?

BW: No! No resolutions have come out of Class A. With Class B there have been some exploratory things of crossover in multiple classes, that they’ve had to put to a proposal. But in terms of direction of the company, they’re coming from Class C. Last year, I think we had about 20 proposals.

We’ve tried to make the resolution process work for us, too. At one point we brought in some external advisors who were trained in Italy. They reviewed all of the resolutions and rejected them all—these aren’t resolutions. That was horrible for the community. So if all of our resolutions are not meeting a resolution expectation, then we need to adapt how we’re receiving this feedback, so we’ve created three classes of resolutions. One is site suggestions and improvements to what we’re doing—this doesn’t require a resolution, just consultation with our product owner.  Two is an idea for discussion. One thing we observed with many resolutions were that they mainly solutions without identifying what they were trying to solve. Great idea, but we need to know why we’re doing it. Three is an actual resolution, the biggest one coming from the membership is video and that being approved.

JGF: Stocksy is one of the success stories of the Platform Co-op movement—you’ve been able to raise significant finance, and are now profitable. What do you think is needed within the sector for co-operatives to increase their market presence in the digital economy?

NS: A great product! One thing I took away from Open 2017 is that most organisations were co-ops first, and products or businesses second. I think we are fortunate for having a very strong product vision from the very beginning, and that the co-op structure worked for our business model. So someone looking to start a co-op needs to have a really good product or business plan first, then make sure that the co-operative model fits that secondarily. If you have no product, then it just becomes ideological and you lack a viable product.

Speaking to Nathan Schneider or Trebor Scholz, you learn that there are companies doing some amazing things, like Green Taxis in Denver, Colorado, who found a need and a business model that fit.

JGF: There are many well-known artist co-operatives, such as Magnum Photos and Pentagram, though they are not actively part of the movement. Is supporting new creative digital agencies to set up as co-operatives part of Stocky’s strategy for the future? And supporting the broader platform co-op movement?

BW: I don’t think our goal is to support competitors! We definitely get a lot of reach outs from other organisations about how to do profit sharing with people they are working with. Anything we can do to share knowledge, tell people about the stumbles and mistakes we’ve made, exploring the assumptions of being a platform co-op, since there are not many examples out there, it’s an incredibly important part of what we’re doing, supporting the platform community. At the end of the day, coming back to the previous question, I think it is about making it more easily understandable and accessible, I think there are many false assumptions that make people think co-ops are more complex and challenging than they actually are, when really it is only a way to approach business. It is not like it is some crazy, different way of doing business, it is just a commitment to investing in your people upfront, instead of having lots of resources to respond to an angry community that is misaligned with your product—which is what private business end up doing.

Brianna Wettlaufer is the co-founder and CEO and Nuno Silva is Vice President of Product at Stocksy United, an artist-owned, multistakeholder co-operative in Victoria, BC (Canada). With its stable of hand-picked photographers, Stocksy produces high-end and beautiful imagery.

Reposted from STIR Magazine

The post Brianna Wettlaufer & Nuno Silva on Stocksy United appeared first on P2P Foundation.

In the run-up to OPEN 2017, where Brianna will be speaking, Oliver Sylvester-Bradley explores her experiences of setting up and running a platform business as a co-op.

OSB: Why did you and your business partners decide to set up Stocksy as a co-op?

BW: Stocksy launched in 2013 in response to a desire to set up a business that put the power back into artists’ hands through shared ownership, transparency of business, and collaborative planning through AGMs, resolutions and ongoing forum discussions. This was an important mission for us after having worked at other stock photo agencies where we saw artists [the producer-workers] being disenfranchised by having royalty percentages clawed back with little control or stability over their futures – we wanted to change that.

We also wanted to change what “stock” meant in the creative world. We wanted to reinvigorate the passion in photography and design and change the landscape of the common content found in most stock collections. To achieve this shift we focused on the work we loved, what inspired us, and ensured content was hand-selected to guarantee a high calibre, while leaving behind all the tired cliches.

OSB: How did you obtain the funds required to set up and launch Stocksy?

BW: Stocksy was started with an initial private shareholder’s loan of $1.2 million from co-founders Bruce Livingstone and Brianna Wettlaufer. Working with a bootstrapped budget and a small but strong team, we were able to keep overhead costs low and reach profitability by our first year in business. We paid back the loan in full by 2015, in addition to paying out our first $200k USD in dividends to our members.

OSB: Stock photography, with distributed suppliers and customers transacting via an online platform, seems to fit very well with the Platform Co-op model and Stocksy is often referred to as one of the best examples of a viable, working, Platform Co-op. How practical do you think it is to imagine platform co-ops succeeding in other industries?

BW: The co-op model is incredibly complimentary to online platforms, we just need more leaders, executives and innovators who are interested in creating a financial model that benefits the many over pursuing millions for a select few or seeking to create a product designed with an exit strategy. As an old model that is becoming new again, there is still a lot of education and understanding to be created and shared around the benefits of trusting your community and investing through transparency as a business model.

