Back in 19th century USA, during industrialization, the idea of working for someone came across to many as a form of wage-slavery. Going from farming or trade-skills to factories working, one gave up any control in their own worker rights and planning of their business.
It seems fundamentally unfair that in most industries you don't have any real share of the company, or any say in the direction of it. People who control those companies are solely executives or wall street share holders, not the people who spend countless hours making the company run and function, thinking about it for even a moment reveals how messed up our system is. Things have only gotten worse recently too with the decline of unions, workers rarely even get a say in their own rights, wages, or working conditions!
In short, sharing information like this is great, I'm all for more co-ops!
More tech co-ops are great. The gig economy needs a unionization proxy to fight the ever worse contracts people are offering.
But
> "People who control those companies are solely executives or wall street share holders, not the people who spend countless hours making the company run and function"
You imply that you think workers should all own equity in their employer. That sounds cruel and arbitrary to me. How is it OK to dock Barista Bob's pay because a national ad campaign went badly?
In my companies, your compensation is tied to your responsibilities. Executives are responsible to make sure the whole company succeeds, so their compensation is partially in equity. If the company does well or poorly, their pay is raised or docked automatically. People whose responsibility is limited to their immediate job are paid based on their time, at a rate that (ideally) tracks how good they are at their job... regardless of how well the company is doing. The idea that I should punish a stagehand for problems totally out of her ability to control, or even visibility... or that I should reward an executive for working extra hours, when that's a normal part of her job... well that sounds like a terrible way to treat the people who make things run. Who would want to work in that kind of environment? Ugh.
Speaking as a several-times-over founder and C-level... you should try starting a company sometime, even as a short term project. I think you'd gain some new definitions for "countless hours" and "making the company run and function."
But the wall street guys - those people are leeches. All they provide is the money to run the company. Why should they get a say in how it's used?
I can't speak as someone with experience starting a successful business, but you have two examples in your post of something going wrong in a business and a part-owner of the business being penalized for it.
They're fair examples, but why do you shine no light on the other side? When businesses are successful, shouldn't everyone who had a hand in that share in the rewards? To me, that's the argument for including workers in the ownership of a company.
Structure it however you want - if the people putting in the money to start the business deserve more ownership because of that, that's your right. But don't paint an incomplete picture.
I think it's easy to see my attack on the system as an attack on yourself and wall street. I tried to skirt the line and be vague in terms of what I think ownership and control should be in a company, but many people feel the current system is quite messed up.
Most workers nowadays are not unionized, and it's declining[0], giving people with the "largest responsibility" pretty much all the control and profit. Clearest demonstration of the problems with this is the skyrocketing disparity[1] or massive top CEO pay disparity[2]. Yes, start ups and smaller companies aren't anywhere near that bad, but that's where the dream of a start up leads to, and most US employees work at large companies.[3]
Anyways, the point in my comment was solely that workers should have a large say in their company, and the blood sweat and tears of founders should be compensated, but far above everyone else? Sure, people who provide capital should be compensated, but should they decide what worker compensation is? Should they get most of the profits? I think there's ample room for improvement.
I also echo what neon_electro says about focusing solely on risk and omitting reward.
Shouldn't everyone's pay be automatically increased via bonuses or equity grants when the company does well? Why should that only be limited to executives, when the workers are actually producing increased value?
You really call attention to the reality that execs can handle automatic penalties/rewards because their pay is so many multiples higher than employee pay. On the other hand, there's really no reason one couldn't reject that as nonsense, eliminate penalties altogether, place executive pay at a significantly lower multiplier, and then share rewards equitably among everyone.
I have a close family member who is a doctor, and I've always said how envious I am of her company's structure. All new doctors that come in are on partnership track, and it only takes two years to make partner (but there is a buy-in period). It is a large practice with over 80 doctors, and the practice is wholly owned by the doctors (it also employs a large number of technicians and support staff). Being in a situation where you're both "the boss" and "the worker" is rare these days, but it can be incredibly satisfying.
