Lessons from a failed co-op
For just under two years I was an owner-member at a worker co-op based in Denver called Good Good Work. Now, as of January 2019 I’m operating as a single member LLC. I wanted to share my story of how I got here. Maybe later my former business partner and I will do a deeper dive into it together. This is a brief overview of lessons I learned in building (and closing) a business.
How it came to be
My friend and I had been working together for a while successfully. I was doing web and branding design through my own business, and he was doing the development as a contractor. We were knocking projects out left and right and having a blast—clients were happy and we were making money. So we decided the next logical step was to deepen our collaboration. What better way than to start a worker-owned cooperative?
Employee ownership solves (or at least undermines) a lot of the issues that I have with “traditional business”. Employee-owned companies keep more money in the pockets of workers and the communities in which they work, they’re generally more stable, survive longer, and have happier employees. I wrote a whole blog post about it shortly after we finished our bylaws, go check it out.
Projects were lining up, contractors were energized, and things were looking up. And they kept looking up through our first year. But then…it failed. Why? Because, at the end of the day, it wasn’t about the business model, it just wasn’t the right business for me.
What worked well
Ways of working
We put a lot of thought and energy into the way we made decisions, the way we communicated, the way we made changes to our business, how we worked with clients, how we brought in collaborators, and so on. We cared so much about the way we worked together. These things really paid off during hard times and I’m so glad we did it up front. I still use these same practices today and I’m always moving my clients in the direction of making ways of working explicit, in part because of how effective it was for us at Good Good Work.
Being values-centered
Both my co-founder and I have strong values. The ones we held most strongly are values I still hold strongly today: authenticity, balance, connection, impact, prefiguration, and transparency. We were mindful to incorporate our values into our contracts, our relationships, our meetings, our strategic choices, and even our brand. Perfection is impossible, but I think we did a damn good job of walking the talk.
Focusing on personal growth
Often an under-valued component to work is personal growth. And it’s such an important part of our ongoing development as humans. There’s some compelling evidence emerging that we don’t just desire it, but actually need it from our work. I’m deeply grateful that the two years I spent at Good Good Work were chock-o-block full of exploratory travel, research, learning, and experimentation. It would be hard to imagine having all of that in a more traditional business setting while serving someone else’s bottom line.
What didn’t work
Not having enough members
Just like any business, finding a good fit for a co-owner is a tough task. I’ll take ownership of the fact that I stood in the way of taking on more owners at times. On the one hand, bringing in more people might have meant more revenue. On the other hand, I was scared to bring on more people when we couldn’t even afford to pay ourselves. It’s hard to say where Good Good Work might be today had we added more people to the mix, distributed the burdens, and been more liberal about who we invited in to join us. It feels to me like a classic example of failing to scale within the right period of time.
Needing different things from work
Even though our values were in the same place, my co-founder and I had different life goals that strained our collaboration. Where I wanted a steady paycheck and was willing to sacrifice my freedoms for it, he was more in favor of foregoing the financial stability and having more personal freedom.
I needed (and still need) a job that would provide me a steady, reliable income as a W2 employee. Eventually I would like to buy a house and maybe even start a family. As someone who’s been self-employed most of my career, it’s hard to imagine a bank approving me for a mortgage or having enough money set aside for self-funded prenatal care and maternity leave. Having pay stubs and benefits from a supportive employer is—for most of us in the US—the only feasible way to make these things happen.
Not enough money
The cost of doing business goes up significantly when you move a person from 1099 contractor to W2 employee status. For example, in my current single-member LLC I often spend under $400 per month on business expenses. With our co-op it was more like $1600 per month to keep us afloat. Why? Because taxes. This pushed on our financial goals, which in turn pushed on our individual goals and led to ongoing conflicts left in perpetual stale mate.
To meet my goals and needs we had to bring in more money than either of us could muster up individually. To make up for not having big projects, we wound up taking on way more low-paying projects than we could manage at a time, stretching us thin. While some projects were a huge success, others were a huge flop. The end result? We were underpaid and overworked. More months than not, I was paying my salary out of personal savings which only intensified the feeling that I was getting further from my life goals.
Big takeaways
There’s also a deeper conversation I’d eventually like to have here about the different societal needs for people of differing identities, and bigger issues like affordable housing and access to healthcare. It’s not to say that one person was right and the other was wrong, we just had different ideas about how to solve our own economic situations in a country where most of us are struggling just to keep a roof over our heads. This is no simple task, and while going out on your own is safer with other people, it’s still a struggle full of uncertainty.
At the end of the day, running a business is just a lot of damn work. And running a business is one of the most intimate things you can do with a person. When my co-founder and I had different needs from work because our lives were taking us on separate paths, our business didn’t have the resources or flexibility to adapt.
That said, through Good Good Work I was able to learn the skills I needed to set out on a career change that has transformed my life. I’m now doing consulting work with groups who need help being more effective at their mission. It’s deeply complex, challenging, humbling and gratifying. And I wouldn’t have gotten here without the support of my former business and my former business partner.
Thanks, Drew.
In solidarity,
Katie
