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Thanks for the links and your valid points. I'm not at all suggesting that everyone participating in a group like this would have equal say or equal ownership

Thanks for the links and your valid points. I'm not at all suggesting that everyone participating in a group like this would have equal say or equal ownership in this structure. Clearly, founders in startups as they stand today can add a lot of value by concentrating power and responsibility. The goal here would be to maintain the ability to exercise substantial top-down control, but on better terms than today's labor situation. To your point about investors and funding, there could certainly still be a holding company structure to invest in - it would just not have any employees. It would sit at the center of a web of entities that it would have majority ownership of (liquidation preferences, senior rights, etc). It would also control the bulk of the IP, by how it had set things up. For example, in the co-founding contracts I mention, the individual engineer might not be an equal shareholder at all. The entity that they contract with would be the majority shareholder and the agreement could apportion expectations. Perhaps a super-star engineer would get more equity in that entity and more leeway. The initial funding of the JV from the holding co, could be on the order of the typical sign-on bonus plus a few months of salary, to be re-upped down the road as IP and services flow the other way. To your point about a class of employees not wanting this: I agree this would definitely not be for everyone. That's comparable to choosing a seed-stage company vs the federal government.

solardev 3y ago
If I'm understanding you right, wouldn't this concentrate profits in the hands of a few while increasing risk for everyone else? They'd have no labor protections while also not having any real equity. It's high-risk, low-reward. It just sounds like a setup for exploitation. What's the upside? Why would anyone want to join such an organization, seemingly set up to skirt the very protections meant to prevent them in the first place...? Maybe I'm misunderstanding something here, but after the most recent round of layoffs and a gradual industry push towards worker unionization, going the opposite direction of "hey, just work under this confusing structure so we don't have to deal with labor laws... don't worry bout it k?" sounds pretty concerning... Traditional cooperatives at least have have the promise of equity (and sometimes democracy) in exchange for the risk and lower pay. What does this structure give the other workers-owners?
- coderatlarge 3y ago
  It's useful to hear your (not positive!) reaction to this idea and I appreciate the exchange. The benefit to individuals participating in an organization like this would be that the org would be more likely to succeed because it faced lower overheads, less red tape and greater predictability. The individuals would have to evaluate for themselves how much compensation they're receiving and whether that's a better deal than open-market "managed employment" options. The structure allows for compensating much better and much worse than existing systems and it allows for more dimensions of negotiation because the contracts are private. If the founders of this business offer only exploitative terms, then presumably no one would sign up. Or perhaps only people who they might not want would sign up. If, on the other hand, they offered similar comp levels but with a greater chance of success, then perhaps it could be a lot more attractive than current options. The problem I perceive with the protections existing laws intend to deliver is their unintended consequences. For example, they can make employers slow or cautious in times when they need to be bold and decisive. Or they can sap exec bandwidth when it should be focused on the survival of the business. Because of its complexity, the system as it stands today requires lawyers and accountants and experts to interpret / research / analyze / opine, when a business generally needs clear and quick decisions. As an individual worker, I've certainly benefited from employment protections, but I've also been constrained by them in many ways. On balance, I'd like to have the option to work within a "managed" employment system OR to try my luck in more open-ended system where I can (potentially) do better by thinking harder and taking more personal risk. Unionization strikes me as an extreme of "managed" options, in which the individual elects to pay dues for some level of representation and then has to accept/reject whatever options are presented to them in an up/down vote with their cohort. In the system I'm envisioning, an individual can participate as an owner-capitalist, but without necessarily taking on the full risk of the enterprise on their shoulders as a traditional founder or co-founder.
