In this interview we caught up with Felix Weth, founder of Fairmondo. Fairmondo, a co-operative social business, is a fair mass marketplace that aims to fight corruption and give power back to the consumer and crowd. 

Felix Weth talks about Fairmondo, whom we recently profiled in our Commons Transition Primer. This interview was originally published by TBD.

What was your motivation for founding Fairmondo?

There were two main motivations for founding Fairmondo, both probably not what you might expect. First, I had been thinking for long time about how we can really address the problem of corruption. After giving it much thought, I realized we will have to change the way our economy works. So why not try by creating an enterprise that works differently, and at the same time, raises funds for anti-corruption activists.

Secondly, I was travelling through African countries in 2011 and realised that everywhere the Internet was spreading quickly, yet the notorious online monopolies from the US, Europe, and Asia had not yet fully grabbed these markets. To me it appeared that there is still a chance to keep these markets locally owned. So I thought, why not try to start a global network of user-owned companies that will face the financial power of the large online multinationals through the power of the crowd. Here we have a true common interest of the “normal people” from “North and South”.

Fairmondo used to be Fairnoply, why the switch? What’s different now?

We had legal issues with the name Fairnopoly. But also, it did not really fit to the next step we wanted to take: Making our marketplace more mainstream and developing it into a mass-marketplace – just with a fair, crowd-owned business behind it. There is still a long way to go, but with Fairmondo we widened the target group from the proactive “changers” towards conscious online-shoppers.

Over 1,900 people are currently part of the Fairmondo co-op – can you explain how it works and what the benefit of this model is? Is there any downside?

In short, our coop allows any user to become an owner and make sure that we live up to our principles. One important aspect is that no one can buy larger shares – Fairmondo is not designed to make anybody rich, but to benefit society. We also have defined a maximum salary range. The highest salary can be at max three times the lowest. These measures are designed to ensure that even if Fairmondo grows big and starts generating massive revenues, it will never be interesting for people whose goal in life is making the most money possible.

One downside is that we have a special challenge in raising sufficient scaling capital (which would normally be several million Euros for a project like ours). It is not impossible, it just requires convincing a lot of people. In some moments, we have done quite well in convincing the crowd that we need to push together to create something big. At other points it got much more difficult, in particular when things took much longer than we had expected.

This poses quite a significant challenge, you need sufficient funds to create a product that fascinates the crowd and you need a reasonably convinced crowd to raise these funds. However I think we are on the right track, thanks to the enormous support of many people and in particular, the enormous efforts invested by our team and external volunteers.

How do you measure your social impact?

By the size of the market share that we have taken over from Amazon & co. Thus so far not a whole lot…

But we have achieved other positive impact, for example by spreading our model. There are four more coops 2.0 now, and we continue consulting other young startups who pick up the coop-model, despite its still dusty reputation in Germany. (While being the most progressive legal structures our society has yet developed).

And in 2014 we did our first balance of common goods “Gemeinwohlbilanz”, a tool to measure the social impact of any business though a variety of indicators.

How are you financed and how do you plan to finance yourselves long-term?

We are financed through the shares of our 1900+ members plus some private loans by our members. More than half of the shares we raised through crowdinvesting campaigns.

Of course, on the long-term Fairmondo needs to sustain itself fully through its business. To achieve that more quickly, we have just launched a new product, a system of monthly subscriptions to baskets of fair and sustainable goods. Behind the baskets are a strategy that involve local shops and transport by cargo-bikes, if you’re interested in learning more, you can check it out here.

You’ve earned substantial sums through your crowdfunding campaigns, how do you motivate people to support you?

We asked our members, and by far the most important motivation for them is our vision: To create a fair, democratic large-scale enterprise that becomes a true alternative to the currently dominating online-marketplaces.

I think it also helps that we try to be as transparent as possible, including talking about our mistakes.

Every endeavor has its ups and downs, was there ever a low point and if so, how did you overcome it?

Oh yes, we had ups and downs and many more will come! A low point was at the end of 2013, when we had just launched our second big crowd funding campaign to finance the next year. The problem was not so much that we had run out of money or that our trademark was challenged. It was rather a collective low in the motivation and energy of the team. Which then had negative effects on all other issues, in particular our campaign. We had worked unpaid before and we had taken absurd challenges before, but you need some inner strength for doing that.

The whole of last year we worked on an extremely tight budget and finally had to radically cut paying ourselves again. Some people left, but with the remaining team we have a much better spirit than in the last crisis. This makes me optimistic that we will eventually succeed.

What are three learnings you would share with other social entrepreneurs?

First: Don’t overwork yourself. If you get into that situation, it comes at the expense of the strategic overview. And that weakens every aspect of your project.

