Occupy to Operations

Open Collective Foundation team members Alanna Irving and Lauren Ruffin in conversation.

Watch the full video, or read on for the text version.

Lauren: I'm super excited because I know Fiscal Sponsorship really well, and I love when people innovate on things that I actually have paid attention to and am bit nerdy about. The work that you're doing with Open Collective has totally blown my mind. I'm excited to think deeply about how fiscal sponsorship can be a tool for creative growth, for starting organizations, for really organizing ourselves and relentlessly shifting the leverage of philanthropic capital and pooling resources.

Tell us a little bit about your path to Open Collective—how did you fall into this? Was this your life plan to build this awesome platform?

Alanna: I definitely did not have a plan. When I was younger, I was interested in a lot of different things and had no idea what the path would look like. I was born and raised in the US on I went to college in Chicago. I studied Asian Studies and learned Japanese, and studied fine art as well. Those are not necessarily vocational career choices. I didn't know what I was going to do.

After college, I got a job in Japan as a translator. I was in the mode of exploring and trying to figure myself out, as I think a lot of people are in their 20s. I basically spent a few years learning what I didn't want to do, which was very useful. I don't regret it. I worked for local government in Japan. Then I lived in London and worked in the finance sector, in the dark heart of capitalism and corporatism. I was like, okay, that one is definitely not for me.

I quit and did the really stereotypical thing: spent time in Spain, went to India and trained as a yoga teacher. Those things were amazing. But I had this feeling inside me that I wanted to really make a difference and work for positive change on a systemic level. Everything I'd tried thus far was either working against that, or in a really tiny bubble that wasn't going to make a big difference.

Then I moved to New Zealand and intersected with the social enterprise sector here. I've always been a bit of a nerd into computers, and also a nerd about how groups of humans talk to each other and collaborate. When I moved to New Zealand, I felt all these different threads in my life come together, and I was able to put my different skills and interests to work on something that made sense.

I ended up founding a series of startups focused on making open source software tools for collaboration. I also became fascinated with the idea of money, and tools for empowering communities with money. When I found Open Collective, I was like, oh my god, it's all the things that I'm most nerdy about in one project! And I've been doing that for about five years now.

Lauren: You were part of the Enspiral network. Can you talk about that? I'm inspired by that work.

Alanna: It was an amazing experience being part of Enspiral. I guess you could call it a network of social entrepreneurs, but no word really fits. It's a network of people that have a mindset of wanting to use their working hours to make a difference in this world, of trying experiments and doing things in new ways, of throwing out the old ideas of what a company is or what a job is, and exploring what can be different.

When I moved to New Zealand, Enspiral had just started. It was basically a freelancer collective of six or ten computer programmers. Computer programmers can get pretty highly paid work, and there's lots of work around for them. By banding together, they could get everybody enough work to pay their rent and live, while spending a lot of their time on social impact projects. So I jumped right into the middle and helped to grow it from there. It grew into a network of companies and 300 people around the world. There were designers and technologists, accountants, lawyers, and all kinds of different consultants and facilitators. But we felt aligned on mission-driven work and hardcore experimentation with things like how to make decisions together.

At that time, the Occupy movement was in full swing and Enspiral intersected with it. We ended up making this tool called Loomio for collaborative decision making. It was a coming together of the kind of collective decision making they were trying to do at Occupy, and the kind we were trying to do at Enspiral to run a semi-professional network together as a co-op, more or less. Similarly, we started doing participatory budgeting, because if you're trying to be a true collective, you have to figure out how to decide what to spend money on together. So we created a tool called Cobudget for internal crowdfunding using shared resources. I'm a facilitator, I like software, and I really love figuring out how we can get engagement, true shared power, and information transparency. All these tools were in pursuit of that.

To be perfectly frank, after about seven years of doing that in a pretty hardcore way, I burned out. It's really exhausting. Startups are exhausting. Social Impact work is exhausting. Trying to do things that are new in the world, and creative and innovative, is exhausting. Deep relationships with diverse people can be exhausting. I mean, it's the most wonderful thing, and it's exhausting.

I tended to do things either not at all or way too much. I hadn't quite got that balance. I was on the way too much side and burned out. Then I swung way toward taking a break from everything. I booked a house in the middle of the woods for two weeks, by myself, with no internet access. Since then, I've slowly come back into working on social impact startup technology, I hope in a sustainable way. I learned so much at Enspiral and grew up a lot.

Lauren: Loomio was one of the first projects potential projects I ever met at Fractured Atlas. I feel like you and I were going to meet eventually, like destiny. Some folks had had come in to see if fiscal sponsorship was the right thing for Loomio.