  - solardev 3y ago
    (Preface: I'm still curious about this vision, and I'm asking about it to better understand it, even if I don't necessarily buy into it yet. But if this is tiring or boring, please don't feel like you have to continue replying! I appreciate the discussion so far, regardless.) > It's useful to hear your (not positive!) reaction to this idea and I appreciate the exchange. Sorry, it's not necessarily meant to be negative (although I can see that)... just... "skeptical", I think, in this post-Uber era, where the disposable, commoditized nature of labor is especially highlighted. Maybe "pessimistic" more than "negative"? The org structure you're describe seems less like "all-owner" and more like "all gig work" -- the closest equivalent I could think of is if everyone simply worked under Ethereum smart contracts and got paid in various financial abstractions on top of that. Or like a web of peer-to-peer B2B sole proprietorships. > If the founders of this business offer only exploitative terms, then presumably no one would sign up. Or perhaps only people who they might not want would sign up. If, on the other hand, they offered similar comp levels but with a greater chance of success, then perhaps it could be a lot more attractive than current options. Actual co-ownership would mean the founders share the high-risk, high-reward situation. But in your setup, it sounds like it would distribute the risk across those who have less agency and financial/legal literacy, while simultaneously concentrating profit in the hands of those best able to manipulate the arrangement through a superior understanding of contract law, access to better lawyers or accountants, higher charisma, etc. It seems almost purpose-designed to disadvantage engineers who just want to contribute on the technical side instead of playing games with the shell companies. They're no longer "owners" in any meaningful sense of that word, just free agents who take on a lot of the risk with almost no guarantee of anything. It's not clear to me who WOULD actually have ownership beyond that "holding company [at the center of] a web of entities"... all presumably with ties to some founder(s) but not others? That's not co-ownership, that's hiding the ownership and falsely representing employment status to the later joiners... OK, but to be fair, let's say all of this is fully transparent upfront and people know exactly what they're signing up for. And let's also presuppose a healthy enough labor market where different kinds of companies and employment relationships all coexist (instead of them all converging towards the highest-profit model): Let's say an individual worker could choose between: -BureauCorp (unionized and a $100k salary, group negotiations, very low chance of unicorn-izing) -Silicon, Inc. (non-unionized, $125k salary, 1% equity, fend for yourself, low chance of unicorn-izing) -Code Co-op (worker-owned coop, $50k salary, 5-10% equity, shared governance, though not necessarily 1-person-1-vote, near-zero chance of unicorn-izing) -Programmer Partnership (co-ownership of business and profits, $40k salary, 10-50% equity, defined governance, low chance of unicorn-izing) -FreedomFirm (your hypothetical model, indentured servitude instead of a salary, X% equity, fend for yourself, low-medium chance of unicorn-izing) What would FreedomFirm offer, especially over other high-risk models like Code Co-Op or the partnership? How would it entice workers, beyond "We're less regulated, so we will succeed" -- or is that the main offer? Do new worker-owners have to "buy in" to have a share of profits, or are they granted some equity upon joining the contract? Is the idea that it would only draw in other people of similar financial/legal standing -- i.e., people who don't need a salary and have a high risk appetite, like former techies with significant savings -- who want a way to participate in a new org that offers basically nothing except a slightly higher chance of becoming a unicorn? Like "invest $200k to buy shares in the shell company, fully vested upon 500k lines of code/delivery of feature X on the roadmap, no salary otherwise. If we succeed we all get rich, and if we don't, you get nothing"? How does ownership/equity relate to governance in this scenario, like what happens to their equity if they are "do-not-renewed"? ------- I think mostly, my main skepticism is still "who would this appeal to". Is it only designed for people who think businesses primarily fail due to labor regulations? Or maybe there's some value proposition that I'm just not quite grasping yet?

