Podcast Summary
Alternative business model for tech companies: The Zebra model: The Zebra model prioritizes mutualism, shared prosperity, and multi-stakeholder solutions, contrasting the traditional Silicon Valley focus on maximizing returns for investors.
The current economic models of tech companies, driven by a need to maximize returns for investors, can create perverse incentives that don't serve the best interests of all stakeholders. Mada Zepeda and Kate Sassoon of Zebras Unite argue that an alternative model, the "Zebra" model, could incentivize technology companies to prioritize mutualism and shared prosperity. Zebras Unite is a cooperative working to create the capital, culture, and community for a more just and inclusive economy. Their origin story began with founders noticing the negative incentives of the traditional Delaware c corp structure in Silicon Valley. The Zebra model, in contrast to the Silicon Valley Unicorn, prioritizes quality over quantity and multi-stakeholder solutions, aiming to benefit not just investors but also users and communities. The business model, they argue, is the message, and it's time to interrogate and change it for a more humane and equitable technology landscape.
Venture capital funding model drives issues in tech companies: Venture capital's 'growth at all costs' model incentivizes tech companies to prioritize user acquisition and revenue from advertising, leading to perverse incentives and issues like misinformation, addiction, and fake news.
The venture capital funding model, which is high risk and requires outsized returns, is a key driver of the problems we see in tech companies like social media platforms. These companies, valued at over $1 billion and known as Silicon Valley unicorns, are laser-focused on user acquisition and often have dubious revenue models like advertising. Due to the lack of collateral in technology businesses, venture capital has historically been the primary means of funding these risky ventures. Venture capitalists, who are wealthy individuals, invest in funds that then capitalize technology companies. The high-risk nature of this investment means that venture capitalists aim for one big success to offset the losses from the many failures. This "growth at all costs" model incentivizes tech companies to make as much money as possible, often leading to perverse incentives and issues like misinformation, addiction, and fake news.
The current VC model can hinder ethical business practices: Alternative forms of capital and governance structures, such as public ownership, cooperatives, and others, are needed for ethical businesses to prioritize values over infinite growth.
The current venture capital business model, which prioritizes maximizing shareholder returns and infinite growth, can create a losing proposition for businesses, particularly those focused on ethics, humanity, wisdom, and care. This model can discourage companies from making decisions that align with these values, as they may not be financially viable once they have committed to the growth-at-all-costs mandate of venture capital. As a result, many tech companies, including those with the potential to positively impact society, may be unable to prioritize ethical practices due to financial pressures. To address this issue, alternative forms of capital and governance structures are needed for the 99% of tech companies that are not served by venture capital. This includes exploring options like public ownership, cooperatives, and other models that prioritize social and environmental impact alongside financial returns. Ultimately, the goal is to create a more just technology ecosystem where businesses have the freedom and resources to prioritize ethical practices and create positive change.
Impact of ownership and governance on tech companies: Private equity ownership vs user governance impacts tech companies' decision-making and behavior. Ancient cooperative movements inspire a more democratic and equitable digital ecosystem, where users have a stake in ownership and governance.
The ownership and governance structure of a company significantly impacts its decision-making processes and behavior. For instance, private equity firms owning Twitter gives them power over its operations. Alternatively, if users owned and governed Twitter, they could collectively decide on content moderation and membership. This concept is not new, as ancient wisdom from cooperative movements, such as the Rochdale pioneers in 1844, shows that those who create value should have a stake in it. The modern cooperative movement encourages companies to take back economic power from venture capitalists and invest in each other instead. In the context of tech companies like Twitter, where users generate the value, it's crucial to consider their role in ownership and governance. By doing so, we can create a more democratic and equitable digital ecosystem.
Social Media: Users Create Value, but Who Owns It?: Social media platforms generate value from user-created content, but users often don't share in the financial rewards. Users could consider acquiring the platform themselves through 'exit to community,' but careful governance is crucial with the rise of DAOs and Web 3 technology.
Social media platforms like Twitter, where users create content and data that drives engagement and value for the company, often do not share the financial rewards of that value creation. Instead, the value generated by users contributes to the stock price of the public company. The speaker suggests an alternative: users could acquire the platform themselves through a concept called "exit to community," which would give users ownership and control. However, this idea has evolved with the rise of decentralized autonomous organizations (DAOs) and Web 3 technology, leading to a potential "tsunami of really bad decisions" if not approached with care. To effectively govern large platforms like Twitter democratically, the speaker suggests exploring tools and methods for collective decision-making at scale. Ultimately, the success of such initiatives depends on fostering personal relational practices and building trust, which can be challenging but essential for democratic participation and governance.
Decentralized governance for tech companies: Decentralized governance model in tech companies empowers diverse voices, reduces outsized capital influence, and prioritizes ethical decision-making and societal impact.
The power dynamics in tech companies, particularly those with significant societal impact like social media platforms, can be shifted to better represent and serve the needs and values of their user base. This can be achieved through a decentralized governance model, where members have equal voting power, and decisions are made through a representative board of directors and community referendums. This approach would allow for a more diverse range of voices and perspectives to influence the direction of the company, reducing the outsized influence of capital and maximizing the input of those who create and use the platform. This model would prioritize ethical decision-making and societal impact over profit maximization, leading to a more equitable and humane tech industry.