Second: Have the courage to delegate and let people help you. But never forget that you are still responsible for the things you delegated and for making sure they work in the end.

Third: Carefully reflect on the expectations you create. Not what you actually say, but what others understand. Managing expectations once they are there (even if you never promised them) is much harder than (unintentionally) creating them.

The post The New Cooperatives: the case of Fairmondo appeared first on P2P Foundation.

(16 mins) Felix Weth — Fairmondo is an online marketplace owned by its users. It is open to professional as well as private sellers, with no general restrictions on what products and services can be offered, except for illegal offers or offers deemed unacceptable by our members. By contrast, through the positive promotion of products that fulfill a set of criteria for “fairness,” Fairmondo makes it easy for users to shop in line with their values. These criteria are constantly open for discussion and improvement by members and the broader user base. Founded in Germany in 2012, Fairmondo is a multi-stakeholder cooperative with open membership for every person who feels affected by its activities. Its statutes include a legally binding commitment to uncompromising transparency and democratic accountability. The managing board is elected by the employees, to ensure a culture of mutual respect within the operating team.

The post Felix Weth on Fairmondo and Open Multi-Stakeholder Coops appeared first on P2P Foundation.

The basic point of the conference was to:

“imagine a transparent, democratic and decentralised economy which works for everyone. A society in which anyone can become a co-owner of the organisations on which they, their family & their community depend. A world where everyone can participate in all the decisions that affect them.

“This is not a utopian ideal, it is the natural outcome of a networked society made up of platform cooperatives; online organisations owned and managed by their members. By providing a viable alternative to the standard internet business model based on monopoly and extraction, platform cooperatives provide a template for a new type of organisation – forming the building blocks for a new economy.”

The idea of “platform co-operatives” – launched at a seminal New York City conference in November 2015 co-organized by Trebor Scholz and Nathan Schneider – has quickly found a following internationally. People have begun to realize how Uber, Airbnb, Taskrabbit and countless other network platforms are distressingly predatory, using venture capital money and algorithms to override health, safety and labor standards and municipal governance itself.

The London event showed the breadth and depth of interest in this topic – and in the vision of creating a new type of global economy.  There were folks like Felix Weth, founder of Fairmondo, a German online marketplace and web-based co-op owned by its users; Brianna Werttlaufer, cofounder and CEO of Stocksy United, an artist-owned, multistakeholder cooperative in Victoria, British Colombia; and co-operative finance and currency expert Pat Conaty.

Trebor Scholz’s opening keynote

There was a lot of talk about building new infrastructures that could mutualize the benefits from local businesses while connecting to a larger global network of co-ops sharing the same values.  Among the tools mentioned for achieving this goal: Mondragon-style co-ops, government procurement policies to favor local co-ops, shifting deposits to local credit unions, and crowdfunding citizen-led community development projects.

One of the more impressive works-in-progress that I encountered is called Reciproka, which proposes a legal, financial and governance structure for federating a network of co-ops, each of which would mutually own portions of the others through a jointly owned trust. The idea is to build a “counter-economy that is able to perpetuate itself on its own,” explained Janosch Sbeih.

To help achieve this goal, Sbeih and his partner Jérôme Birolini proposed a scheme by which aging baby boomer entrepreneurs could retire by converting their conventional businesses into employee-owned coops rooted in local communities.  Participating co-ops would band together and contribute to a common fund.  The federation would work to build a larger, diversified network of like-minded co-ops while building a pool of shared funds. All co-op members would act as voting trustees in a overarching legal structure that would eventually become the sole owner of the co-operatives. There are some refinements that need to be made to the Reciproka plan, but it gives you an idea of the bold thinking at the conference.

There were other fascinating discussions, such as a panel on “Future Makerspaces in Redistributed Manufacturing.”  The focus here was on open design and manufacturing as the core infrastructure for building a new type of circular economy.  Instead of the “extraction – use – disposal” sequence for economic activity, the goal would be to institute cycles and spirals that minimize waste and focus on local needs.  While the future business models for open manufacturing remain somewhat speculative, one idea put forward was a business that would help individuals build their own stuff at reasonable prices – in conjunction with FabLabs, for example.

Proponents of new forms of distributed manufacturing consider it a Fourth Industrial Revolution (the first ones being agriculture; the steam engine; and electronics).  Emerging trends point to a production system that will be distributed, not centralized; digital, not mechanical and electrical; oriented to direct, on-demand production; using mixed forms of intellectual property; and based on open source principles that are accessible to anyone.

