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.