Supporting the next generation of ethical and alternative tech companies: Invest in and back ethical and alternative tech companies with different ownership structures to counterbalance larger, established firms and create a more equitable ecosystem
Instead of focusing solely on correcting the issues with large, established tech companies that are too big to fail, it's essential to support and invest in the next generation of ethical and alternative companies with different ownership and governance structures. These companies, often small and invisible, are the future paradigm to counterbalance the challenges posed by larger tech companies. The Business Roundtable, a group of top Fortune 500 CEOs, has started recognizing multiple stakeholders in companies beyond just shareholders, opening up opportunities for conversation and collaboration. Alternative incubators like Start Coop, which focuses on cooperative businesses, are crucial in fostering these ethical and alternative companies. One example is Zebras Unite, a graduate of Start Coop, which embodies the cooperative ownership ethos. Another example is Driver's Coop, an alternative to Uber and Lyft with driver ownership. By supporting and investing in these alternative companies, we can create a more balanced and equitable tech ecosystem.
Cooperative Companies Innovating in Various Sectors: Cooperatives innovate in transportation, capital, and community services, prioritizing people and character over traditional measures, and creating equitable and sustainable business models.
Cooperative companies are innovating in various sectors, including transportation and capital, to better serve communities and fill gaps left by traditional businesses. The consumer-facing side of driver's cooperatives is just one example, as they also work with cities to transport foster children and Medicaid patients. Capital instruments like the Matriarch Fund reimagine measures of creditworthiness and prioritize people's character and community involvement. Zebra Unite's chapters focus on incentivizing specific types of companies, such as century-old businesses in Japan and family-owned companies in Berlin. Meetup, an asset built by its community, faced challenges in exiting to community ownership due to the lack of experienced executives capable of handling the conversion process. These experiments demonstrate the importance of culturally specific solutions and the challenges in finding the right human capital to execute them. Ultimately, the goal is to create more equitable and sustainable business models that serve the needs of diverse communities.
From Unicorns to Zebras: The Shift in Tech Industry: The tech industry is moving towards cooperative platforms and employee-owned businesses, called 'zebras', replacing traditional 'unicorn' companies. This shift requires addressing culture, community, and capital, and involves nurturing new sources of power and creativity while hospicing the death of old systems.
The tech industry is seeing a shift towards cooperative platforms and employee-owned businesses, or "zebras," as opposed to traditional "unicorn" companies focused solely on growth at all costs. HILO and Social Roots are examples of cooperative tech companies aiming to bring the principles of cooperatives online, enabling features like tokenization, stakeholder votes, and patronage. However, transitioning to this new ecosystem requires addressing culture, community, and capital. Margaret Wheatley's tooth loop theory suggests that the death of old power structures and systems is necessary for new growth. Zebras Unite is focused on supporting this transition by promoting the stories of small experiments, fostering community, and inventing new capital instruments to serve these companies. The process of transitioning from unicorns to zebras involves nurturing new sources of power and creativity while hospicing the death of old systems, ultimately leading to a more sustainable and equitable tech industry.
Embrace the power of many zebras: Shift perspective to invest in diverse, collaborative initiatives for lasting change instead of competing with traditional structures
To create meaningful change and scale impactful solutions, we need to shift our perspective and embrace diversity and collaboration. Instead of focusing on one big company or solution, we should recognize and invest in the multitude of smaller, innovative initiatives that together can create a more vibrant and resilient ecosystem. This approach, as compared to competing with the status quo, leverages the power of cooperation and collaboration as a survival mechanism. It's essential to create a positive vision for an alternative and work towards making the existing paradigm obsolete, rather than trying to directly compete with it. By recognizing the value of diversity and collaboration, we can create a more complex and confusing pattern that makes it harder for traditional structures to maintain their dominance. In essence, the key to creating lasting change is to embrace the power of many zebras, rather than trying to be the one unicorn.
Creating sustainable communities: A lesson from Mondragon Corporation: The Mondragon Corporation's success as a cooperative federation shows that owning the means of production, banking, housing, and more within a community can lead to sustainable and impactful local projects, fostering a more equitable future.
Creating a new and defensible structure to compete with older, established systems, especially when it comes to acquiring the necessary capital, is a significant challenge. The example of the Mondragon Corporation in Spain, however, offers a potential solution. This cooperative federation, started as a resistance movement, demonstrates that it's possible to own the means of production, banking, housing, and more within a deeply connected and relational community. By focusing on a multitude of small, local projects rather than one large-scale endeavor, we can build our own sustainable and impactful communities. This approach, as advocated by Zebras, can lead to outsize impact and a more equitable future. Additionally, it's crucial to recognize that even with good intentions, individuals within larger organizations may be limited by their incentives, making it essential to shift the focus towards community-driven initiatives.
Empowering the 99% for transformation: Join the Zebras Unite community, cooperative, and party to invest in the creativity and potential of the 99%, shift towards deeper connections, and create a more just and inclusive economy.
Instead of focusing solely on trying to influence a select few powerful individuals to bring about change, we should empower and invest in the creativity and potential of the 99%. The Zebra Movement, led by Zebras Unite, is working to create the necessary capital, culture, and community to enable this transformation. Individuals can support this movement by joining the community, the cooperative, and the party (or dazzle), and shifting their mindset towards deeper, richer relationships and connections. This will not only lead to positive social returns but also economic ones. Joining the Zebras Unite Coop, which has over 6,000 members in 30 chapters across 6 continents, is a step towards creating a more just and inclusive economy. Ultimately, the goal is to move away from a quick, fast, scale mindset and embrace a deep, rich, connected one.
