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Can you explain with some detail how would this work? Because I can’t make it work in my head. Say you find 100 tech people that can afford to put $100k each t

Can you explain with some detail how would this work? Because I can’t make it work in my head. Say you find 100 tech people that can afford to put $100k each to start the company. Then what? Do they put up money and work for free? If you have to give the money back in 1 year as a salary what about the second year? How about marketing budget, office space, equipment etc?

whatshisface 4y ago
In a startup with investors you have money coming from the investors and equity going to them, expenses leaving the company, and money going to and work coming from employees. For a co-op you draw that diagram but have the equity and money arrows that were connected to the investors connect to the employees, with some of the money cancelling out (working for equity, not for free.) As for why the employees would work for equity, well, they'd value it for the same reasons the investors would. If 1M shares is worth $20M to a group of investors it should be worth the same to 100 employees. You're obviously going to be using personal runway, which millionaires have more of than average workers, but SWEs have been making enough money over the last 30 years that it will be easier for them than almost any other profession.
- Kalium 4y ago
  Equity is valuable to investors in no small part because they have the expectation that they'll be able to sell it should the enterprise become very successful. That isn't usually available to a cooperative - there generally isn't a liquid market. Something is only worth what you can sell it for. If you can't readily sell your equity to anyone but your fellow worker-employees, how sure are you that it'll be worth the same to them as it might be to investors?
  - whatshisface 4y ago
    It depends on the business. For one with steady recurring revenue and a predictable future, they could value it on a risk-discounted basis. I agree that the unicorn model wouldn't work well for someone who was going to put most of their money in a single opportunity. Fortunately, any given business is virtually guaranteed not to be a unicorn.
    - Kalium 4y ago
      Yes, you're right. I think that's the problem here. Worker-owners can't value their equity for the same reasons investors would. Those reasons aren't available in this hypothetical context. I think you need a different explanation for why worker-owners would value equity if they can't expect to be able to sell it for a profit. Might I suggest avoiding the question of equity and financial value entirely? Successful worker-owned coops seem to handle it mostly by making shares the thing that gets you voting rights with the rest going into wages.
      - AndrewKemendo 4y ago
        >I think you need a different explanation for why worker-owners would value equity if they can't expect to be able to sell it for a profit Because you believe what you are doing is more important than maximizing how much money you can make
        Kalium 4y ago
        You can take that approach, but if your argument is that workers can expect to be financially compensated just as well in a cooperative structure as outside one then you may experience some difficulties. The person I was interacting with had made precisely this argument.
        AndrewKemendo 4y ago
        >financially compensated just as well Actually better [1]: "Additionally, the average cooperative wage paid at all reporting worker cooperatives is $19.67 per hour, more than $7 higher than the minimum wage in the 13 states with the most worker co-ops." Oh, I'm sorry. You were probably talking about the infinitely small minority of software workers that make the top of the top salaries + non-controlling equity that is just more salary really. So long as you don't get laid off right? Should all labor be structured around some pipe-dream that everyone can be a billionaire as long as nobody shares or cares about those around them? The problem is that it's an apples to oranges comparison friend On average most people make more than people on average in corporations it's just that the lottery ticket like chance of getting so rich that you can move into the capital class and leave all the peasants back on earth is not only unlikely, it's explicitly an anti-goal. [2] https://ncbaclusa.coop/blog/worker-co-op-employees-now-earn-an-average-of-19-67-per-hour-according-to-new-report/ https://ncbaclusa.coop/blog/worker-co-op-employees-now-earn-...

whatshisface 4y ago

In a startup with investors you have money coming from the investors and equity going to them, expenses leaving the company, and money going to and work coming from employees. For a co-op you draw that diagram but have the equity and money arrows that were connected to the investors connect to the employees, with some of the money cancelling out (working for equity, not for free.) As for why the employees would work for equity, well, they'd value it for the same reasons the investors would. If 1M shares is worth $20M to a group of investors it should be worth the same to 100 employees. You're obviously going to be using personal runway, which millionaires have more of than average workers, but SWEs have been making enough money over the last 30 years that it will be easier for them than almost any other profession.

Kalium 4y ago
Equity is valuable to investors in no small part because they have the expectation that they'll be able to sell it should the enterprise become very successful. That isn't usually available to a cooperative - there generally isn't a liquid market. Something is only worth what you can sell it for. If you can't readily sell your equity to anyone but your fellow worker-employees, how sure are you that it'll be worth the same to them as it might be to investors?
- whatshisface 4y ago
  It depends on the business. For one with steady recurring revenue and a predictable future, they could value it on a risk-discounted basis. I agree that the unicorn model wouldn't work well for someone who was going to put most of their money in a single opportunity. Fortunately, any given business is virtually guaranteed not to be a unicorn.
  - Kalium 4y ago
    Yes, you're right. I think that's the problem here. Worker-owners can't value their equity for the same reasons investors would. Those reasons aren't available in this hypothetical context. I think you need a different explanation for why worker-owners would value equity if they can't expect to be able to sell it for a profit. Might I suggest avoiding the question of equity and financial value entirely? Successful worker-owned coops seem to handle it mostly by making shares the thing that gets you voting rights with the rest going into wages.
    - AndrewKemendo 4y ago
      >I think you need a different explanation for why worker-owners would value equity if they can't expect to be able to sell it for a profit Because you believe what you are doing is more important than maximizing how much money you can make
      - Kalium 4y ago
        You can take that approach, but if your argument is that workers can expect to be financially compensated just as well in a cooperative structure as outside one then you may experience some difficulties. The person I was interacting with had made precisely this argument.
        AndrewKemendo 4y ago
        >financially compensated just as well Actually better [1]: "Additionally, the average cooperative wage paid at all reporting worker cooperatives is $19.67 per hour, more than $7 higher than the minimum wage in the 13 states with the most worker co-ops." Oh, I'm sorry. You were probably talking about the infinitely small minority of software workers that make the top of the top salaries + non-controlling equity that is just more salary really. So long as you don't get laid off right? Should all labor be structured around some pipe-dream that everyone can be a billionaire as long as nobody shares or cares about those around them? The problem is that it's an apples to oranges comparison friend On average most people make more than people on average in corporations it's just that the lottery ticket like chance of getting so rich that you can move into the capital class and leave all the peasants back on earth is not only unlikely, it's explicitly an anti-goal. [2] https://ncbaclusa.coop/blog/worker-co-op-employees-now-earn-an-average-of-19-67-per-hour-according-to-new-report/ https://ncbaclusa.coop/blog/worker-co-op-employees-now-earn-...