…we just need more leaders, executives and innovators who are interested in creating a financial model that benefits the many over pursuing millions for a select few…

What we’ve experienced running Stocksy is that the accountability to our membership is no different than the reports required for investors or boards within traditional business models. The beauty of the member-shareholders is that they are not only incredibly familiar with what and how your product is used, but they’re additionally very focused (and therefore invested) on the long term vision and strategy for the business to achieve success. This creates incredibly valuable feedback and collaboration for your product, while maintaining its long term integrity.

Over the last year, we’ve had reach-outs from a number of incredibly unique businesses doing interesting and valuable work supported by communities of workers. Those communities include anything from engineers, artists, chefs and even scuba divers, all with inspiring ideas about how their collectives can set up business models to have better profit sharing. We’ve yet to see any limitations around exploring a profit sharing model in any industry; the “how” just has to be adapted to serve each community and their needs – how they gather feedback, achieve transparency, and have a profit sharing model that still maintains not just the financial sustainability of the members, but the business as well.

OSB: How did you find the process of establishing a co-op?

BW: It was definitely an exploratory process setting up an online platform as a co-op back in 2013/14. We had legal advice but there weren’t a lot of established practices or businesses that we could look to as examples. So we approached it with the same goals as you would a normal business, establishing bylaws that support and protect the long term success of the business and our members.

The one thing we knew that could hinder a business was taking democracy to an extreme at the expense of experts being unable to do their jobs, operate efficiently, and in the world of tech, be able to move and adapt quickly to business demands and challenges.

We, of course, always aim for 100% support from our members in everything that we do, but not being able to move forward without unanimous support or participation would be unrealistic.

Another common considerations is how you’ll put value on shares. In our case, we value them at $1 USD, and a share is a share, so you can’t own more in order to have more voting power.

Lastly, you’ll need to outline what onboarding and offboarding means to you. Do members have to meet a certain criteria in order to keep their membership? If they don’t meet that criteria, how aggressive will you be to cull your membership – and is that a sustainable solution?

OSB: Most people think setting up a co-op is harder than setting up a Ltd company – what would you say to them?

BW: Setting up an Ltd may initially seem easier by virtue of its familiarity and I hope one day setting up a co-op is held in the same regard.

The difficulty, like any business, will likely be the resources you initially have available. In the instance of a co-op, you need a product and a community from the outset, which poses different challenges than a traditional business model. You have to be extremely pragmatic about how you grow and prioritize those two things. Focus too heavily on having a community first and your product may suffer. Focus too much on your product without enough engagement or governance and you may not build the momentum and investment from your community to create a successful product.

The answer to that challenge will be unique to every business.

OSB: What other advice would you have for anyone who is thinking about setting up a co-op?

BW: Don’t feel inundated or overwhelmed by getting your legal perfect or over-documenting rules in the beginning. Set up bylaws that ensure transparency, accountability and engagement, but don’t over-define it. Be ready to trust and explore the parameters and measures you need with your community as it grows, evolves and develops its own culture, and then be able and willing to adapt to ensure the success of the business.

But really, I will emphasize trust. Choosing to set up your business as a co-op means you have to truly believe in absolute accountability to your community. When you set up your business to invest in open conversations from the beginning, your ROI will pay itself back twofold. Don’t be afraid of varied opinions or worry you may lose control of the company by having co-owners. Being a co-op creates deeper purpose and a richer experience when building a product that you believe in.

Being a co-op creates deeper purpose and a richer experience when building a product that you believe in.

OSB: People often think it must be really hard to make decisions and achieve consensus if everyone gets a say in how a business is run. How do you make decision at Stocksy?

BW: I think one of the big points of confusion is understanding what a business driven community resolution process looks like. We use our forums and resolution mechanisms to gauge and understand ideas, product direction or issues that need to be addressed. This often requires a deep dive in conversation to assess proposals and understand the pervasive needs within the community.

Common mistakes to watch out for are solution proposals that lack true understanding of what they are trying to solve. It is the business’ (and board of directors) responsibility to facilitate that conversation to make sure that everyone has comprehensive insight into the why of a problem or challenge.

As a business, once we’ve identified the issue or idea that we’re trying to address or solve, as experts in their fields, it is the business professionals who conclude the how that follows. This isn’t to say we don’t love input from our members, but ultimately the business needs to access ideas and scope, how it relates to a product roadmap and goal strategies, and report that back to the community of shareholders.

OSB: So, I presume you are a multi-stakeholder co-op with different classes of members?

BW: Indeed we are a multi-stakeholder co-op. From conversations I’ve had with others working in/with cooperatives, I’ve often heard multi-stakeholders are a less commonly used setup, but this model works especially well in the platform co-op sector. It allows every level of people involved to be stakeholders, in our case that is:

• Class A – Founders and advisors (5 max)
• Class B – Staff (a latter development after we realised how hard and invested our staff were in helping grow the business, we realised they needed the same sense of ownership as our members. Early founding staff are represented here, and new staff that complete 2 years of commitment are now eligible.) (20 max)
• Class C – Our artists membership (1,000 max)

OSB: And how do decisions actually get made?

