Stop Chasing Unicorns

Lieza Dessein and Chiara Faini: There is a fundamental flaw in the narrative of the startup culture: everyone is chasing Unicorns i.e. private companies valued at one billion dollars or more. Instead of aspiring to this elusive goal, should we not pause and wonder if it is really worth it? Rather, we should ask ourselves: is it really worth it? How much does society benefit from these companies when one does not merely consider their financial value? This focus on monetary valorization results in forgiving much of the negative impact they may have on their environment: the working conditions they provide, their general social impact and the redistribution of their value.

Collectively, we got lost in the rush for innovation. In the era of digitalization where solutions are only a few clicks away, we are looking for instant gratification. We subcontract daily tasks, decision-making and management to softwares that indicate the most efficient solutions. This process creates an ultra-competitive society where it is difficult to find space for human involvement nature, its diversity, its inherent complexities and our well-being. Instead, we trust simplistic binary solutions provided by digital platforms that often help us solve minor inconveniences, whilst creating ethical loopholes.

Lieza Dessein and Chiara Faini

Platform Co-op: a Disruptive Narrative

Entrepreneurship within specific social territories is a complex matter. In order to create a company that truly makes a positive impact, there is a need for a complex balance between all stakeholders and their environment. Businesses driven by values rather than mere profit do exist. These social enterprises have proven to be sustainable, even if they do not always seek global dominance. Legally, they are often constituted under the cooperative entity or coops.

What if digital platforms were also structured as coops? What would happen if platforms allowed members to vote on the use of their personal data? Or how the value that the platform generates is redistributed? What if users had their say in the strategies implemented to ensure a sustainable development?

Luckily, these questions are not just hypothetical. Numerous companies are attempting ethical digital ventures. Trebor Scholz and Nathan Schneider have developed an impressive corpus of publications over the past three years. Their work provides the framework for a strong narrative that highlights the existence of this sector under the label Platform Cooperativism.

The term gained rapid traction as existing companies recognize their values in this specific narrative. Ethical digital start ups flocked to this specific labeling because it embodies what they are trying to achieve.

. Zebras have two advantages: they are real and, since they strongly believe in cooperation, they move in herds.

The strength of the PlatformCoop Movement is that it creates an alternative narrative for digital entrepreneurship by highlighting existing initiatives as well as the challenges ahead. The diversity of the actors involved in the movement creates a slow but consistent progress in the growth of this sector of the digital economy.

The way our current business models are structured and financed is intimately linked to the dominant neoliberal narrative. It is structurally more difficult for a platform co-op to emerge as there still is too little formalized know-how available. Moreover, the existing financing models are not always adequate. While new Zebras are struggling to emerge, they are also fighting an unfair battle with wannabe Unicorns. These opponents are able to move faster due to suitable financing models, and the lack of regulation and ethics. A shift in this economic paradigm will require time and patience.

There is still a long way to go to make a structural change. If we want to succeed we will need to continue to organize the movement by strengthening our emerging networks and its narrative. Additionally, we will need to embrace patience and appreciate the complexity of what we are trying to achieve.

Nurturing the Narrative by Actions

Shifting the economic paradigm is not an easy task and sometimes it is good to take the time to appreciate the progress that has been made.

The Platform Co-op Movement is colliding with existing and emerging initiatives.

These include but are not limited to groups such as “Open Co-op”: an organization in the UK “building a world-wide community of individuals and organizations committed to the creation of a collaborative, sustainable economy”. The “Zebras Unite Movement” was started in Portland, and calls for a more ethical and inclusive movement to counter existing start-up and venture capital culture. In Paris, “Plateformes en Communs” is organizing recurrent meet-ups for Zebra startups. “Supermarkt” a platform for digital culture, collaborative economies and new forms of work in Berlin is also trying to structure the local PlatformCoop Movement. Another relevant?example relates to the sale of Twitter in 2016, Nathan Schneider suggested to transform it into a co-op. This idea got enough attention to be seriously discussed during the annual stakeholder meeting in May 2017.

Trebor Scholz got an important grant from the Google Foundation to support the economic development of cooperatives in the digital economy. Professor and author Jack Linchuan Qiu is strongly invested in gathering the existing PlatformCoop network in Hong Kong for their annual meet-up in an effort to get the asian coop sector and digital entrepreneurs on board.

