9F/ Co-Ops the business model for our future / Chris Heller

Session 9E

Co-ops: A Business Model of our Future for our Future

Session Convener: Chris Heuer https://linkedin.com/in/chrisheuer

Notes-taker(s): Otter.ai

Tags / links to resources / technology discussed, related to this session:

Several related articles are linked from Chris’ Linkedin

Discussion notes, key understandings, outstanding questions, observations, and, if appropriate to this discussion: action items, next steps:

The session was recorded and transcribed by Otter. Audio is available here https://otter.ai/u/sPW3-k4eKN4E-pVjZfDArZyXwuA

Transcript:

Chris Heuer 0:00

Yeah. Anybody kind of settle in. Also breathing for a minute because I've just done like I made three introductions for people I met today via LinkedIn. I delivered something or client. I wrote something up and then I have like an opening that I had to write. So we're all good to go. I'm Chris. Nice to meet

you here for the session. Okay, great. Well, as you can see over there, let's okay let's get into this

so let's get underway then. This is the conversation. Okay. I'm sorry. Yeah, you can go It's okay. You have to go this is asking you to open face opening. Thank you so very much. Thanks for coming. Yeah, well, you know what, it was the last one left but I wasn't too sad. So it's good to be out here. I have to unfortunately cut this a little short today because I have a three o'clock meeting. I have to run to so I can actually get paid to keep doing the fun stuff. So anyways, I just wanted to put that up front. Before we get underway. Hi, my name is Chris Heuer. I got short story to introduce the topic and then to ask a question and to propose that into the middle. I've been into the circle for conversation. I've been kind of leaning towards all my life as being a stand for integrity. It's gotten me into trouble in a lot of places as well, but like I'd rather do that and suffer those consequences and not I tend to overshare and do TMI and all that. So if I do that, I guess that just kind of who I am. So forgive me for that. But, you know, I think that if you're better off, I'm better off and for the central principle of my life, without getting it all the background behind it. It's just what I learned from a very early age as part of the lesson in that way, you know, whether you want to use the religious side and say We are brothers keepers or whatever else, it's that, you know, we are interdependent upon each other. I think when the biggest challenge is that it's not as visible. You know, particularly in rural parts of the country. It's just not visible you have to be independent. You have to stand on your own. So when we don't see it, we don't pay no mind to it. So a big part of what's missing and one of the reasons why I do like conscious capitalism, although every you know, sort of structure talking about this stuff is a little different, is the idea of bringing consciousness to it. And in fact, one of the things I think that's hurt society that's led to this right now, is the general absence of conscious value. You know, we look at something on a sticker price, we say that's the price. It's a value and we have shorthand to do this sort of stuff. So one of the big challenges it has created a lot of this income inequality, a lot of other challenges out there from businesses. And somebody else had said this a few times too. It's really the tyranny of convenience. Like we give up a lot just so that we don't have to do much and I'll tell you as well a lot of people don't agree with me on this, but I use Facebook ID to log in and get people connected. I need to log into place because it's easier and I just don't want to remember all those passwords. And I look at the consequences of who am I sharing it with, you know, Expedia, instead of great side hustle, travel agent.com And I feel a little better sense of it, even though they're bigger companies and everyone has their different degrees of comfort with that, and that's fine. But where I, where I started a number of years ago was a realization that too few companies, but let me say it this way instead, that we needed to shift from serving the stock market to serving the market. And so that's kind of a big lead into this where I started working on my book and a bunch of other concepts about it was around that. Last year, I ended up getting into web three a bit and crypto. And really more than that the underlying architecture in the future potential than the existing use of it, but what I recognized was that it was finally a way to shift from the sharing economy concept into what we call the CO ownership economy. And the difference there is that there's a higher degree of stewardship responsible for CO owners. And so that changes kind of the mindset of it. But what it also means is that the way we derive value or the way we generate value is also different. And so that led me to looking at the Creator economy and the rise of what's going on there. And the real need for more smart people to figure out how to work together so that we can improve, improve our collaborative EQ, so that we can improve our collaborative productivity. purely looking at that, you know, what it comes down to is the incentives. Obviously, mission and purpose is a big part of what we're doing