BW: Our goal is decisions are a continuous conversation that allows us to always be adapting and improving upon what we’re doing. This has definitely gotten more challenging as our membership has grown and headquarters takes on more layers and responsibility as the business scales. This is currently a huge priority for us, improving our monthly member newsletter, monthly/quarterly reporting on analytics, facilitating conversation from submitted resolutions by our membership (a process that’s open year round) now lead by our VP of Operations, one of our most recent changes in communication. We’ve explored multiple staff and roles to make our resolution process as engaged and timely as possible, but its definitely challenging making this a seamless process. We’re really excited to be connecting our members directly with a person on our executive team, in particular the person responsible for managing our backlog of priorities and working with departments to create solid documentation in order for projects to get prioritised.

The resolution process is there to identify new business opportunities, improving upon our existing product, as a means to improving our co-op and member engagement, etc. Something that’s important working together collaboratively and in as flat of a hierarchy as possible is that we still respect the business experts so they can bring their experience and expertise, but they can only do that when a resolution successfully identifies the problem it’s trying to solve first vs. jumping to the solution.

OSB: From your experiences, how would you compare decision making within a co-op structure to that within a Ltd Company?

BW: Being accountable to a community vs. a board of removed executives or VCs, is hands down my preferred method. Accountability to a community creates a much richer and more fulfilling experience. Having an engaged community drives business in a direction that you can always feel good about at the end of the day.

I will note, you have to invest in the education and communication with your community first, which can be more work up front than a traditional Ltd company, but in the long run it amasses a group of people that share a common value set and ethos which generates the framework for attainable and sustainable company trajectories.

OSB: What software do you use to manage Stocksy?

BW: Stocky’s online platform for transaction, managing our content library and managing our online community is all custom built.

On the day to day, we use JIRA as our project management system across all departments and Google Docs for collaborative documentation.

All staff and remote contractors use Slack everyday to maintain constant communication.

And we all keep energy up by sharing music through Spotify.

OSB: Do you use any open source software?

BW: Our controlled vocabulary is based on Wordnet, an open source dictionary / lexical database from Princeton.

OSB: You seem to be a fan of democracy, as am I, however, I’m not sure I have ever experienced it. What do you think real democracy is?

BW: Democracy, to me, is creating a system that values fairness. It levels the playing field across all walks of life involved, so that everyone can feel heard and have a say in the control of their futures. A democratic system is enforced by shared accountability that invests in creating success for the many, (vs. the few), by championing support, mentorship and education so that everyone’s involvement in the system can be as valuable as possible. Finally, I think democracy aims to create a feeling of respect, pride, ownership and end goal of sustainability through focusing on the long terms goals.

Democracy is creating a system that values fairness… so that everyone can feel heard and have a say in the control of their futures.

OSB: We are often exposed to the vision of a world full of hate and extremism and scarcity but rarely hear about a positive alternative. If platform co-ops, the solidarity / generative economy take hold it strikes me we could be living in a very different world in the future. Can you describe what you think this world might look like?

BW: I think the co-op model, as an old model becoming new again, provides amazing opportunities for companies looking to achieve both a more collaborative and financial model that creates deeper purpose and involvement. To envision a world where everyone is using the co-op model I would say is taking one extreme and replacing it with another. It’s important to celebrate diversity and individuality as a key component to fostering innovation and we need a variety of approaches, models and ideas to achieve that and maintain that my momentum. My ultimate hope is that as more Platform Co-ops are created and more people become familiar with it’s structure, it will become something more common that more entrepreneurs will turn to.

Deloitte Global’s sixth annual Millennial Survey stated, “76 percent say businesses, in general, are having a positive impact on the wider society in which they operate”, and that they “view business positively and believe it’s behaving in an increasingly responsible manner”; however, “Overall, only 36 percent of millennials expect the social/political situations in their countries to improve during the next 12 months.” Which I think demonstrates that our values in business are changing, but it’s up to us to make that difference happen.

OSB: What do you see as the main stepping stones for this vision to become a reality?

BW: There seems to be a lack of easily accessible information about co-ops and this lack of information makes it difficult for more companies (and people) to become familiar with it’s values and structure. A next stepping stone is to use the momentum that cooperatives currently have to connect with educational institutions to include cooperative education within programs for the next generation. This will ensure that students are entering the workforce with a functional knowledge of the ethics of values they can bring as entrepreneurs and executives.

As more Platform Co-ops gain traction, we’re seeing many come together to combine knowledge and experience to empower other co-ops. My hope is we start seeing tech based co-op incubators, mentor programs and investment programs to support the next wave.

OSB: At The Open Co-op we’re working with The Hive, a co-op incubator here in the UK, so hopefully the change you describe is beginning to happen! Thank you for your time Brianna, we look forward to hearing from you at OPEN 2017 and we wish you every success with Stocksy.

Cross-posted from The Open Coop

The post “Creating a financial model that benefits the many over the few” – A Q&A with Brianna Wettlaufer, CEO of Stocksy appeared first on P2P Foundation.