Pathways for Open Collective’s “Exit to Community”

Pathways for Open Collective’s “Exit to Community”

(Stay up to date on our journey here.)

How might we free Open Collective for the commons? Part 2 of …

The not-so-secret dream of our strange beast called Open Collective is to be infrastructure for the commons, owned by our community, which I talked about in part one.

Open Collective is committed to making that dream a reality. But ownership can be tricky. How can a for-profit company be owned by everyone? To pull it off, we need a legal structure that allows the community to become stewards of Open Collective on behalf of the commons.

This is where the fun part begins! This blog series, and an upcoming video series, will discuss how on earth we can make this work.

In this post, first I'll provide a high-level overview of a few interesting structures, along with some categories we are using to think them through. Then, I'll go a bit deeper on two structures that I feel are not right for Open Collective, to transparently share my thinking process.

Making sense of what we need

At Open Collective, we use technology to bend legal structures and entities to fit the needs of communities, all over the world. We push the limits of what is doable to enable the biggest number of communities to successfully access and manage funding.

We want to engage you to co-create an ownership structure for the commons, which can fund itself for the future. The structure we choose will integrate our purpose and values into our legal DNA, future-proofing Open Collective for the long term.

We need to future-proof our purpose and mission with cultural, legal, financial, and technological structures that can provide:

  1. Multi-stakeholder community governance
    Gives power to the community while (1) maintaining our efficiency, adaptability, resilience, and sustainability, and (2) accounting for a variety of stakeholders spread across disciplines and geographies, including employees, Fiscal Hosts, Collectives, funders, investors and individual contributors.
  2. Purpose protection
    Safeguards Open Collective’s integrity and purpose, protecting against sale, co-option, and subversion.
  3. Liquidity
    Harnesses capital (i.e., money) so that our impact-driven investors, founders, and employees can eventually exit confidently and reinvest in new social enterprises.
  4. Long term vision
    Orients Open Collective toward the long-term needs of our community and the world.

That's a big mouthful, I know. We need to roll up our sleeves and get real with the thinking to land this. Here we go.

Where do we look for ideas?

Selling to workers and diverse users is what is known as an “Exit to Community”. While many brick-and-mortar companies have been successfully sold to their workers, there is no clear roadmap for tech start-ups like Open Collective.

But we’re not afraid to get creative! New pathways are emerging, and one of them—or some combination of them—may provide the answer we need.

Here are some ideas - and mostly questions - as we learn in public:

Purchase by a federation of Fiscal Hosts

We could be purchased by our Fiscal Hosts, perhaps in the form of a federation like the Associated Press. Fiscal Hosts already play an important role for the platform, and tend to have some key governance and community building capacities. This one was one of the first ideas that came to mind.

The questions we have are: Does it provide for community governance or ownership involving our full community of Collectives, funders, users, and employees? Can it provide the needed liquidity? Does is optimize for long term vision and future needs? Practically, coordinating of a consortium of that size, made up of many different types of organizations (not all of which are nonprofits), that spans multiple countries, means a level of complexity that could grind to a halt. Plus, it's not clear that Fiscal Hosts can provide the liquidity necessary to buy the company, or that this would the best use of their limited resources.

There's also another set of issues that are long term vision-related. If the platform that Collectives use to organize themselves is owned by Fiscal Hosts, we would be locking them into a certain power structure, a system where Fiscal Hosts hold control over the infrastructure Collectives rely on.

Multi-stakeholder platform cooperative

A cooperative is a democratically governed and jointly owned organization. "Multi-stakeholder" means that multiple types of members are involved in the ownership and governance of the platform.

In this model, both users and employees make decisions about the platform. For example, Fiscal Hosts and Collectives could elect a board of directors, who then hire management, who in turn hire the staff that create the Open Collective tech platform. The mission is held by a balance of groups. It seems it solves for community control, but how do we bake in the structure the purpose for the future? How do we accommodate ownership across thousands of individuals and communities around the world?

Decentralized autonomous organization (DAO)

Decentralized autonomous organizations, or DAOs, are organizations that are governed on the blockchain via the distribution of tokens (think shares that give you voting power). The “blockchain” refers to a secure, distributed ledger that verifies and stores information transparently, for all to see.

In a DAO, like a cooperative, every token holder has voting power. Different from a cooperative, this power is tied to the number of tokens a person holds. Tokens can be shared based on any method for assigning value or weighing contributions. . Because it's tech-enabled, it can more easily involve a large number of people from all over the world, and handle more complex stakeholder relationships. Members can be a diverse community stakeholders and it solves for global ownership because location doesn't matter. DAOs allow members to make proposals and be directly involved in organizational decisions so it should solve better for the future. Liquidity in theory is easier to access. Questions are, it negatively impacts less tech connected community members, depending on the arrangement volatility is an issue. Finally, how do we securely protect the purpose of Open Collective?

Foundation ownership

In this model, a foundation created by Open Collective takes ownership of a company and ensures that it is independent, values-driven, and purpose-led in the long term.

Foundation ownership does not provide for a specific way that our community would engage in governance, but there are possibilities for a foundation board to represent our global community. However, how would we solve for a global community and protect the purpose of Open Collective? Even if we could hack the corporate board structure to include the community, the power dynamics are problematic, to say the least. Finally, liquidity is likely be a challenge in this model.

Golden Share model

This model spreads decision-making power amongst a set of individual stewards than can include a wide variety of stakeholders and can be elected by the community. It utilizes a special, valueless Golden Share, which gives a non-commercial entity veto power over major decisions, like the sale of the company.

There's a high degree of community control that could grow over time. Stewards would be selected by our community, and would govern the platform's long term strategy and vision. The Golden Share could be held by a trusted third party like the Purpose Foundation who's only role is to prevent major decisions that can subvert the mission. This model solves very well for protecting the purpose of Open Collective and multi-stakeholder governance.

Perpetual purpose trust (PPT)

A trust that centers our purpose would own all or part of Open Collective Inc. and be governed by a Trust Stewardship Committee. The Purpose of the Trust would be Open Collective's mission and the Committee is tasked with protecting it from coopting, sale or subversion.

While there is flexibility in how appointment are made, the committee would be the primary way that stakeholders would be involved in governance. Beyond just electing representatives, we could explore integrating democratic spaces and governance. The Trust solves relatively well for purpose protection, long term vision and multi stake-holding. Finally, a global community ownership still need to be questioned here.

What else? Did I miss any other options? We'd love to hear your ideas...

Next steps: finding better models

In the coming months, we will be learning in public about potential structures, as we knit together deeper relationships to hold this learning, and we'll practice spreading more wealth and power to our Collectives and Hosts. Future posts will dig deeper into the other structures mentioned above, to explore if they fit.

We're excited to engage in public conversation with experts in Exit to Community, the solidarity economy, steward-ownership, and non-traditional start-up financing. Stay tuned for our Public Conversations Series starting in January 2022!

As always we are chatting in our Discord E2C channel or just reach out to me.

Thank you Nathan Hewitt and Caroline Woolard for writing this with me! <3