The Strategies We Need

After graduating with a bachelor’s degree in computer science during the pandemic, I found what I thought to be my dream job: a technology startup building software for city transportation departments and planners. As a self-declared Numtot, I was overjoyed to discover a software engineering role that involved building public-facing solutions for urban planning. A couple months into this new role, the situation rapidly changed. We were informed of an upcoming acquisition, one that would allow us to expand our reach and services, and, for many of us, make it difficult to maintain our values. One of my coworkers vowed to never care so much about their workplace again. Given that venture capitalists expect a return on their investment, startups are ultimately left with three options: go public, get acquired by a larger company, or run out of money.

This reality was difficult for me to accept. How could one maintain value alignment at work if, at any point, it could be acquired in order to survive? Who did this acquisition benefit, and who did it harm? Even though our company was spending more than we were making, our co-founders walked away with lots of money, while other employees were laid off after the merge. I re-entered the job market, discouraged, until I came across a job posting at a tech worker-owned cooperative. The simple idea of an equal vote in company operations for all workers enchanted me, pulling me into the promise of an anti-capitalist workplace.

From the inside, that promise takes a great deal of operational planning, open communication, and willingness to work through conflict in order to be realized, and sometimes that conflict is further entrenched by assumptions about what it must mean to work at a cooperative. Yet the dream and the promise remain, available to some and just out of grasp for others.

The simple idea of an equal vote in company operations for all workers enchanted me, pulling me into the promise of an anti-capitalist workplace.

What is a tech cooperative?

According to the International Cooperative Alliance, a cooperative is a “jointly owned and democratically-controlled enterprise” formed by an “autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations”. As you can imagine, a cooperative can take many forms, and within each type of cooperative, there are a range of industries, legal structures, and leadership models. You’ve likely interacted with them already, maybe by living in a housing co-op, ordering produce from a Community Supported Agriculture, shopping at REI, or opening an account at a credit union. While startups are a familiar part of the tech industry, the rise of worker-owned cooperatives has been a more recent wave. In order to be a worker cooperative, these two characteristics must hold true: “[1] workers own the business and they participate in its financial success on the basis of their labor contribution to the cooperative; [2] workers have representation on and vote for the board of directors, adhering to the principle of one worker, one vote”. Members of a worker co-op thus participate in democratic decision-making as well as profit sharing, reaping the benefits of their own labor.

Dylan Kohler, co-founder of a shared mobility app called RideHare, reached out to me earlier this year for advice in structuring his new company as a cooperative. For Kohler, and others, the co-op model offers an alternative to the fast-paced, capitalistic environment of a tech startup. It allows workers to build “real collaboration and solidarity” among each other and “make decisions based on what works for us, not just on maximizing profits.” A sustainable and financially successful cooperative would make Kohler “far prouder than just becoming another rich tech bro.” It is grounded in both personal and financial wellness, in collective governance and care.

Cooperative Business Models

According to an open-source list¹, there are at least 31 tech cooperatives in the United States, which make up a small portion of the 612 reported worker cooperatives and democratic workplaces in the U.S. While they operate across a range of industries, including food delivery, rideshare, and gaming, most tech co-ops function as consultancies, offering design, user research, or IT services to their clients. Because of that, their impact on the tech industry has historically been outsized by the hypergrowth, capital-infused companies that characterize the economic landscape of Silicon Valley. Danny Spitzberg, a user experience researcher who has worked with a variety of co-ops, explains that the consultancy model allows companies to “spread the risk across lots of clients”, providing a lower-stakes business model, one that is more sustainable yet less likely to scale.

Software products and applications, on the other hand, require greater investment up front, but they hold a greater potential to magnify in market share. For the last two years, I worked as a developer at Politics Rewired, a tech cooperative bringing peer-to-peer texting software and consulting services to progressive political candidates, advocacy organizations, and unions. Like The Drivers Cooperative, Gemify, and a few others, it stands out as a tech cooperative that builds and sells software. But the models for how to do so are extremely limited, or, even, nonexistent; we have yet to see a software cooperative achieve a level of financial return that allows it to compete with a “regular” tech startup.

Greg Brodsky, founder of Start.coop², witnessed a common trap among cooperatives: too much focus on governance and not enough focus on developing a strong business model often led to failure. Co-op founders assume that because they are structured as a cooperative, “customers will flock to it, revenue will magically emerge, and the business will thrive.” But that’s rarely true. Loconomics, for example, created a platform for local service professionals, like dog walkers and tutors, to connect and offer their services, but closed down in 2020 after running out of money. In an interview with Spitzberg, co-founder Joshua Danielson said he regretted building a marketplace that “didn’t have the funding or ability to generate demand on both sides, even though it seemed like if we got the marketing right it could happen.” In practice, the marketing of a cooperative structure cannot take the place of building a robust financial business plan.

