Greedy Co-Ops
We currently face an unprecedented tragedy of the commons.
Here I will present two solutions, one old and one new, neither original but framed with the intention to bring clarity. Yet another Medium thought piece …
1. Some greed is good
Problem:
Cooperatives will not build themselves.
Solution:
Create a for-profit organization with greedy but well-aligned incentives to bootstrap a cooperative.
If the goal is that the cooperative will have 1 million members each paying $20 in annual membership fees, then give the greedy for-profit 20% of the first years membership fees. $20 * 1 million * 20% = $4 million commission for a for-profit organization. If the for-profit has 10 partners with equal equity, this would be a $400k commission per partner. Shares in the commission could be sold for start-up capital, e.g. 10% of future commission sold for $40k, giving a 10x potential return.
After the first year bootstrap ends, the for-profit’s commission contract is terminated, and the cooperative decides how to maintain growth (possibly choosing to renew the contract).
Networks will not build themselves, chicken-and-egg problem, etc. … I like nice things and you like nice things, and $ helps … some greed is good.
2. Infotech for an info problem
Problem:
“Cooperative” is a dirty word in professional circles, yet even the staunchest Western Libertarian can’t deny that a pure free market can’t solve all problems, particularly given the recent tragedies that have face-punched neocons and neoliberals alike (I have a bloody nose). If cooperatives don’t work, do we hit the crack pipe and go all-in on “China-style surveillance communism”? Resoundingly: “that won’t work here.”
Cooperatives are a smaller scale, targeted form of communism, and are “institutionally pluralistic”, i.e. they can co-exist in a capitalist society.
Seems like the best of both worlds, so why the bad reputation for cooperatives? By my assessment, cooperatives have suffered from multiple information problems, leading to two main failure modes:
- Corruption: where a subset of cooperative members with asymmetric information abuse common resources.
- Dead: members aren’t receiving actionable and relevant information, and so nothing gets done.
Start-ups and Inc’s thrive on information asymmetry and concentration, with a small group of founders or C-executives at the helm, while cooperatives die by this dynamic.
Solution:
An appropriate infotech stack.
The tools already exist, from crypto and DAO’s (Aragon or DAOstack), to Web2 decision-making (Kialo or Loomio), to plain old Slack, Skype and DocuSign digital signatures.
The challenge is in constructing an appropriate “cooperative stack” to solve the cooperative problem, and driving member adoption.
This is where “some greed is good”. The for-profit organization (Solution 1) has incentives to create an appropriate stack to bootstrap the cooperative.
Of course this is not easy, how to mash together a DAO with a Co-Op with a Facebook group requires creativity and breadth of understanding. But that’s it, problem and solution, and a $4 million haul for the team that makes it work.
Feedback welcome.
Cheers,
DAOtoshi