today. And at the center of co ops, that's kind of the heart of it. We have a purpose. We have a mission. We're aligned together. We're working towards that. But what it also means is that the incentives need to be aligned. And there's a whole bunch of psychological problems to be worked out. I don't think it's all fixed and ready to go as it is yet. But I do believe we're at a new age of the rebirth of the co op as a new model for us to really go going forward and in that thing, one of the titles for this book that I really hit on recently, in trying to figure out how we can get that world that we all would like to see, that isn't what we're seeing right now and the way corporations are taking advantage of us and harming us and not caring in so many ways and you know, 30,000 times salary for the CEO to the lowest paid employee and all that stuff was that we weren't necessarily going to get Tim Cook or other people to become co ops with Apple or anything else. And like with the early Internet era, we needed to create a groundswell and the current attitudes and activities of Gen Z aligned with purpose tends to fit within this sort of group. So I've been kind of pondering the Gen Z entrepreneurs choice and sort of a kind of working title for it being that you can either, you know, started company, as a Gen Z entrepreneur, and make the fatal sin that I did, which was when I started my first company, I thought I owned all of it. I could give out a little bit of stock here, a little bit of stock there and that you know, I was just entitled to it. So that's like an original sin really to think that just because I've started something that I own all of it, and then I'm going to own all of that. And so I start thinking about, you know, how do we reward the value that CO creates it? And so ultimately, that's kind of the landing of the big phrase, if you will here, which is while we are finding new ways to co create shared value, that not only you know, benefits of the company and the employees and the customers, but also society. Is anyone familiar with shared value, by the way, the concept of it and the Institute and all that? So Michael Porter, about 1210 12 years ago now, he is a US competitive intelligence guru typically works with all the top government folks out there and the top business leaders put out this paper in Harvard Business Review called shared value. And basically He admonished the corporate powers that be for their exploitation, and saying they need to do more to like, give to society that they weren't doing enough. And if they didn't change that they were gonna go extinct. So shared value has a little more meaning than that. But if we're going to learn how to co create shared value, then we need to now think about how we're sharing the value that we've co created together. And so that's what ultimately leads me to Dows and co ops and, and more than that, but what it also led me to and one of the reasons why I'm here is this idea of a zero profit company instead of a nonprofit company, nonprofit company is specifically not to get to profit, whereas the zero profit company is really about balancing that. Yeah. Like when we get to a certain point of growth, where we have retained earnings to be able to operate and we have some r&d money to invest in growing and that other stuff, there's a certain point with growth, decelerates, and which we can then look at how do we pay back dividends? And in fact, this is a real core concept of stakeholder capitalism, with a little more extreme sort of, let's take it out to the heart vision and not just through the easy stuff with the idea being that you have five primary stakeholder groups, employees, management, investors, customers and partners. You also do have communities by the way, but maybe you have a 1% pledge. We can talk about that later. But the idea being is like we need to basically bring consciousness to the value contributed by these stakeholder groups, and keep them engaged in what we're doing and cooperatively develop something that is for all of our mutual benefit, and which people are fairly able to participate in. So that leads me to the question of why did you come here to talk about coops are you in one? Are you trying to start one? And then of course beyond that, is this even possible? Or am I just fucking full of shit and spouting marks? Because I've had people telling me that by hand please if I can, so we can, please. So a co op is a cooperative. So literally, that is a cooperative organization. You've probably heard the term building coops from New York because New York has everybody in the building. It's actually an alternate. It's not an HOA actually, Hoa is a dirty word, but it's literally how they manage that building together. And it's really more of the individuals involved. Instead of an HOA board and all that stuff. So it's actually a form of a sort of legal entity. And there's a lot of other ways that it's been implemented. But ultimately, the idea is again, the stakeholder capitalism that it gives voice power and some greater amount of equality or equity to Yes, an employee owned organization or an employee owned business, although they're not necessarily you know, it gets into what's the difference between a sub essence of it seeing Yeah, thank you, thank you, please.