There were other fascinating panels – on alternative currencies, collaborative decisionmaking, trust and reputation systems, open data, “bread funds” for the self-employed, and much else.  I participated on a panel introducing the commons and exploring the role of open co-ops (as explained by Stacco Troncoso of the P2P Foundation) and the blending of co-operatives and commons (as described by Nicole Alix of La Coop des Communes).

There is clearly a lot of creative development still needed to actualize the ideas presented at Open Co-op.  But a big barrier, especially among traditional co-ops and trade unions, may be the skepticism or ignorance about these fresh ideas. It can be hard to embrace the unfamiliar.  Fortunately, the Open Co-op conference helped expand people’s imaginations, provide hard evidence of working models, and encourage new experiments.  May this conference become an annual affair!

Photo by CodyJung

The post Building a New Economy Through Platform Co-operatives appeared first on P2P Foundation.

True sharing organisations share the organisation too, by making members owners with real democratic voting rights, enabling them to have a say in the decision by which they are affected.

Saturday night is not the time most people chose to meet to discuss disrupting democracy.  But that’s what happened at the Platform Co-ops event in London on the 21st of May 2016.

Whilst most of Brick Lane was quaffing vast quantities of craft beer and sipping organic low-fat soya lattes with tofu sprinkles whist discussing how awesome it was that #rainbowunicornkittens was trending on twitter, over the road at New Speak House, a collection of hackers, designers, systems thinkers and aspiring cooperators gathered to discuss the bourgeoning movement know as Platform Co-ops.

New speak House is an amazing place founded to “foster the creation of technology to disrupt the UK political / media / government complex” and it is doing exactly that. It’s an events venue, community space, residential incubator and general hangout set up for people who want to change society with technology, and meet other people with similar interests, the perfect place for progressive peers to plot.

The Platform Co-ops event was organised and sponsored by the excellent Outlandish which meant everyone was suitably furnished with bagels and beer absolutely free, a fitting start to a co-operative gathering, which was kicked of by Nathan Schneider, organiser of the Platform Co-ops event in New York last November.

Nathan is a journalist who, along with Trebor Scholz, has helped elevate the subject of Platform Co-ops into the zeitgeist. Whether the newfound interest in Platform Co-ops simply reflects the growing unease with the rise of the deathstar platforms like Uber, or is the makings of a movement to disrupt democracy remains to be seen but the buzz from the brains at New Speak house certainly implied the later.

Nathan Schneider

Nathan gave a great introduction, framing the debate superbly; it’s all about ownership and governance. The so called “sharing economy” platforms which “share” their apps with consumers and producers whilst rinsing value from them to make venture capitalists rich, is not really sharing at all. True sharing organisations share the organisation too, by making members owners with real democratic voting rights, enabling them to have a say in the decision by which they are affected.

Felix Weth

Next up was Felix Weth, founder Fairmondo, a German, co-operative, alternative to Amazon, which is owned and managed by its members. Felix spoke extremely candidly about the difficulties of putting Platform Co-operativism into practice. Building a working alternative to the worlds biggest online retailer is never going to be easy and it was refreshing to hear about Fairmondo’s open philosophy. Felix showed how any profits they generate are split four ways with 25% going to: Owners of shares in the co-op, People who have earned Fair Founding Points, to other Non Profits, and the final 25% to upscaling Fairmondo. I’ve never seen a founder of a company openly present a slide showing the status of their bank account before! We’ll be keeping a keen eye out for the UK version of Fairmondo, coming soon.

Fairmondo’s 4/4 model of profit distribution

Last up was Sarah Gold, creator of the concept “Alternet”, an open source, peer produced, run, owned and maintained version of the internet. Sarah’s work on Personal Data Licences which was exhibited at the Big Bang Data exhibition at Sommerset House kicked off some interesting discussions. In a post Snowden world the idea of owning your own data, as well as the platforms and other organisations upon which you depend is an inciting proposition.

Sarah Gold’s Data Licences concept

If the growing number of other examples of member owned platforms and co-ops we heard about are anything to go by, Platform Co-operativism is a concept that is only just getting started. Whether it can actually manage to disrupt democracy remains to be seen but the only way that is going to happen is if we (the people) make it happen.

Sign up at 2016.open.coop to be kept up to date about the two day conference on Platform Co-ops that is being planned for London later this year.

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Note: All Procomuns videos feature simultaneous translation, please switch from left to right channels to change languages.

This plenary was filmed at PROCOMUNS, a 3 day event which was held in Barcelona in March, 2016 to discuss commons-oriented approaches to public policy, peer production and the commons collaborative economy. Key goals included proposing public policies and providing technical guidelines to build software platforms for collaborative communities. You can find more Procomuns material on the P2P Foundation blog, compiled under this tag.

