Distroid Issue 22: Why ustwo studios became an employee-owned business & The dangerous appeal of technology-driven futures

Outline

1. Introduction
2. Commentary
3. Digest

1. Introduction

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Distroid is put together by Charles Adjovu, a member of the Ledgerback Digital Commons Research Cooperative.

2. Commentary

2.1. Why ustwo studios became an employee-owned business

In Why ustwo studios became an employee-owned business, Carsten Wierwille discusses why ustwo, a design agency?, decided to convert to an employee-owned business, and also how employee ownership can help improve society. Wierwille mentions that the founders of ustwo, John “Sinx” Sinclair and Matt “Mills” Miller, invited Wierwille to be CEO to help them transition away from management, and eventually full ownership of ustwo. The owners wanted to reduce their equity in ustwo while keeping ustwo independnet. To do so, the ownership of ustwo was given toan Employee Ownership Trust (EOT). An EOT is a trust that owns partially or fully the equity in a business for the benefit of the employees. The changes include giving a larger stake of the 1/3 of profits to employees, and employees now having the ability to elect three board representatives.

Wierwille states some of the benefits of transitioning to employee ownership, including increasing employee engagement and productivity. Additionally, Wierwille notes that “ [t]here is extensive research to demonstrate that companies where at least 30% of the shares are owned by a broad-based group of employees are more productive, grow faster, and are less likely to go out of business than their counterparts.”

Most importantly, Wierwille hones in how employee ownership (and new enterprise models in general) can be a vehicle to addressing economic inequality in society by providing “workers a path to wealth creation.”

Related Readings

1. Legal Framework for Non-U.S. Trusts in Decentralized Autonomous Organizations
2. An Employee Community Ownership Trust in Oakland, California
3. FIREBRAND ARTISAN BREADS CASE STUDY
4. How to convert a business into a worker-owned cooperative
5. New Structures For Protecting Impact Companies’ Missions
6. An Introduction to Employee Ownership Trusts
7. Signs of a magnetic pole flip in company ownership
8. How ustwo studios became employee-owned

Highlights

1. We think that employee ownership is not just important for ustwo’s future, but for our society more broadly, to address widening inequality, worker’s rights and participation, and the “great resignation” of talent.
2. After we gradually shifted management away from the founders, to a talented team of leaders in the studios, it was time to transition ownership as well. Sinx and Mills didn’t want to continue owning 100% of the equity and value in a business that they were less involved in running. However, it was critical to them that we stayed independent. By moving the ownership of the business into an Employee Ownership Trust (EOT), the founders can realize monetary value over time but preserve the studios’ culture, values, and independence for the long run.
3. For our talent, this has both tangible and intangible benefits. The ownership change is paid for with the future profits of the business, and when this transition is complete, our talent can expect an even larger share of the ⅓ profit than they are receiving today. All employees are now a partner in the business, and the management team of the studios works for our shareholders, i.e. the employees at ustwo. We have reflected this shift by having three elected employee representatives participate in discussions and decisions on our board.
4. There is extensive research to demonstrate that companies where at least 30% of the shares are owned by a broad-based group of employees are more productive, grow faster, and are less likely to go out of business than their counterparts.
5. Distributing business ownership more broadly is also one of the most effective ways to address problems of inequality. Wealth inequality in modern societies is driven by many factors but the concentration of company ownership plays a large and increasing role. In the U.S. for example, the top 10% own more than 90% of all businesses. As Thomas Dudley and Ethan Rouen put it succinctly: “Without intervention, the rich will continue to get richer, and everyone else will be unable to keep up.” Expanding employees’ ownership stake in companies can give workers a path to wealth creation, and they will reward the business with increased engagement and productivity.
6. This is a crucial time for capitalism and societies built around markets and a liberal constitution. Businesses need to take seriously the responsibility that they have for the world and their employees. By becoming a B Corp, ustwo made a commitment to giving more than we are taking from the world. And by becoming employee owned, we are breaking down the distinction between owners and employees, capital and labor, to become a business that is — to channel Abraham Lincoln — run of the people, by the people, and for the people.

