Say there’s a startup coop that can turn $10 of investment into $100, but will split that $50 with the workers and $50 with investors. Meanwhile there’s also a traditional capitalist startup that can turn $10 into $90 which goes purely to the investors.
Is this just a blind-spot for people starting coops? I don’t see any reason a coop can’t have equal voting shares held exclusively by employees while selling non-voting shares to investors. If it’s actually the case that tying their hands this way causes higher profits, you’d expect investors to sign up since they’re just in it for the money.
I’d expect the bigger problem than profit sharing is profit expectations though. VCs want rocket ships and my impression of coops is that they’re usually not designed to grow like that. But slow-growing businesses aren’t attractive to VCs in general, and the investors who do invest in slow-growing businesses (banks?) should be more attracted to coops if they’re more likely to succeed. Admittedly, both VCs and banks tend to be risk-adverse and prefer businesses that look like what they expect though.
I also imagine coops have a lot of trouble hiring for some positions, like good founders / CEOs, since the market-rate pay package for a good founder is 15% of the value in company.
Ironically, I wonder if a non-voting-VC-funded coop startup full of hardcore libertarians who agree to pay the CEO 1000x more than everyone else would do really well.
Is this just a blind-spot for people starting coops? I don’t see any reason a coop can’t have equal voting shares held exclusively by employees while selling non-voting shares to investors. If it’s actually the case that tying their hands this way causes higher profits, you’d expect investors to sign up since they’re just in it for the money.
I’d expect the bigger problem than profit sharing is profit expectations though. VCs want rocket ships and my impression of coops is that they’re usually not designed to grow like that. But slow-growing businesses aren’t attractive to VCs in general, and the investors who do invest in slow-growing businesses (banks?) should be more attracted to coops if they’re more likely to succeed. Admittedly, both VCs and banks tend to be risk-adverse and prefer businesses that look like what they expect though.
I also imagine coops have a lot of trouble hiring for some positions, like good founders / CEOs, since the market-rate pay package for a good founder is 15% of the value in company.
Ironically, I wonder if a non-voting-VC-funded coop startup full of hardcore libertarians who agree to pay the CEO 1000x more than everyone else would do really well.