Most tech startups rely on venture capital to bail them out or fund their next pivot, contingent upon the expectation that they will yield a high return on investment in the future. Cooperatives, in contrast, are expected to build revenue from the start. This is how the tech industry, and most companies, should be expected to operate; it’s a dose of reality that I welcome. Many tech startups, bolstered by VC funds, can mask their negative cash flow or unsustainable business model by continuing to provide high salaries and strong benefits. In a cooperative, in addition to reaping the benefits of financial profits, worker-owners share the consequences of financial losses. Employees may decrease salaries or delay profit disbursements until their product is more viable. While those financial burdens increase the barrier of entry to working at a cooperative, they also provide a counterbalance to the inflated salaries and lack of profitability across tech.

Because of this early focus on building revenue, tech co-ops with a strong business plan are well-suited to build a lasting and sustainable workplace. The five-year survival rate of worker-owned co-ops is 69 percent higher than non-cooperatively owned businesses. Cooperatives are designed to build jobs that last a long time — in stark contrast to the rest of the tech industry, which has recently gone through waves of devastating layoffs. There are also a growing number of resources for early-stage co-ops, like the U.S. Federation of Worker Cooperatives, the Start.coop accelerator, and non-extractive lending sources such as the Cooperative Fund of the Northeast.

---

What does it take for the promises of a cooperative to be actualized? How does one know that it’s worth that leap of faith, that the cooperative is a reflection of their own values and vision for the world?

To start, we can draw inspiration from the labor movement, as worker cooperatives have been influenced by the economic and social conditions of working-class people throughout history. Cooperatives in the United States first arose in the 19th century, in response to the Industrial Revolution and its harsh working conditions, and they continue to provide an alternative to the typical “winner-takes-all” capitalism. Design Action, for example, a union worker co-op that provides graphic design and web development services to progressive movements, wrote a union contract with Communication Workers of America to explicitly list the benefits “hard won by organized labor” that they wanted to provide but could not yet afford. Graphic designer and owner Sabiha Basrai recalls, “During the hard startup years, in the early 2000s, our wages were really low; we barely had any benefits.” That was especially difficult with the Bay Area’s high cost of living, but the union contract was a guiding star that allowed the co-op to plan from a place of abundance rather than scarcity. The contract provided a written promise of what the cooperative was working towards, even though they couldn’t offer everything right away.

Importantly, the decisions and values that a co-op documents in the beginning can and should change over time. The labor movement did not stop with a six-day work week. However, documenting something that is visible and revisable enables greater transparency and protections for vulnerable and marginalized communities. Of the thousands of people who work at democratic workplaces in America, the 2021 Worker Cooperative State of the Sector reports that 47 percent are non-white, of which 25 percent are Latinx and 13 percent are Black, while 56 percent are female or non-binary. Given the historical and present-day conditions of racial capitalism, worker co-ops can be a tool for economic empowerment among people of color and those who are traditionally exploited and undervalued by capitalism.

Psychological Safety

Despite these ideals, cooperative governance structures are just as susceptible to forms of oppression and disagreement. Worker-owners must discuss and agree upon their desired decision-making model, organizational structure, and distribution of responsibilities and governance rights. As different values, personal experiences, and past and current workplace trauma converge, it can be difficult to sit with the emerging dissonance. Some want to sit back, focus on their code, and let someone else decide everything for them. Others want to be an active participant in every single decision. Some feel deeply opposed to an organizational chart that introduces hierarchy, while others cannot thrive without clear management and mentorship.

In many ways, I was able to thrive at Politics Rewired because of my tolerance for uncertainty and my willingness to jump into new areas of work. From my first week, when we were a company of six, I felt empowered and confident sharing feedback and contributing to different parts of the company, parts that were usually siloed off from me due to artificial role boundaries and hierarchies. After asking, why don’t we have a Twitter account?, I was prompted to create a social media committee. After asking, why don’t we have a retreat?, my coworker and I planned our first company-wide in-person retreat. After asking, how do we hire more BIPOC?, I created a Diversity, Equity, and Inclusion committee and improved our hiring pipeline. My questions were almost always turned into action items, fueling my desire to influence and see change.

For others, however, imposter syndrome, learned insecurities, and past workplace trauma did not enable them to share input or raise concerns. Those who hold marginalized identities and lack financial safety nets feel even less comfortable pushing back against the status quo. As Basrai notes, “We are all capable of recreating white supremacy, and patriarchy and playing these out with each other.” In a cooperative, just as in any other organization, trust must be built rather than assumed.