2.2. The dangerous appeal of technology-driven futures

In The dangerous appeal of technology-driven futures, Sheila Jasanoff discusses why the technological determinism worldview blinds us to the underlying societal, economic and cultural structures and drivers that influence technological development, and the ability for new technologies to reinforce existing inequities.

Jasanoff provides some concrete examples of where technological development has led to societal disparities and reinforcement of existing inequalities. Two notable examples were the US biomedicine industry’s focus on moonshots (especially concerning COVID-19) and the loss of weaving skills in West Bengal.

Most importantly, Jasanoff comments that we should avoid falling into the trap of technological determinism, “that a technological pathway, once embarked upon, leads to inevitable social consequences, whether utopian or dystopian,” and rather consider that there are multiple pathways or possibility spaces that society can take in technological development.

Related Readings

1. What Tech Futurists Get Wrong About Human Autonomy
2. The Case Against Naive Technocapitalist Optimism
3. Web3 and the Trap of ‘For Good’
4. Possibility Space

Highlights

1. Technology is not an autonomous force independent of society, nor are the directions of technological change fixed by nature. Technology at its most basic is toolmaking. Insisting that technological advances are inevitable keeps us from acknowledging the disparities of wealth and power that drive innovation for good or ill.
2. But the most optimistic and most pessimistic views of technology both rely on a common misconception: that a technological pathway, once embarked upon, leads to inevitable social consequences, whether utopian or dystopian
3. Technology is always a collective venture. It is what it is because many people imagined it, labored for it, took risks with it, standardized and regulated it, vanquished competitors, and made markets to advance their visions. If we treat technology as self-directed, we overlook all these interlocking contributions, and we risk distributing the rewards of invention unfairly. Today, an executive officer of a successful biotech company can sell stock worth millions of dollars, while those who clean the lab or volunteer for clinical trials gain very little. Ignoring the unequal social arrangements that produced inventions tends to reproduce those same inequalities in the distribution of benefits.
4. Change may not be inevitable, but economists have a point when they talk about “path dependency,” or the notion that once an engine gets going it’s bound to follow an existing track. Sunk costs-foundations laid, machinery ordered, workforces trained-cannot be recovered. It often seems easier to go where the flows of materials and social practices have already cut deep channels. It’s not surprising, then, that defense spending has proved to be one of the prime motivators of innovation, even though such investments perpetuate power imbalances and seldom respect cultural or ethical sensitivities.
5. In his famous poem “The Road Not Taken,” Robert Frost reflects on how the human mind constructs narratives of inevitability. We come to a fork in the road, we choose a path, and then as memory plays its tricks we come to see that choice as shaping all that came after. Faced with mounting problems of inequality, diminishing resources, and a looming climate calamity, we must learn to recognize the flaws in such linear storytelling, and to imagine the future along as-yet-untraveled pathways of change.
6. In US biomedicine, for example, energy, attention, and money tend to be directed to high-impact, silver-bullet solutions, or “moonshots,” rather than to messier changes in the social infrastructures that give rise to many health problems. This inclination is reflected in Congress’s decision to authorize $10 billion for Operation Warp Speed to bring a covid-19 vaccine quickly to market. Moderna owes much of its success as a vaccine manufacturer to that massive public spending, and both Moderna and Pfizer have benefited hugely from lucrative supply contracts with the US government. At the same time, about a third of all US deaths from the pandemic occurred in nursing homes, a result of decades of underinvestment in the unglamorous social practices of elder care. Collectively, we chose to ignore the plight of the vulnerable elderly, and spent big on technology only when everyone was at risk.
7. For example, in West Bengal, where I was born, weavers lost such skills as making the intricate narrative motifs of the Baluchari sari during 200 years of British rule. Indeed, Britain’s first industrial revolution, which introduced the power loom in cities like Lancaster but adopted punitive tariffs to keep out hand-loomed cloth from India, was also a story about dismantling Bengal’s once-flourishing textile industry. Lost arts had to be regained after the British left. The cost of a radical break with a nation’s own economic and cultural heritage is incalculable.