Alanna: Loomio was such a strange beast as a startup. We had like 12 cofounders, all really far on the idealistic side of the spectrum, and it's a worker-owned co-op. VC investors do not know how to interact with co-ops. We had to figure everything out.

Lauren: It's the 10 year anniversary of Occupy. I was living in Washington, DC and had just got my first nonprofit job after being a lobbyist for a while. My office was on the second floor overlooking McPherson square, where everybody camped out. I'll never forget it. It was super loud all the time. But it felt like something was building. Do you think, long tail, that Occupy had a big impact?

Alanna: I hope so!

I was raised in California by hippies. At that time, I'd been going to Burning Man and living in a cooperative house. We were really hardcore into consensus decision making, so Occupy was almost like a whole whole lot more of the world discovering this way of being that was very familiar to me. I knew some of the pros and cons of it.

The people who ended up being the cofounders of Loomio with me were down the road camped on city hall's front lawn during Occupy, and came over to Enspiral's office because they heard we were values-aligned and knew a lot about technology. They needed to use technology. I remember sitting in the room with these activists who ended up becoming good friends and just being like, you seem really tired. Are you sleeping? Are you eating? And the answer was no, they were completely overstretched, taking calls from media and trying to solve people's drama. I understood, because I have very much been there.

What was really amazing about Occupy was it gave many, many, more people that experience, and essentially radicalized them. Just sitting in circles and doing real consensus, and just doing the work that's involved in creating a cooperative society. Occupy went out of the news after a while, but all of those people's lives were changed, and they're still out there doing amazing things influenced by that. So, I really think it did have quite a big impact. There have been a lot of movements that you could say are like that in different ways, like Arab Spring and all these social movements around the world. We're just going to have to keep doing that over and over and over again until the world changes.

Lauren: That's so provocative. I think there's a quieter movement happening around solidarity economies and collectivity, at a small grassroots level, and in the work that you're doing providing infrastructure.

Can you tell us a little bit more about what Open Collective is?

Alanna: Open Collective appears on the surface as basically a crowdfunding platform. People can put up a page and say, support us and give us money. That is one level that it functions on, but there's more to it.

Open Collective is also a software platform that enables fiscal sponsorship. An entity that has a bank account and a legal existence recognized by the world can use Open Collective to pitch up an umbrella under which lots of unincorporated projects can live. The umbrella entity has a bank account, an accountant, and provides infrastructure so each of the projects under the umbrella doesn't have to set that up for themselves. That's essentially what fiscal sponsorship is about. Open Collective is a software platform that automates a lot of the admin around managing fiscal sponsorship, and makes it all transparent.

If you're looking for what is different about Open Collective compared to Kickstarter, or Patreon, or other things it might look a bit like, one of the first things you'll notice is the transparency. You can see where all the money comes from and what it's spent on. So it's not like throwing money into a black box where it disappears—it's it's more of an invitation for ongoing engagement, with accountability back to the wider community.

The other thing that's different is that it's not designed for one-off campaigns where you build up support that just disappears once it's over. Open Collective is designed from the ground up for ongoing collaborations, for collectives, which are not owned by any one person and exist between organizations. That has created really different assumptions about how software should be designed and what's possible on the platform.

Open Collective has grown into an international network of these umbrella organizations. We call them fiscal hosts, because they're 'hosting' projects under their umbrella. They each have a different focus. So for example, Open Collective Foundation is a US-based 501(c)(3) helping groups who want to go for funding that requires that staus and want to give US tax deductions, and that fit our mission around the Solidarity Economy. There's another US nonprofit that's focused on open source software projects, Open Source Collective. There's one in Europe that's focused on climate action groups. I started one here in New Zealand. There are some that host of a network of meetups, so each chapter can do its own fundraising.

Open Collective allows you to not only raise money, but also manage spending it and distributing it out to the people contributing to your project, in a really flexible way. Because of the software, we can handle lots of little transactions coming in and out without driving everybody absolutely insane.

It allows community organizers, creators, or volunteers to set up a group without having to take on huge amount of liability, admin, and bureaucracy. It's a big heavy lift to hire a lawyer and an accountant to incorporate and get registered as a 501(c)(3). That's massive. It just kills me to think about amazing community activists, creators, and all kinds of people wasting their time doing paperwork. I love paperwork. Give me all the spreadsheets. I actually really enjoy filling out my tax forms. I want to do all that for them so that they can be out in the community.