At times, the public benefit mission of a cooperative can make it even harder to call attention to harmful power dynamics. At The Drivers Cooperative, staff and drivers were working to build a ridesharing company cooperatively owned by its drivers, ultimately in the hopes of competing with Uber and Lyft. Jason Prado, the former Director of Platform, shared that conflict between the founders created a fraught environment until one left, while another promised impossible features and pushed through uninformed decisions undemocratically. Staff members tolerated the working conditions “for the drivers and the cause.” Ironically, this acceptance of toxicity in the name of gig worker protections has an outsized impact on the rideshare drivers themselves, whose livelihoods are most affected by the founder’s overpromises and mismanagement.

At a cooperative, members pride themselves on freedom from the exploitation of a traditionally hierarchical place of work. This pride, along with the company mission, can contribute to a willingness to avoid conflict or accept unreasonable working conditions, a practice that holds back both the cooperative and the greater co-op movement. It prevents the organization from growing stronger in their vision and strategy, from clarifying the shared values and business model they need to survive, and from being vulnerable enough with other co-ops to exchange struggles and advice.

This pride, along with the company mission, can contribute to a willingness to avoid conflict or accept unreasonable working conditions, a practice that holds back both the cooperative and the greater co-op movement.

Working Through Conflict

In order to survive, cooperatives have to build a practice of engaging in healthy conflict, rather than shying away from discomfort. In order to facilitate such vulnerable conversations, workers should operate from a shared set of values. Design Action, for example, has been bound by specific points of political unity since its inception over twenty years ago. These points of unity, which can be revisited at any time, provide a foundation for how the cooperative seeks to operate, make decisions, and serve their clients. Because the cooperative was built on shared values, serious impasses are rare. When they happen, however, Basrai says, “Part of being in a democratic decision making process with one another is also investing in continuing to check in with each other about anything that feels weird or needs to be shifted.” Power dynamics and workplace harm arise in every organization; they can either be discussed in a productive manner, building upon a foundation of mutual respect and honesty, or they can be utterly destabilizing.

Employees need to trust one another in order to raise points of conflict, and that trust must be built from the start and reinforced over time. Even though the ownership model of a cooperative creates the structural conditions for psychological safety in the workplace, relationship building requires continuous investment and commitment to shared accountability and transparency.

Yotam Maron, a grassroots organizer and leader of Occupy Wall Street, asserts that conflict is actually necessary to build the kind of strategy our movements need to succeed. “Sometimes,” Maron says, “moving towards conflict will mean changing course, letting partners down, losing funding… parting ways with our teammates, hurting or being hurt, firing or being fired.” Conflict reveals misalignments, disagreements, power dynamics, and areas of weakness that can be utterly destabilizing to uncover, but they need to be made transparent; a cooperative cannot sustain itself if conflict continues to go unaddressed. At The Drivers Cooperative, most staff members left the company because conflict with their founder could not be overcome. Conflict is a key element of a cooperative’s resilience.

Conflict is actually necessary to build the kind of strategy our movements need to succeed

As a conflict-avoidant person, I was nervous to engage in conflict during my time as an active worker-owner. At Politics Rewired, however, we reached a point of tension regarding our product offerings. In response, our cooperative decided to take a step back from day-to-day work; we re-established our personal relationships with one another and re-clarified our vision, values, and personal and company mission. Upon this foundation, we vulnerably shared ways in which we felt harmed and exchanged opinions about how to move forward. We voted on a product roadmap to adopt, and while some people who didn’t agree with that roadmap decided to exit, the cooperative members continue to invest in their governance structure, decision-making processes, and personal relationships.

We can slowly grow this muscle by sharing the truth with one another, operating from a set of shared values, and approaching tension with deep curiosity rather than feigned ignorance. At Design Action, workers talk through differences and approach issues from different angles, bringing in external consultation support as needed. Taking time to document their values and build political alignment with one another has allowed them to be robust and effective in their decision-making and conflict management.

---

By creating or joining a cooperative, you accept a certain amount of risk. The cooperative may not be profitable at first, forcing you to take a much lower salary than you would otherwise. You may have to be debt-free and financially privileged to even join in the first place. The co-op may never IPO, provide benefits like family planning or 401(k)s, or match the level of financial success that one can find at a traditional tech startup. It may not even survive. However, with a strong business plan, a transparent governance model, a healthy approach to conflict, and some luck, your cooperative will be well-prepared to provide stable jobs, and when it comes time to distribute profits, you can collectively decide what to do with them based on shared values.

Notes

Footnotes

1. Maintained by a worker-owner at a tech co-op, this list has nearly two thousand “stars” on GitHub. ↩

2. Start.coop is an organization that seeks to promote the development of cooperative businesses, through programs like a co-op accelerator. ↩

---