3. Digest

3.1. Research

The Cambrian Explosion of Stablecoins

• Northeastern University Blockchain Club, Coin Metrics
• Northeastern University Blockchain Club, Coin Metrics

In just two years, the total supply of stablecoins has grown twenty fold to more than $180B today. Stablecoins have emerged as a linchpin of the crypto ecosystem, providing stability in contrast to the volatility of most cryptocurrencies. The rise of stablecoins is a recent phenomena and the ecosystem is fast evolving. The design space for stablecoins has expanded dramatically, encompassing a broad range of economic mechanisms. The stakes are growing as governments increasingly evaluate digital fiat currency while private stablecoin issuers compete for market share. In this datadriven report written by the Northeastern University Blockchain Club with data and support from Coin Metrics, we break down the stablecoin landscape today, the key measures of its growth, and the possible future paths for this burgeoning sector of the crypto-economy

Decentralized Society: Finding Web3’s Soul

• Vitalik Buterin, Puja Ohlhaver, E. Glen Weyl
• 2022–05–10

Web3 today centers around expressing transferable, financialized assets, rather than encoding social relationships of trust. Yet many core economic activities-such as uncollateralized lending and building personal brands-are built on persistent, non-transferable relationships. In this paper, we illustrate how non-transferable “soulbound” tokens (SBTs) representing the commitments, credentials, and affiliations of “Souls” can encode the trust networks of the real economy to establish provenance and reputation. More importantly, SBTs enable other applications of increasing ambition, such as community wallet recovery, sybil-resistant governance, mechanisms for decentralization, and novel markets with decomposable, shared rights. We call this richer, pluralistic ecosystem “Decentralized Society” (DeSoc)-a co-determined sociality, where Souls and communities come together bottom-up, as emergent properties of each other to co-create plural network goods and intelligences, at a range of scales. Key to this sociality is decomposable property rights and enhanced governance mechanisms-such as quadratic funding discounted by correlation scores-that reward trust and cooperation while protecting networks from capture, extraction, and domination. With such augmented sociality, web3 can eschew today’s hyper-financialization in favor of a more transformative, pluralist future of increasing returns across social distance.

Aligning ‘Decentralized Autonomous Organization’ to Precedents in Cybernetics

• Michael Zargham, Kelsie Nabben
• 2022–04–04

The concept of “Decentralized Autonomous Organization” has been popularized as part of the “Web 3.0” movement. This movement is characterized by digital infrastructures that are ‘decentralized’ in network architecture and permissionless to use. Decentralized autonomous organizations, referred to as DAOs, are a digital expression of the political will to self-organize. The granular entanglement of social and technical concepts makes it challenging to identify a historical precedent for DAOs. Yet, literature review and analysis reveals that this particular entanglement of information systems and self-organization is consistent with longstanding conceptual development and practice in the field of cybernetics. Drawing on Stafford Beer’s Viable Systems Model, this piece bridges DAOs and cybernetics via two main principles of organization: viability and purpose. Viability is a property of a system such that it has sufficient adaptive capacity to thrive in the face of change; adaptive capacity is characterized according to Ross Ashby’s concept of ‘variety’. Purpose is the ability to define and collectively pursue a goal in the sense of feedback control systems. Building on the control theoretic concepts of observability, controllability, and reachability, we examine the ‘governance surface’ of an organization and the associated trade-offs between resilience and robustness that emerge in governance surface design. We propose that this trade-off can be addressed with a constitutional archetype whereby an organization’s ability to update its code is constrained but not eliminated. A case study from a DAO known as ‘1Hive’ is explored to demonstrate this archetype in action. We consider the limitations of the cybernetics perspective by emphasizing the subjectivity of the governance designer. Finally, we conclude with future research directions.