The interest for the co-op model is also visible in the interest of academic institutions for the field. The VUB (Free University of Brussels) has started to study the benefits of the co-op model. The idea of platform cooperativism received enough traction to catch the attention of the Region of Brussels. The Region is currently funding a consortium of local experts in order to facilitate and encourage the emergence of platform co-ops. The consortium is composed of 3 organisations combining theoretical and practical skills; “Febecoop” is promoting and developing the cooperative model; “SAW B” a non profit enterprise is advocating for social entrepreneurship and “SMart” a shared enterprise of freelancers operating in 9 european countries that managed to scale its business model by developing a digital platform. The consortium is working hand in hand with “Coopcity” an incubator for social and cooperative entrepreneurship in an effort to create an appropriate environment to start a platform coop. Looking beyond the ambition of the Region of Brussels, the consortium will gather data on best practices from Berlin and Barcelona in an effort to strengthen and broaden existing networks.

The process initiated by Trebor Scholz and Nathan Schneider will be slow but as long as we collectively continue to engage we will make change happen. It is important to encourage and nurture the existing mobilisation of policy makers, unions, entrepreneurs, academics, investors and consumers.

Embrace Patience and Appreciate Complexity

The challenges we are facing today are thrilling. We have at hand incredible technologies, brilliant thinkers and entrepreneurs which could enable us to shift our current world dynamic. This shift would contribute greatly to solving crucial global issues such as the urgent need to reverse the growth of social injustices. Collectively, we have an exceptional opportunity to work towards cultural change. We could move from an individualistic system that aims for personal profit, to a state of mind of solidarity.

To make these things happen, we hold an abounding ecosystem of social enterprises which can give insight on their know-how. Cooperatives have years of experience in managing distributed governance and social impact. We can also tremendously benefit from the unfortunate misconceptions of the current platform-economy as a handbook, which logs a full set of guidelines explaining what not to do and why.

Incorporating these positive and negative experiences can ensure that the tools we develop ensure the well-being of all the actors of the networks we create and bring about a positive impact on the environment in which they operate. In this way, we will be able to create the tools of tomorrow which central values will be social justice and genuine sharing.

Photo by belgianchocolate

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Kevin Stark: SMart is a social enterprise founded in 1998 in Belgium. The project’s aim is to simplify the careers of freelancers in cities across Europe where SMart operates. These days, there are many freelancer services — cooperatives, coworking spaces, unions — but at the time of its inception, SMart officials were focused on one subsection of this workforce: artists. “That’s how we started,” says Lieza Dessein, a project and community manager for SMart. “What we realize is that a lot of artists have the same kind of issues when they are working. For example, a band would make up a contract. The band would actually pay the musicians with that single contract. And they had very irregular revenues.”

Dessein said the original idea was to take all the bookkeeping and other administrative tasks off of the artist. “The solution that they came up with was, OK we will just make up a company,” she said. “So instead of every artist needing to develop its own legal entity to be able to work, we will just share a company with the artists.”

Today, setting-up a coworking platform is not uncommon, but at the time it was a bold idea. Over the years, SMart expanded to provide services for many other types of freelancers, and changed with the evolving nature of work. Dessein spoke with us about the evolution of the project.

Kevin Stark, Shareable: I’m a freelancer in Chicago, and to my knowledge, we don’t have an organization that is as comprehensive as SMart. If I were moving to Brussels, how would you pitch me on the program? 

Lieza Dessein, SMart EU: We are a shared company. It’s quite important for us. We have over 90,000 members here in Belgium alone. And active members on a yearly basis, we are around 20,000. Active members are members who log in between one and three times a year. All of that together in 2016, they billed to our company in Belgium 136 million euros. We’re operating in nine European countries.

The development of the project in European countries is quite different from country to country. They’re not all that far developed as Belgium. Belgium is the mother house. For 20 years, we’ve had a full range of services. Our business model is a patient one. We grow steadily and smoothly and build up the community inside each country. We make sure that everything we are doing is under a legal frame that exists in that country, and we need also to adapt it to the culture in each country and in the communities. I would say, we haven’t changed all that much but we have shifted with the realization that the work environment has changed.

I love the lifestyle associated with freelancing and the freedom to work on a wide range of projects. The only rub for me is the stability and the lack of community. What’s different about SMart?  