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“The common vision of Fairmondo is to create a true alternative to the big online marketplaces and thereby provide a model for others who want to set up democratic and fair business at a larger scale. My personal long term vision is to create a multinational cooperative that is strong enough to outcompete the very big players currently dominating the market.”

The above is a quote from co-founder Felix Weth in an interview conducted by Chelsea Rustrum for Shareable.

Fairmondo wants to create a scalable fair ecommerce platform and is one of the pioneering platform cooperatives with a innovative redistribution scheme that honours unpaid contributions.

* Chelsea Rustrum: How did you originally fund Fairmondo and how are you sustaining it now? Did the crowdfunders automatically become members or was that a separate process? How does all of this work legally?

Felix Weth: We originally funded Fairmondo through crowdfunding, using a platform to distribute coop-shares. The crowdfunding platform thereby provided an escrow service—they collected the membership applications and once our campaign had successfully ended, they handed the applications to us. We thus applied the requirements of German cooperative law to the crowdfund. Since then, we regularly do a membership campaign. Today, our monthly costs are covered through income from fees and subscriptions by customers.

We used the German platform startnext.com. With them, we developed a solution of how we could crowdfund coop shares through their platform. Two examples are (both still under our former name Fairnopoly): startnext.com/fairnopoly and startnext.com/fairnopoly2

So far, we’ve done two campaigns for raising member shares. Another one is scheduled this spring.

* What is your business structure in Germany and what would it be in the U.S. if you localized here as well?

Fairmondo is registered as a cooperative, according to German law. In order to preserve our vision even if the project grows big, we developed a set of principles and bylaws that we call “Cooperative 2.0”. They consist of seven core elements, which any new Fairmondo chapter needs to adapt. Among those are mechanisms to ensure democratic ownership and accountability, as well as an uncompromising commitment to transparency. Internally, local coops are largely free to adapt their preferred modes of operation. In Germany we are adapting a holacracy type of process.

Here are the seven core elements of Cooperative 2.0:

* 9/10 people have to agree to change anything in the general principles
* Democratic accountability to all stakeholders
* Independence of individual vested interests
* Uncompromising transparency
* Distributed profits (see 4/4 profit distribution model)
* The magic of the crowd
* Open source

* What is your management model?

There is no specific management model attached to Fairmondo’s coop 2.0 model. In accordance with German coop law, we have a managing board that is responsible (and liable) for running the company. Formally, this board takes decisions and is free to set up internal organizational processes.

The one thing that is special in our model is that the managing board is elected by the employees. This enables employees to elect a new board if they do not support the management style implemented by the existing board, or if they feel they do not get sufficient voice in the design of these processes. Combined with the principle of uncompromising transparency, employees are thus empowered to make sure that the company is run in a way they are comfortable with.

The managing board knows it can be replaced by the employees, so it has a direct incentive to work for an open and respectful organizational culture and to listen to their needs, suggestions and critique. Which specific style or model suits the needs of the team best, is really left to the people in place.

In our coop back in Germany, we are in the process of introducing a holacracy variant, because it comes closest to what we have been practising so far. But this can change when people change, when organizational growth requires different solutions, or when we learn of new useful management models.

* How do you pay your employees? Do you feel they are adequately compensated or does that come once there is a surplus?

Right now we work on a very limited budget and this forces us to work with very moderate salaries. We did and do communicate this constraint on our job ads and interviews. At one moment we did have to reduce our team, which at the time was mainly paid through the starting capital we raised in our crowdfunding campaign. We then had to restructure into a setup that is covered by our monthly income.

As we have monthly presentations of our budget situation with the team, everybody was aware of this. The restructuring was then a quite difficult process in which we brought employees’ needs, business needs, and budget limitations into a balance that worked for us. Also, Fairmondo is supported by many volunteers (including the managing board), and some employees choose to work more time than they are paid for.

In order to compensate for this, our Cooperative 2.0 model uses a special “Fair Founding Point” system. For every unpaid hour contributed to Fairmondo, members receive an equal number of 200 points. These points are registered in the bylaws and entitle those members to an extra share of the surplus once the cooperative works successfully enough to actually make one.

* Can you please explain your four-pronged approach for distributing surplus?

Fairmondo aims at very broad membership (We now have over 2,000 members, if successful it should have hundreds of thousands.). We therefore defined very clearly what should happen with any surplus in case our business grows big:

* One quarter is distributed to members through their shares
* One quarter is distributed through the Fair Founding Points just mentioned
* One quarter goes as donations to nonprofits that the users decide on
* The last quarter is used for developing the wider Fairmondo project”

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