The Crypto-Museum: Investigating the impact of blockchain and NFTs on digital ownership, authority, and authenticity in museums

• Frances Liddell
• 2022–05–08

This thesis explores to what extent blockchain technology and Non-Fungible Tokens (NFTs) impact, challenge, or support the themes of collaboration and partnership, ideas that cut across current discussions and practices of digital ownership, authority, and authenticity in museums. In doing so, this thesis considers how this technology might produce values that go beyond the monetary and are instead more social and community driven. These questions are explored through John Chapman’s (2000) archaeological theory on fragmentation and enchainment, which proposes that found artefacts in Mesolithic, Neolithic, and Copper Age sites were purposely broken as a way to symbolise a binding social contract between the parties involved. Through a collaborative doctoral research project with the National Museums Liverpool (NML), the thesis develops this theory to consider if blockchain can contribute to a process of digital fragmenting and enchainment in museums. It explores how the technology might forge new connections between the museum, the collection, and audiences by binding personalised experiences about NML objects to NFT versions of these objects. In doing so, the work also critically analyses how NFTs might embody different perspectives of a particular object and function as a personal and ownable edition of the digital collection. This thesis argues that the process of creating NFTs from a museum’s collection is a process of pseudo fragmenting the work which simulates the effects of ownership and authenticity. The simulated effect of these conditions provides the owner with control over their token because it can be exchanged or traded, which challenges traditional institutional authority over its digital collections. This also has the potential to forge a new relation between the participant and the museum that can be understood as shared guardianship or a feeling of enchainment. In turn, this thesis proposes that this can create social value for museums. However, ultimately, building enchainment is contingent on a triad of relations between the technology, the museum, and the participant, whereby these different aspects interact with each other to produce value in the digital object

Barriers to Expertise in Citizen Science Games

• Josh Aaron Miller, Seth Cooper
• CHI ’22: CHI Conference on Human Factors in Computing Systems
• 2022–04–29

Expertise-centric citizen science games (ECCSGs) can be powerful tools for crowdsourcing scientific knowledge production. However, to be effective these games must train their players on how to become experts, which is difficult in practice. In this study, we investigated the path to expertise and the barriers involved by interviewing players of three ECCSGs: Foldit, Eterna, and Eyewire. We then applied reflexive thematic analysis to generate themes of their experiences and produce a model of expertise and its barriers. We found expertise is constructed through a cycle of exploratory and social learning but prevented by instructional design issues. Moreover, exploration is slowed by a lack of polish to the game artifact, and social learning is disrupted by a lack of clear communication. Based on our analysis we make several recommendations for CSG developers, including: collaborating with professionals of required skill sets; providing social features and feedback systems; and improving scientific communication.

Evaluating Forecasts with scoringutils in R

• Nikos I. Bosse, Hugo Gruson, Anne Cori, Edwin van Leeuwen, Sebastian Funk, Sam Abbott
• 2022–05–14

Evaluating forecasts is essential in order to understand and improve forecasting and make forecasts useful to decision-makers. Much theoretical work has been done on the development of proper scoring rules and other scoring metrics that can help evaluate forecasts. In practice, however, conducting a forecast evaluation and comparison of different forecasters remains challenging. In this paper we introduce scoringutils, an R package that aims to greatly facilitate this process. It is especially geared towards comparing multiple forecasters, regardless of how forecasts were created, and visualising results. The package is able to handle missing forecasts and is the first R package to offer extensive support for forecasts represented through predictive quantiles, a format used by several collaborative ensemble forecasting efforts. The paper gives a short introduction to forecast evaluation, discusses the metrics implemented in scoringutils and gives guidance on when they are appropriate to use, and illustrates the application of the package using example data of forecasts for COVID-19 cases and deaths submitted to the European Forecast Hub between May and September 2021

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Originally published at https://distroid.substack.com on June 2, 2022.

You can find the original post here.