We have a whole range of services, and the most important one is that people who work with us to guarantee that they will be paid in seven days after the end of a contract — even if the client hasn’t paid yet. We have a mutualized salary guarantee fund, and we take care of the debt collection for the freelancers as well. We share the company with our freelancers. We become the employer of all our freelancers and take on the responsibility linked to the employer status. The reason why we decided to become the employer of the freelancers is that for the moment it’s very difficult for freelancers to access social protection and the best social protection you can get is linked to the employment contract. And, if we manage to put everybody on the employment contract they have easier access to social protection as well.

How has the project evolved over time?

Smart means Societe Mutuelle pour ARTistes (mutualized company for artists). It was a company that aimed to take over the administrative burden linked to artistic entrepreneurship. Little by little we developed a tool that could cover a wider range of professions and we opened up to all freelancers. It’s an evolution that little by little you realize that you have a tool that can serve a whole new community that you weren’t planning to serve. There was this shift to make in the mind. We were saying, “Is it actually possible?” Because it’s a little bit frightening to say. I’m focused on musician, artist people in the theater. And it’s like you can have a grasp of that reality, and suddenly you get people working in the care service — everything that’s related to massage, yoga. We have I.T. consultants, and you get all those different professions. For the advisors, it could be overwhelming. We really rationalized: What are the needs of that community as a whole? What are the needs? They are the same as the freelancers. Along with shifting our mindset, we also strengthened our team with advisors coming from a wide range of different professions to make sure we have people who have a good grasp on particular professions.

What were some of those needs?

Our members have an irregular income, multiple clients, being an employee and then becoming an employer, develop different skills and jobs. We have a very fractured job environment where they will work a lot during the year and then not always in the summer. If you really take the whole community and say what are the needs? Instead of focusing on the differences — they need this, and they need that. At one point to say, where are the similarities? If you look at not from the perspective of differences but on a perspective of similarities. We needed to open up our services. Because freelancers — and artists — are evolving in complex legal issues, are confronted to a lot of administration and the risks involved in individual entrepreneurship are high.

SMart was evolving with the changing nature of work?

The workforce is more and more scattered and individualized. And you have all those individual entrepreneurs and the old school way of doing things is to say: I’m an individual entrepreneur,so I will set up my own legal entity. I will go for my own little office somewhere lost in city.

If you scale that model you can see that you are facing very isolated society where every individual is on their own and facing the same kind of difficulties. How do I set-up a company? How do I make myself known? How do I meet fellow people that are working in the same field? How do I find clients? Suddenly if we say, let us take over the administration, and then if you need training we have training sessions. And for the moment we are also investing in work spaces. We are really looking into different ways of bringing back [collectivism] among that scattered workforce. How do you reinvent solidarity amongst individual entrepreneurs? How do you make people create a community that eases their entrepreneurship? How do we reinvent the social protection for all workers?

Images: SMart’s website

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Alexandre Bigot-Verdier, Lieza Dessein and Thomas Doennebrink: The past year has been an exciting one for the platform coop movement. In December 2016, Nathan Schneider launched the “Buy Twitter” campaign. Twitter was for sale and he suggested that its users buy it and to change its legal structure into a cooperative. This would allow the redistribution of the value created on the platform among its community of users. The idea got more attention than expected and the campaign was even presented at the Twitter stakeholders’ annual meeting in May 2017. In the end the campaign failed but it had managed to question very publicly who controls the tools we use daily. Why are we accepting that the value we create on platforms is extracted and distributed to private stakeholders? Would we be willing to invest in the technology of tomorrow to ensure more ethical surroundings? How would we govern the platforms if we were in charge? And how could we reconnect the digital economy to the local communities?

During the Ouishare Fest 2017 many speakers addressed those questions in their presentations. The city of Barcelona invests very proactively in new ways of connecting citizens, encouraging a bottom-up approach. A former Twitter employee is currently building a co-governed platform to facilitate the construction of resilient digital collaboration tools by social movements. And freelancers are developing networks and tools to create resilient ecosystems of entrepreneurs.