Unknown Speaker 10:49

Think generationally, you're probably right. A lot of different kinds of things, you know, and Gen Z and how they, you know, they value, you know, sustainability a lot more they can see where this is all going and then what, you know, capitalism has given to us, you know, done to the environment and the process of everybody kind of getting a little bit better off. And I think that I mean, the way I've always seen it is like, dolls are essentially a block can improve living for coops large largely, you know, not all Dallas but, but plenty of Dallas have as spouses in values that, you know, traditional coops do, and then you know, credit unions and other similar sort of, you know, organizations that I've I've seen this process, right, I think there's there's something to that. Cool.

Chris Heuer 11:47

Charles, should I respond to that? Well, whatever you had to share before respond to it, whatever it is, it feels like

Unknown Speaker 11:57

in some ways, I think like Bitcoin is a cooperative currency, which is, you know, fascinating because it's one token and you know, with different fees and things like that. And so, so that, to me is just this, like, boom, we can create cooperative web scale that works

Chris Heuer 12:13

very much open infrastructure and open infrastructure.

Unknown Speaker 12:15

I think you're spot

Unknown Speaker 12:17

on with this idea of the American Dream being to get rich in a company because you started the right idea really quick, and that's, I do think that what they're seeing and that's not so what's rewarded in life and going to a documentary, this couples looked at the phrase, the American dream, and a lot of time it is about monetary riches, where it should be about spiritual riches and something different, so they call it the dream we choose and highlight some of these but I think that is, is growing. And in fact, I'm really interested if anyone wants to start a co op where we can rely on basic income, maybe a minimalist income but basic for everyone. That's, yeah,

Chris Heuer 13:07

that gets really interesting when you start with a UBI time banks and other forms of the cooperative operating out there. I actually entered pre pre pandemic, I was working under the sort of idea at the time that the 2020s would do the era of the guilt. So one of the things that's really interesting when we start looking at these cooperative models, and being able to share is actually the rising power of human capital over venture capital. We're literally all of us with our SaaS services that we're already paying for many of them are free. You could literally start a service providing business right here together, use your contacts, reach out to people you know, to your design. You know, we can literally in the course of three hours, have a webpage up that offers a service that we can then go off and sell to people we know and we can make money together. It's literally that easy, right? So I look at the professional service firm as that and then of course, we go back to the old concept of the guilds. Not to create monopoly protections that are given feudal society, but to band together to ensure quality and to actually assure quality to the people who are buying those goods and services. So that like if somebody's delivering something as part of the guild member and they screw up, the guild is responsible for they're in accountable to go in behind it and make it right and figure out where it is. And then there's educational and learning opportunities for the person who messed up. And then eventually, if there is determined to be malfeasance or something, there's a little a year out, and we've got to maintain our integrity and our quality so it's a really fascinating sort of opportunity right now. And of course software as a service.

Unknown Speaker 14:47

My Groups are talking about this kind of thing. In and out very much more complicated. People they're dedicated to the government's are going to make their job but a lot of us are software developers and designers that are about how can we have a level of humanity through consciousness and get rewards for doing good deeds, whether it be eco tourism, or, you know, getting rid of your pain body and I hope she got pissed off at someone. You know how can I see the love or whatever like I'm an adult. I've seen a lot of people suffer and older generations, and even in my generation, because they're, they can relate to that. So how to get rid of the conscious evolution. I'm into this conscious evolution. So So what are what groups created a group little weekend dream synergy,

Chris Heuer 15:41

awakened really synergy.

Unknown Speaker 15:44

Right now, I have a website awakened dream, but because I didn't do the membership model and yet people besides me doing the administration itself. It's not understood. We have a lot of developers and designers, specifically more developers who want to come together to create a system, but we've got different parts.

Chris Heuer 16:05

Yes. So I'm interested in what you owe. The complexity of that is a whole different thing. And the Dow complexity is even more the rise of Dows and the rise of these coops and actually this is the reason I'm here because old friend of mine, Deckard doing Hello, and he's doing it as a co op. I'm like, You kidding me? I'm working on a book, I go out, and my missing thing is to help stand up a really big talk. So anyway, so we're exploring that right now. I'm not working for him yet. I'm just friendly helping him.

Unknown Speaker 16:34

But he's doing it as a co op.

Chris Heuer 16:36

Yeah, yeah. And in fact, you can go online now legal entity. Yeah. Oh, no, we're already a verified Co Op and all that other stuff. So we have a co op domain and

Unknown Speaker 16:44

we'll easily refund that the way he's taking investment but it's like we can't take investment. This is a co op. We can't execute. Sorry, we can take. We can't give you equity, but we can guarantee you an ROI. Yes. And so there's there's alternatives to all this. But we just you know, we just have to cleverly navigate that regulation.