Lauren: At Fractured Atlas, we did research into the point at which you should probably become your own 501(c)(3). It's something like a million dollars a year over three years in donations. Such a small percentage of organizations reach that level, so it really doesn't make a lot of sense to start a nonprofit when fiscal sponsorship is a viable alternative.

Alanna: I was talking to Social Impact Commons, who support fiscal sponsor organizations across the sector, and they've done similar research that says it's actually not worth it until your budget's more like $5-$10 million. It's not just the costs. The costs are real—lawyers and accountants are really expensive, and auditors, oh my god—it's people's time and energy.

I think a lot about how leadership leadership works in non-hierarchical groups and networks, and a big component of that is diversity. You need diverse kinds of leadership coming together. If you're forcing somebody to do stuff that they hate—that drains their energy and takes them away from what was driving their passion in the first place—it's just a terrible use of everyone's capacity. We need to specialize and share.

Lauren: For some people, spreadsheets and forms feel like smooth sailing, but for a lot of us, it really feels like battling in whitewater up a river. I think a lot about the opportunity costs. A number of people reach out to me who are in over their heads, haven't filed a 990, are having a hard time budgeting, and feel so bogged down with admin for board meetings. It's a lot. Container organizations, like Open Collective, make it really easy to plug and play, and are so vital for the ongoing success of of a vibrant nonprofit sector.

I'm curious about ideal use cases, the perfect sweet spot to join Open Collective. What does that look like? Who would those people be?

Alanna: The groups that have found a really natural affinity with Open Collective fit a few different categories, but I think they have a lot in common.

I mentioned meetups—that's an example of a thing that exists, but nobody really owns it, and the people involved might change over time. If somebody did take ownership of it, it could be weird or not right. You can see that same pattern in open source software projects: an open collaboration, where it becoming a for-profit company or someone owning it could actually destroy something special about it. Mutual aid groups are a huge one for Open Collective Foundation, and have really found an affinity with how we work. They are groups of citizens coming together. How much a given individual is involved can ebb and flow, but it persists in the community. Open Collective is designed so that a group of people can manage it together, enabling a much wider community of supporters to be involved.

You've started a thing, it's snowballing, and you qualify for a grant, that's great! But now they want to know where to send the money, and if you put it in your bank account you'll have to pay income tax on it—suddenly, the problems Open Collective solves will crystalize for you, and in that moment you will instantly understand the benefits.

In recent years, we've found that even very large projects can be a good fit, when they are not in it to manage a nonprofit, but to focus on what they are trying to do in the world. We have a lot of really amazing partnerships with major funders, both corporations and foundations. The procurement systems can be hellish—oh my god, you don't even want to know. We've set up these relationships and we're in the procurement systems already. So we can just get an email saying Google has decided to give another half a million dollars to open source projects. The channels already there, so they just press a button and it's easy.

Even on a large scale, it can be really useful, both from the funder side as well as the project side. We make life a lot easier. When a funder wants to distribute a large number of grants to different people, that's a nightmare for them to process through their accounts payable system. Instead, they can do one grant to us, and then it's easy for us to distribute to lots of people.

Another example is when something sit between organizations and needs to live in a neutral and transparent space, like coalitions. Right now, we have several large mutual aid groups coming together in Chicago to rent a warehouse space. They need to put a fund together that they can all see and manage. Here in New Zealand, we've had a good response from the Māori indigenous community, because a lot of times they're organized through families with an association to a marae, which is like a meeting place. If several marae want to come together and do something, keeping the money in the bank account of any one of them could be damaging. Having a neutral space where they can put money and see it and use it is really valuable. That's another time that it comes up.

Lauren: That's such a helpful description of like 14 use cases. I have a meetup that is likely to fall on my lap and I'm trying to put it off. I actually don't know how to manage this thing without growing it. And I don't want to grow another entity on my own, necessarily.

Alanna: Some people are magnets. What they touch starts to attract growth. And you're like, oh, no, I don't need another project right now! But while people might be intimidated if you asked them to take over leadership of an entire meetup, if you add three or four people as admins on Open Collective, they can grow their capacity and confidence, and then, a little bit down the track, you can back away slowly.

I think young people is a really great example, because they have really amazing capacities. But throwing them into incorporating an entity and dealing with the tax agency—and by the way, if you fuck it up, you're gonna go to jail—is a heavy situation. Inviting them in by taking care of the outer bounds of compliance, while really leaving them in control of the project, can be a massive capacity and confidence builder. Then, next time they will have the confidence to start their own company, if that's what they want to do.

Lauren: What did you think would be really hard about getting Open Collective going that was easier than expected?