The platform co-op movement is only two years old. Slowly but surely the movement has grown and it is now looking into ways to get organized. Trebor Scholz and Nathan Schneider did a tremendous job inventorying existing coops and advocating their actions throughout the world. They are connecting people with one another in an effort to ease knowledge exchange. Through this movement, coops, academics, policy makers and people involved in social economics found a communication channel to spread their ideas. In all corners of the world the notion of platform cooperativism is being promoted and debated. Nevertheless, the community is aware that if it wants to compete with the Silicon Valley’s mastodons there is still a long way to go.

Every year, Platform Coops enthusiasts gather at the Ouishare Fest. This year they decided to set up a spontaneous workshop. Their objective was to gather the main learnings and challenges encountered by their community. The rest of this document will relate the exchanges that took place among the participants during and after this encounter.

How to fund the platform co-ops?

Building platform co-ops implies patience. The coop business model is a patient one, it is built for long term benefits. A coop is a company that is nurtured and this is the main difference with the short term vision of the startup world. Private stakeholders invest heavily in startups hoping to be betting on a “unicorn” and to have a quick return on investment. This creates a hyper competitive environment that makes it very difficult for holistic companies to emerge and compete. Investors quickly lose interest when business models are not build towards fast and high profits. To make platform coops emerge quicker there is a need for regulation and funding.

Local authorities start to question and to regulate the digital economy. They realize that it is in their best interest to keep a close eye on these companies because they have a direct influence on their communities. The challenge for them is to look into ways to reconnect the digital economy to their local communities. For communities to thrive, the digital economy needs to be inclusive and not extractive. City policymakers from all over the world are taking measures to avoid invasive platforms and encourage local initiatives.

The harder challenge to tackle is funding. Private foundations and investment funds are starting to partially fund ethical digital compagnies. For example, Nesta (UK) and the city of Barcelona or Brussels are investing in this field. CoopVentures (FR) is a 16M euros fund dedicated to fair digital initiatives. We also see the emergence of alternative models such as crowdfunding platforms. Opencollective (US) and Startnext (DE) are exploring new ways to propose crowdfunding solutions to their communities. But is this a viable strategy to compete with the classical start ups?

The attendees of the workshop wonder how to involve bigger coops. Do traditional coops have the money to fund fair platforms and would they be ready and willing to invest in those companies? How can we create the necessary incentives? Some of them seem to be ready. Maif (FR) is investing in the broad specter of the collaborative economy. The “Conseil québécois de la coopération et de la mutualité” launched a lab on the sharing economy in Montreal (CA). So it seems that there is an ability and willingness to fund initiatives. It would be interesting to verify which initiatives are funded and if they are part of the fair-side of the sharing economy.

Another question raised by attendees is whether we should invest in a series of initiatives or consolidate existing ones. The reason behind this question is that money in the platform coop movement is scarce. So wouldn’t it be more sustainable to invest in initiatives such as Stocksy (CAN) or Fairmondo (DE/UK)? Those platforms have shown traction, enjoy a certain visibility and have an active community. Wouldn’t it be wiser to invest in these companies to ensure sustainability and help them become known worldwide?

This proposal was counter argued by other attendees who value local impact more than worldwide deployment. Should all platforms seek global domination and is that the only way to be sustainable? Should coop models scale, and if they do, how can they keep in touch with their community? And how can smaller coops get real traction if nobody knows that they exist?

Maybe Loconomics (US) will manage to bring a solution to the issue of smaller coops. Loconomics is a cooperatively owned app on which you can find transportation, child care and other services that are all cooperatively owned.

SMart (EU) on the other hand managed to scale and implement their business model into 9 european countries, respecting existing legislation and adapting the model to the local communities. They provide services to freelancers with whom they share a company. The value created is redistributed through the development of services for the community.

All attendees agree that funding is an issue and that there is a real need to develop and raise awareness on the social benefits of the (platform) coop movement. If we manage to highlight the positive social impact of cooperative entrepreneurship we might find more traction amongst ethical financiers and policymakers to invest in this sector.

How to transfer knowledge and know-how?

Raising awareness about coops seems central if we want this movement to grow. The coop model is not well known. It’s a model that is not often studied in business schools where students are introduced to more liberal ways of entrepreneurship. This is even more true in the startup culture where business models are very capitalistic and dehumanized. It looks as if the digitalization of the economy is obliterating the human aspect of entrepreneurship. The quest towards efficiency seems endless and the main purpose is way too often monetary benefits for private external stakeholders. The immediate collateral damages are the impact on the working conditions of the platform workers and the disappearance of much needed local tax money.