Unknown Speaker 17:05

Right you can get an ROI or the

Chris Heuer 17:07

well, okay, so it ends up even what you were talking about before, and I I'm a Reiki Master as well. So I mean, I'm kind of down with all that. But there's a challenge in human behavior when we start mixing intrinsic and extrinsic motivators. And so as I look ahead, that's my biggest kind of, how do we solve for that as we started playing with different engagement models with the different stakeholders, so gotta figure that out. But the one thing that I know from past experience and I built a global nonprofit, it was only a official nonprofit in the US and we were operating dangerously in the rest of the world. Thankfully, nothing happened. But, you know, we made it a community organization and a community market. It was one of those first sort of global meetup sort of networks, called social media and club it's still around in about 80 cities now. But, you know, I literally tried to make the first people co founders who would even associate because I wanted them to have a sense of ownership, so that not only would they spread word of mouth, contribute ideas, but that they would, you know, basically feel a part of, and feel that sense of ownership. And over the last five years in particular, we've studied organizational design and culture. And the organizations that foster a sense of CO ownership are the ones that are outperforming because the individuals feel they have agency in their jobs. They have respect, they have dignity. And actually the interesting thing that's happening today to go back to what you were saying before is the greater realization that the well being of our people determines the well being of our organization. And it's so much friggin common sense. Why are you burning out all of your employees? Why are you doing all this stuff? Because they're not able to produce at the level they need, and then you get a great superstar and play. And then of course, superstar ends up being taxed 130% Because everyone goes to him with all their stuff and no one protects them and they get burnt out sooner and they deliberately CIT all of us can raise their hands on that right yeah. Yeah.

Unknown Speaker 19:12

Take care of my braces, you know?

Chris Heuer 19:14

Yeah. Then you can't be happy. It's just like kids. They can't learn if they're not that it's very simple. Go ahead.

Unknown Speaker 19:22

Curiously, Foster is it ownership that the members is ownership the right word for what they're getting like? Or is it about governance?

Chris Heuer 19:40

So So this to me gets into like the world of folksonomy. So are you familiar with that concept? So we can go ahead and define the taxonomy in any way we want, but people come to it with their own language. So you know, they're not exact specific, literally equivalents, but they're conceptually equivalent that people feel related to, and two different people could come in and choose a different word. And it's that sense and that's why language is one of the poorest crudest method for collaborating and understanding each other. What are you gonna get?

Unknown Speaker 20:27

There's less than that. transferability I think I got an expert.

Chris Heuer 20:30

Yes, that's correct. So, so we and that's a part of the very subtle shift. Good point. Okay. A part of the element is that we're not and when I talked about a zero profit company. It is a company that's not built to be sold. Right. So that's an important bit and there's actually a firm over in Sweden, that I'm including, as a case study, its professional services group consulting group called Chris. And that's Chris that Fe and they put all their stuff out so you can learn from it, how they're doing it, etc, etc. And that's where I actually got the term zero profit company from, but yes, it is that point. And even in thinking about, really the nature of the organization, I was fortunate to meet a bunch of good people over the years like all of us here, one of whom is Tom chi. Tom was one of the original founders of Google X along with Dan Frydenberg. And Tom has become a human factors expert and all that stuff. Anyways, ran an accelerator for a little while and he had a different model to it, which really included things like not blocking up smart people with four year vesting agreements for them to get their value, when they've already delivered the value in some algorithm that they're the only person in the world can deliver. So they sit around for three and a half years doing nothing being bored, not contributing to society. We got to solve that problem. That's one of the other problems, stock buybacks, all the rest of it. But at the end of the day, what he basically said in a little bar graph was is basically we're looking at three players, individuals, organizations, and society is kind of a big sphere. And I know there's more than that, because simplifying it right, for a very long time, organizations existed to take away from individuals and take away from society. And what does that leave us with? It's literally how it ends up and his model is very simple. And, you know, for us, I'm really big on attribution. That's why I keep making sure I get this out. But what if we flipped it where the organization was just a model for organizing work? Right. And so now we're talking about future cash flows. We're talking about growth. We're talking about well being we're talking about accomplishing our purpose. And so it really shifts the game and you know, I just know that you know, a lot of the old folks are not going to get this and not gonna want to get it because the world as is a lot of things be fearful out. You know, I need my 25,000 foot underground bunker out in the Arizona desert so I can survive whatever's coming. And so fuck you. I need to make a billion dollars.

Unknown Speaker 23:07

Like when I was talking about driving down there to pick her up every Friday or whatever, like totally got.

Chris Heuer 23:21 Yeah, well, I mean. Yeah, and guilds even longer, and they're all based on the model that we're in this together, and you know, whether you want to go global or whatever. That's why most of our local farm coops, buyers coops and things along those lines as well which are a little less business structure, and more just like if we band together we can get a better price. Right? Become a buying group and things like that. Yeah. So interesting. I'm sorry, I've been kind of rattling

Unknown Speaker 23:55

a number of people. Like if I ever have like enough runway, like what I want to do is basically what you've articulated here exactly, which is the zero profit model. Never designed, which is like also kind of like a D centralizing the like the role of the founder as like the primary owner and then like the hierarchy that comes up. And the importance to me and that is the Yeah, these institutions that we build, especially when you go public, especially when I'm financialized and like have this concept of equity, which can be sold. One of my Like, I literally work in web three, like I was and all of that nonsense. But like the biggest objection I have to kind of the way that this format is if you just simply tokenize and like, the whole point is to sell off as soon as you have this financial incentive of like, my value out as perceived by external people in a way that that changes the incentives. Like it takes your focus away from each other, the more are there in the organization. And perhaps most importantly, a lot of cases, it takes away the focus on society, like both your customers and just the broader effect in your community. And so that's how you have these like boards of companies that are like I am obligated by my function in this board to make the number go up, even if it means like, maybe plan agenda.