solardev 3y ago

If I'm understanding you right, wouldn't this concentrate profits in the hands of a few while increasing risk for everyone else? They'd have no labor protections while also not having any real equity. It's high-risk, low-reward. It just sounds like a setup for exploitation. What's the upside? Why would anyone want to join such an organization, seemingly set up to skirt the very protections meant to prevent them in the first place...? Maybe I'm misunderstanding something here, but after the most recent round of layoffs and a gradual industry push towards worker unionization, going the opposite direction of "hey, just work under this confusing structure so we don't have to deal with labor laws... don't worry bout it k?" sounds pretty concerning... Traditional cooperatives at least have have the promise of equity (and sometimes democracy) in exchange for the risk and lower pay. What does this structure give the other workers-owners?

coderatlarge 3y ago
It's useful to hear your (not positive!) reaction to this idea and I appreciate the exchange. The benefit to individuals participating in an organization like this would be that the org would be more likely to succeed because it faced lower overheads, less red tape and greater predictability. The individuals would have to evaluate for themselves how much compensation they're receiving and whether that's a better deal than open-market "managed employment" options. The structure allows for compensating much better and much worse than existing systems and it allows for more dimensions of negotiation because the contracts are private. If the founders of this business offer only exploitative terms, then presumably no one would sign up. Or perhaps only people who they might not want would sign up. If, on the other hand, they offered similar comp levels but with a greater chance of success, then perhaps it could be a lot more attractive than current options. The problem I perceive with the protections existing laws intend to deliver is their unintended consequences. For example, they can make employers slow or cautious in times when they need to be bold and decisive. Or they can sap exec bandwidth when it should be focused on the survival of the business. Because of its complexity, the system as it stands today requires lawyers and accountants and experts to interpret / research / analyze / opine, when a business generally needs clear and quick decisions. As an individual worker, I've certainly benefited from employment protections, but I've also been constrained by them in many ways. On balance, I'd like to have the option to work within a "managed" employment system OR to try my luck in more open-ended system where I can (potentially) do better by thinking harder and taking more personal risk. Unionization strikes me as an extreme of "managed" options, in which the individual elects to pay dues for some level of representation and then has to accept/reject whatever options are presented to them in an up/down vote with their cohort. In the system I'm envisioning, an individual can participate as an owner-capitalist, but without necessarily taking on the full risk of the enterprise on their shoulders as a traditional founder or co-founder.
- solardev 3y ago
  (Preface: I'm still curious about this vision, and I'm asking about it to better understand it, even if I don't necessarily buy into it yet. But if this is tiring or boring, please don't feel like you have to continue replying! I appreciate the discussion so far, regardless.) > It's useful to hear your (not positive!) reaction to this idea and I appreciate the exchange. Sorry, it's not necessarily meant to be negative (although I can see that)... just... "skeptical", I think, in this post-Uber era, where the disposable, commoditized nature of labor is especially highlighted. Maybe "pessimistic" more than "negative"? The org structure you're describe seems less like "all-owner" and more like "all gig work" -- the closest equivalent I could think of is if everyone simply worked under Ethereum smart contracts and got paid in various financial abstractions on top of that. Or like a web of peer-to-peer B2B sole proprietorships. > If the founders of this business offer only exploitative terms, then presumably no one would sign up. Or perhaps only people who they might not want would sign up. If, on the other hand, they offered similar comp levels but with a greater chance of success, then perhaps it could be a lot more attractive than current options. Actual co-ownership would mean the founders share the high-risk, high-reward situation. But in your setup, it sounds like it would distribute the risk across those who have less agency and financial/legal literacy, while simultaneously concentrating profit in the hands of those best able to manipulate the arrangement through a superior understanding of contract law, access to better lawyers or accountants, higher charisma, etc. It seems almost purpose-designed to disadvantage engineers who just want to contribute on the technical side instead of playing games with the shell companies. They're no longer "owners" in any meaningful sense of that word, just free agents who take on a lot of the risk with almost no guarantee of anything. It's not clear to me who WOULD actually have ownership beyond that "holding company [at the center of] a web of entities"... all presumably with ties to some founder(s) but not others? That's not co-ownership, that's hiding the ownership and falsely representing employment status to the later joiners... OK, but to be fair, let's say all of this is fully transparent upfront and people know exactly what they're signing up for. And let's also presuppose a healthy enough labor market where different kinds of companies and employment relationships all coexist (instead of them all converging towards the highest-profit model): Let's say an individual worker could choose between: -BureauCorp (unionized and a $100k salary, group negotiations, very low chance of unicorn-izing) -Silicon, Inc. (non-unionized, $125k salary, 1% equity, fend for yourself, low chance of unicorn-izing) -Code Co-op (worker-owned coop, $50k salary, 5-10% equity, shared governance, though not necessarily 1-person-1-vote, near-zero chance of unicorn-izing) -Programmer Partnership (co-ownership of business and profits, $40k salary, 10-50% equity, defined governance, low chance of unicorn-izing) -FreedomFirm (your hypothetical model, indentured servitude instead of a salary, X% equity, fend for yourself, low-medium chance of unicorn-izing) What would FreedomFirm offer, especially over other high-risk models like Code Co-Op or the partnership? How would it entice workers, beyond "We're less regulated, so we will succeed" -- or is that the main offer? Do new worker-owners have to "buy in" to have a share of profits, or are they granted some equity upon joining the contract? Is the idea that it would only draw in other people of similar financial/legal standing -- i.e., people who don't need a salary and have a high risk appetite, like former techies with significant savings -- who want a way to participate in a new org that offers basically nothing except a slightly higher chance of becoming a unicorn? Like "invest $200k to buy shares in the shell company, fully vested upon 500k lines of code/delivery of feature X on the roadmap, no salary otherwise. If we succeed we all get rich, and if we don't, you get nothing"? How does ownership/equity relate to governance in this scenario, like what happens to their equity if they are "do-not-renewed"? ------- I think mostly, my main skepticism is still "who would this appeal to". Is it only designed for people who think businesses primarily fail due to labor regulations? Or maybe there's some value proposition that I'm just not quite grasping yet?