Alanna: I don't think marketing is my strong suit. So, sometimes I found it hard to tell the story in a really simple, catchy way, because there's a bit of complexity to it. I think this is a really cool thing, but how do we get it out there? What ended up happening is it just caught on in some subcultures through word of mouth, and started growing. We ended up having the opposite problem of growing really fast and running to keep up, building the plane while flying the plane. Which is great; that's what you want if you do a startup, for it to grow and thrive. But there's a lot that needs to be done, and sometimes that can get stressful.

Lauren: Conversely, what was harder than you thought it'd be?

Alanna: Really normal stuff for a startup. It took us a long time to figure out the right pricing model and it was a painful process iterating on that. We had to change it several times, explain to everyone, and get the numbers going in the right direction. Plus, we had a very typical story of two of the three original co-founders moving on for their own reasons, in their own way. Cofounder relationships are basically like a marriage separation process. The relationships are good—it wasn't horrible or anything like that. But it's always a thing.

It took us a few years to get through all of that, figuring out who we should be and getting it all to click together. It was only about two years ago that we felt really clear and confident and ready to scale. Luckily, at the same time we were getting more traction and growing. It's working now.

I've done several startups now, and that's always the story. The whole startup journey asks a lot of you, personally and intellectually. Figuring out how you fit into the world, and the technical stuff like the right capitalization model, etc. And a lot of really interpersonal human stuff.

Lauren: The interpersonal human stuff.... You can sort of predict what tech is going to do, but humans are the most unpredictable aspect of building things. But you've got an awesome team. For an early stage organization, you've managed to recruit some really competent people. Can you tell us about that process of identifying and bringing people on board? You have an interesting pilot, let's get to know each other, sort of ethos, which I think is super cool.

Alanna: Honestly, I wake up in the morning these days with this sense of gratitude and relief at the team that we've managed to put together, because that's everything. It's taken some time to gain clarity of what are we actually here to do, and therefore to understand what kind of people to work with.

One of the cool things about Open Collective is its decentralized, fluid nature. It's a tool for enabling fluid, dynamic, collective ways of working, so it's natural that we would internally be shaped like that. We're truly a collective, or like a cloud of interrelated collectives, in terms of what Open Collective is like on the inside. That's allowed us to do things like work with someone on a project basis, or do a little consulting and get to know each other and see if that genuine fit is there. Really traditional hiring processes haven't worked out as well for us, because there are some things you just can't know about someone in an interview.

There's the flip side to that, which is that not everybody has the luxury and the privilege of being able to work on a flexible group of projects. Not everybody's in that position. Now that we're a little bit bigger, we're being more serious, and need to give people stability and health insurance. We're really conscious of all that stuff. But we were small and growing, we couldn't get there straight away.

Pretty much the whole team has found has found us and hired themselves, as I found happened with Enspiral and other similar projects. If you have authenticity in what you're doing, what your business is about, how the technology is built, what your actual values and mission are—if those things are all in genuine alignment, it tends to turn into a beacon that attracts people.

Like Caroline, for example, who joined the team about six months ago, did this amazing report (art.coop) about culture bearers and the creator space. I don't remember how I got linked up to that, but I read it and I was like, oh my god, we need to align behind this word solidarity. We need to understand how fiscal sponsorship fits into this bigger story. That report is about how funding should work in that world, which we needed to understand as well. So I just sent a fan girl email to Caroline saying, hey I read your report and I really loved it. She wrote back saying she was aware of my work as well. We had a call, and at first, I didn't quite believe it could just work out this way. We thought we'd just work on a small project together, but then Caroline took all her projects and brought them under our umbrella so we could support them and go crazy.

That's happened with a few people. Like when I connected with you, it was really similar. I don't even know what's going to come out of this; I just know it's going to be awesome and we should invest in it.

Lauren: That's comfort with ambiguity and letting things develop naturally. The older I get, the more I hate hiring people through a traditional hiring process. I'm supposed to know you after talking to you for two and a half hours? And figure out if I want to spend more time with you than I do with my family? It's the weirdest process. Y'all are on to something in terms of how to build a team that's moving in lockstep. If you have shared values, you can do anything together. The flip side is that privilege piece, which you also raise. Not everyone's fortunate enough to only to do stuff that they care deeply about.

Having worked in so many different organizations, I'm super impressed with the quality and dedication of the Open Collective team. One unique thing is you've got users in a shared Slack channel with staff, in a way that I've never seen before. It feels highly vulnerable and super direct in terms of feedback, feature requests, all that stuff. That level of transparency and shared community building in an organization—where the line between worker and user is blurred—feels really special.