Chris Heuer 25:35

And worse than that the short term focus without understanding long term and and then again, one of the things I didn't mention when I stood up but one of the things that Roger McNamee mentioned on Monday as well is to outlaw acquisitions beyond a certain size of say 50 to $100 million, because it destroys competition. And in fact, most of these acquisitions are done to destroy the competition and not allow the market to work. The way all these capitalist say the market should work freely. A lot of hypocrisy as we know in some of those arguments. Yeah. Any other thoughts questions? So let me just ask this. Please go ahead. And then I got one question.

Unknown Speaker 26:15

Do you see any deals you see here, but I sat in a creative morning's talk last month that was given on a you know, food hall concept is really hot right now. So two chefs both work with Jose Andres, one of them plan, Ferran Adria and Alicia and spean. There is a trending topic is the TLDR but they're opening a food hall cooperative. So it's collective buying while the alcohol one butcher downstairs, they use the whole animal for everything. So they're kind of centralizing that buying process, especially pandemic because so many restaurants had to shut down. Because how do you order with the laws change and in between, and then they're charging their rent on a progressive model so that your success is their success, and they're not trying to price everybody out. So I think this cooperative model is catching fire across all verticals. So I think the industries are ready for it. And I don't know if it's the pandemic just showed us how, how individualism fails. With that kind of bootstrap technique for how you're how you're deemed successful. So I don't know I think it's a catch fire.

Chris Heuer 27:25 Thank you. It's really great to my one of my dear friends on medium rare, and so he put he was one of the first people to put the refrigerators out of the street to have people leave leftovers for homeless and other people walking around so yeah, and they actually are doing Yeah, well and they're doing now they're doing a whole Thanksgiving thing for seniors. Anyways, marks really cool. This is a restaurant in DC actually. A steak and steak fruits restaurant in DC. So yeah, and I went to American so I spent a lot of time there over the years. Oh, really, um, maybe one, maybe one Click. Click. That's International. Mine was I was undecided. So please

Unknown Speaker 28:14

doubt he's also had a disco disco class. I think having this capacity and it's like website, you can go to cisco.com and I believe that it's like got a manifesto that you buy for guerrilla marketing, basically like a co opted as translation as a service. So there was like a partnership with like, a lockdown or something. But it basically had like a playbook for doing something cool with like, certain language around the different kinds of work that need to go into sustaining that organization to make sure that like, all of that work and labor is compensated appropriately, like not just the translation, but the care work to make sure that the translator has an advantage. Yep. That just thing is really good. It's a little bit.

Chris Heuer 29:12

What's the URL? Let's go down. Just discoteca Thank you. I would hope that you all can stay and talk a little bit more. I'm sorry, I have to run into this client call but I've literally got like 30 minutes to like you know, finish the project that I'm delivering to this guy. So I gotta go do that. But I encourage you to continue to talk and share more and if anyone finds anything else, you know that please add it to the session notes. I've recorded this instead of taking notes because I didn't have friends coming in to do that. So I didn't want to burden anyone with that. But if you have anything else that comes up with any URLs to share, please add it into the session notes whenever you get a chance. And I'm happy to be around for the next few days. So I'll be here through tomorrow afternoon. And in fact, if you're interested, we can meet again tomorrow morning and talk a little further because I'd love to hear more of your feedback and you know more research and things I can include as examples I don't have the book title yet even so. All that stuff. It's just my name Chris Heuer, everywhere. He we are like the Watch Company, and I'm involved with them sadly. Although I'm not allowed to have a lot of like domains and shit because they blocked everything. So I can't even have my own name on stuff because it's, anyways, I really gotta run. There's one last thought I can and whoever else. Oh, there's somebody who made me think of that was really important. I'll think of it again tomorrow. Thank you so much for sharing and we'll talk more tomorrow please. Thank you. Thank you Sorry, Hey, are you around? Are you staying for tonight? Hopefully you're gonna be here. I'll be I'll be here tomorrow too. Okay. Good. Then tomorrow we'll catch up.