True, but medical practices are not quite in the egalitarian spirit of co-ops.
The physician's assistants, nurses, billing staff, typing pool (yes dictaphones are still a thing), IT staff, equipment repair contractors, and cleaning crew don't tend to also be owners.
> People who control those companies are solely executives or wall street share holders, not the people who spend countless hours making the company run and function
As an entrepreneur, it's actually pretty difficult to find folks who prefer getting compensated primarily in shares rather than cash. If you want to have significant ownership in a company that usually isn't much of a challenge.
I think it's because the ideals of a start up and co-op are at odds.
Start ups typically want large success, and are more pitching in for a gamble. What this person is talking about, and I imagine many co-ops are in general, is just want to exist as masters of themselves with a steady job. That's just my 2 cents on it, people probably have wildly different ideas based on who and what the co-op was for...
When you launch a start up, the best case scenario involves selling off large chunks of the company at every step of the way to your amazing success. By the end you and your original owners have a diluted share (and say) in that vision. Very different than, "we're all making steady pay with democratic leadership." Sure it's a matter of taste as to who would want which.
I think that's largely a cultural issue though. We've trained people to believe in this extreme form of specialisation. They don't even expect to take on responsibility any more because they believe that this is solely the domain of management, owners and so on.
It's probably going to take some effort if we want to bring the idea back that employees should have a say in the direction and leadership of a business.
"They don't expect to take on responsibility"? No. It's just that most of the time, employees having a say in leadership decisions is a pipe dream in practice, ergo: Paid in shares = all of the risk and none of the authority.
If you want to have significant ownership in a company that usually isn't much of a challenge.
It's not so easy if you want to cap your total employee equity to 10-20% or some other arbitrary number that "they" tell you should be targeted. Lot's of people who are advocating this sort of approach are unrealistic about how much equity gives "significant ownership", in my experience.
A related issue - I know many people who are more than happy to consider joining early for "significant ownership" (however we define that) but only if it comes with "significant decision making input" as well, in similar ratio. If as an entrepreneur you are looking at this sort of arrangement as primarily a tool to manage early cash flow, you are thinking about it the wrong way in my opinion.
Probably because the shares that most companies offer are worthless for setting company direction. Employee pool of options is 20%? So investors & founders can always out vote everyone.
Did those shares come with any actual power with respect to how the company is run? Were you trying to offer any decision-making ability to your employees?
> It seems fundamentally unfair that in most industries you don't have any real share of the company, or any say in the direction of it. People who control those companies are solely executives or wall street share holders, not the people who spend countless hours making the company run and function
I think the reason things are as they are is that people don't care about these things. At least not enough to put their own time and money in exchange of it. I would easily choose to take a higher salary and enjoy not having to worry about managing company's risks and direction in addition to my main job. Also, evil executives who specialize in managing companies are probably more competent in managing companies and maximizing profits than random people in the office.
A huge proportion of the workforce are employed by listed, publicly traded companies. Those workers can use their salary to buy as many shares as they want on the open market, and also sell those shares whenever they want.
The fact that people tend not to do this very often tells you that people don't actually want to have any "real share of the company, or say in the direction of it".
I don't need shares of stock to survive. I do need food, shelter, and access to transportation to my source of income. Am I missing something about the risk of investing in the stock market when basic needs could be put at risk? (i.e., a dollar put into the stock market could have been a dollar put into savings to help me in times of need)
It seems fundamentally unfair that in most industries you don't have any real share of the company, or any say in the direction of it. People who control those companies are solely executives or wall street share holders, not the people who spend countless hours making the company run and function, thinking about it for even a moment reveals how messed up our system is. Things have only gotten worse recently too with the decline of unions, workers rarely even get a say in their own rights, wages, or working conditions!
In short, sharing information like this is great, I'm all for more co-ops!