Alanna: Our thing is about getting getting people paid: their work is our work. Our platform enables their work, and their work enables our platform. So it's really natural. Alignment is part of it, and transparency is an important factor. There are also really important structural factors that make that possible. We are currently in the black, making enough money to operate, and that creates spaciousness. This is the first startup I've done that's ever got to that stage. It feels different.

I mentioned capitalization model.... Open Collective raised money at the beginning, as you do when you're starting up and trying to scale, but they were very picky about the investment they took. Most companies don't have the luxury of taking really values-aligned impact investment that doesn't cede any control, which allows the actual mission to be at the center in a deeply genuine way. We don't have any dark incentives trying to get us to exploit users or scale beyond where we actually need to be. With a lot of startups, if you take VC, it's either 1,000x or zero, and they literally don't care about anything in the middle. I've talked to a lot of startup founders who took the VC, but in their hearts are a values-driven person, and it's very hard. So we had that kind of privilege as well with Open Collective, about the type of investment we could access, and we didn't raise more money than we needed.

Early musings on “Exit to Community” for Open Collective

How can we future-proof Open Collective Inc. for the thousands of communities around the world that rely on it?

Open CollectivePia Mancini

We're looking into doing an exit to community, in terms of the future of Open Collective. If the capitalization structure and the way the company was set up was different, that would not be possible.

Lauren: That's so powerful. Open Collective might be the only organization I know who doesn't run in fear from its users. Many startups have a hard time figuring out what their value proposition is, and aligning that with their user base, or they start something before they know what their users actually need, because they just want to raise money.

Can you tell us more about exit to community?

Alanna:
I think the first time I saw your face is when you were in the exit to community explainer video!

It was great. I loved it!

Exit to community is a different way to think about a startup exit. The traditional way that startups are funded is that you have an idea at the very early stage, you get venture capital investment, which allows you to grow it, and then you have an exit, where you sell the company. That enables the people who put investment in at the beginning to get their investment back, hopefully multiplied by however much—that's their goal. And it means a payout for the founders and early employees.

I think that's really in tension with how a lot of people actually want to do companies and business: a lot of people don't start something with the intention of selling it and exiting. Maybe it has a perpetual purpose or it's not necessarily focused on a scaling and exit model. And the community around it—your users, employees, and the community that you're serving—are all stakeholders as well. They're really left out of a traditional exit framework. Exit to community is about doing your exit to your community, meaning you essentially sell yourself to your wider community of stakeholders.

It's actually important to have an exit moment in a startup, especially if you have values-aligned investors. If you give those investors their money back, plus more, they're going to turn around and invest it in the next generation of important ideas and things that need to happen. We want that.

I'm very fascinated by ownership as a concept. Obviously, I've started a few worker cooperatives, and I think it's incredibly powerful to have shared ownership of a thing. If you scale up the number of owners, it really changes things. You have to figure out shared power and shared information. I'm really interested in that.

Open Collective hasn't figured out exactly what its exit to community might look like. We're in a research phase. But essentially, the platform could be owned and governed by a coalition of all the different fiscal hosts that use the platform, or it could go even broader in terms of all the Collectives individuals in the Collectives. I don't know exactly what the right model is going to be, but the mission will be at the center of it. There are people who have done exits to community as perpetual purpose trust, which is a legal entity set up with the mission at the center. That's one way to go about it. There are more cooperative-based ways to do it, too. I just think it's a really values-aligned version of an exit for us.

Lauren: The thing I love about exit to community is what a departure it is from what we usually imagine. It's really frustrating how not-creative we are; we don't expose folks, at that pivotal point of making these decisions, to everything that's possible. We're taught to set up a Delaware corp and march straight through pre-seed, seed, series A—you have to follow that path. I love constantly testing what people tell you that you're supposed to do. That level of  contrarianism is so necessary.

Alanna: Look at who benefits from that traditional system. It's another version of a tiny elite at the top getting all the money and the benefits. While 999 people get chewed up and spit out, one gets a huge payout and the controls sits with a very small number of people.

It's a microcosm of our bigger society. Are we building a society where there's an elite at the top with a hierarchy of humans below, or are we building a society that's inclusive, where we all share and build things together, and share the benefits of what we build? The decisions we make come down to that distinction: what kind of world are we actually trying to build?

Building one company structure how we think society should be is a way for us to practice, to explore these ideas and understand how the different facets fit together. It's like what we were talking about at the beginning with Occupy: if you have that experience of sitting in a circle, you can internalize it and really live it, and that can start to spread in a really powerful way.