The good news is that the digital economy is fairly new and people still remember the internet of the nineties. An internet that was fairer, where our data was not yet outsourced and exploited at our expense. Patronizing companies took over huge chunks of the digital landscape but today people start to get organized and look into ways to regain control.

Movements like “Occupy Wall Street” and “Nuit Debout” revealed the growing concerns about social and economic inequality. Appetite for change also emerges with what we like to label “the Y generation”. A growing part of the population is showing interest in social economics. Schools start designing masterclasses studying alternative business models. Academics and journalists such as Trebor Scholz, Naomi Klein and Nathan Schneider encounter considerable attention. Think-tanks gather knowledge around holistic organizations. Cities are surrounding themselves with specialists of the P2P movements to better understand the needs of their local communities. Governments are looking into ways to regulate the digital economy to prevent the disappearance of local tax money. And entrepreneurs are (re)discovering the coop model and its benefits. In return, the coop sector is surprised to find itself scrutinized.

There is a real opportunity detected by the attendees of the workshop between the old bigger coops and the new emerging ones. The “old” coops have an expertise in holistic entrepreneurship and developed a set of tools required to operate in democratic ways. They also invented sustainable business models that are serving their communities. The newer coops are eager to benefit from that experience. Attendees would also love to experiment with digitalization in the coop sector. Digitalization could ease processes and collaboration within the coop sector. Open sourcing appropriate technologies could ease scaling and reduce operational costs.

One of the seven principles of the coop sector is “Cooperation Among Cooperatives”. Everyone agreed on the fact that solidarity amongst structures is needed. This solidarity could take different forms: financial, service oriented, consuming products of other coops, P2P exchanges, …

This topic brought us back to the educational part. How can the new sector learn from the old one and vice versa? How can we make the coop model and its benefits better known amongst entrepreneurs? According to some attendees, the best way for coops to transfer knowledge is by being involved in incubators or even by creating their own. They could mentor entrepreneurs and give them insight in their operational knowledge. By doing so, they would gain an insight in the visions of the younger generation and could integrate these in their own companies. The young entrepreneurs would benefit tremendously of the expertise of the older coops. For the attendees of the workshop, this could be a first concrete goal to advocate for.

Does the juridical status really matter?

A major debate between the activists of the platform coop movement is the one concerning the juridical status of the coop. Is a coop the unique way to implement decentralized governance and a fair redistribution of created value?

One of the founders of Affinity.works (US) indicated that they are a for-profit company operating in the same way as a coop. They were strongly inspired by the coop model but chose not to be one because it would have made their funding opportunities a lot more complex. Some attendees think this is a risky bet, as the collective ownership and the distributed governance are not principles linked to that particular juridical status. Others argue that it is not the juridical status that is the unique token of responsible ethical entrepreneurship.

The founder of Open Collective (US) pointed out that some initiatives are not even looking for a juridical status. The complexity of administration often is a disincentive to community driven initiatives. Not every initiative is willing to constitute a juridical entity but they do need a legal structure to be able to raise funds and redistribute gains. The situation is even more complex for transnational or international communities.

SMart does not have solutions for volunteers, but it is tackling this problem for “regular“ workers. Indeed, not every freelancer wishes to set up his individual company so SMart is sharing theirs. Every member can use the company as their own. By doing so, they mutualise a part of their revenues which in return gives them access to services designed to ease their entrepreneurial activities.

Attendees seem to agree that, when possible, the coop model should be favored, but that it is important to remain open to hybrid and alternative solutions. There is a strong attachment to the distributed governance and the social impact of the companies. There was a consensus about the fact that we should be inclusive in an effort to learn from each other and by doing so to better our entrepreneurial endeavours continuously.

Context :
This document has been initiated by Alexandre Bigot-Verdier, Lieza Dessein and Thomas Doennebrink after the workshop held at the 2017 OuiShare Fest. This workshop was a spontaneous gathering of platform coops enthusiasts. The next Platform Cooperativism conferences in Toronto and then in New York will be occasions to challenge these orientations.

Lead image copyright: © www.StefanoBorghi.com. Used with permission.

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