For decades, startup founders have looked with dollar signs in their eyes at anything you could possibly do with the internet. In a corporate culture fostered by large venture capital funds, startups compete to become the next big billion-dollar disrupter, like Uber or WhatsApp.
Too often, the business models of the biggest internet companies have led them to squander the trust of users and workers by putting profits ahead of people’s best interests.
At the height of public scandals, consumers have launched campaigns like #DeleteUber or #DeleteFacebook to voice their objections. But with few good alternatives to major internet companies like Amazon, Google or Facebook, the social or economic cost of abandoning them can be too high. Could there be a truly democratic way for users to steer companies?
A new generation of internet entrepreneurship is emerging to respond. There is Zebras Unite, a women-led movement to push for more ethical and inclusive alternatives to the “unicorn” culture of Silicon Valley. There is the Purpose Foundation that promotes “steward-ownership” as a legal structure to prioritize a mission over profit. And there are hundreds of cooperatively owned and managed companies around the world exploring how to share power and profits directly with users, in order to break the cycle of maximizing gain at any cost.
Mapping such alternative forms of internet entrepreneurship – or “platform cooperativism” – is a passion of Nathan Schneider at the University of Colorado Boulder in the United States. Together with Trebor Scholz who initiated the Platform Cooperative Consortium at the New School in New York, he co-organized some early gatherings of the platform coop community. Schneider is the author of Everything for Everyone: The Radical Tradition That Is Shaping the Next Economy and a co-founder of Start.coop, a business accelerator for new cooperatives.
Q: What is the problem platform cooperatives could solve?
We are in a major accountability crisis with the online economy. Companies are taking on utility roles, but we don’t have a choice of whether to use their services because there are no meaningful alternatives. We see people agonizing about giving away their data, but not really doing anything because they have no other choice. Community ownership is an opportunity to build accountability into platforms. It is a vehicle for users to gain a voice and build democracy into companies. Maybe it can even lead to a rejuvenation of the democratic sphere.
In most places, people don’t even stop to consider that they have the choice to create an alternative to existing companies that are giving people a bad deal.
When Uber backed out of Austin, Texas following a dispute with local authorities in 2016, it led to the creation of a new ride-sharing nonprofit, Ride Austin. It’s better for drivers and supports other local nonprofits. It’s a totally different vision for how things can work in an economy.
Q: Do you think big tech could evolve in the direction of cooperative models?
Wouldn’t it be great if these big companies would share ownership with the people who are really generating value for them? Instead we have an online economy that is structured to generate massive profits for a small number of shareholders. Involving users in ownership means making sure they are not getting cut out of the value they are creating, and ensuring that they benefit alongside investors in the wealth that they are creating together.
In 2017, I was involved in a campaign to bring a shareholder resolution to a Twitter annual meeting to encourage the company to consider options for expanding user ownership and governance in the platform as a way to address systemic problems. We weren’t successful, but we do need more strategies to bringing democracy to companies. Especially when we recognize they’re so big that they basically become utilities. For instance, it could be a legal structure and tax treatments that would lead somebody like Facebook’s Mark Zuckerberg to see it as a reasonable option to transfer large amounts of stock and control to users.
Q: The allure of venture capital funding is strong. What motivates founders to go for a cooperative business model instead?
Often people are trying to solve deep problems and realize that handing something over to investors just isn’t going to cut it. One example is Jen Horonjeff, the founder of Savvy. It’s a health insights platform for patients and their families. She has a chronic illness and she was obsessed with patients having more control over their illness. She knew that whenever you hand medical processes over to investors, patients get exploited. So she turned to a coop model as a last resort to protect people, and at the same time run a business.
The economy needs variety. There may always be a need for the classic high risk and high return model of venture capitalism, but at the same time we can create more options.