Coops: The Next Generation

The podcast, hosted by Sean Hildner and Whalen Wong, introduces the concept of shared ownership through cooperatives, referencing previous discussions on 'Exit to Community' where company ownership extends beyond founders and investors to include workers, suppliers, and customers. The episode explores how cooperative models are reshaping ideas of scale, profitability, and exits within businesses, with a specific focus on Start.coop, an accelerator dedicated to supporting cooperative startups.

Greg Brodsky, co-founder and co-director of Start.coop, describes how his family's business experience led to the founding of the accelerator. The origin story highlights a group of carpet store owners forming a cooperative, which has grown significantly. Brodsky's background in cooperatives for bicycle stores and breweries underscores his lifelong commitment to the model. The goal of Start.coop is to address barriers—perception, support, and financing—that inhibit the growth of cooperatives, and to create an ecosystem that encourages creating businesses with shared ownership.

The episode explains that cooperatives are diverse and ubiquitous, including businesses like REI, Ocean Spray, Blue Diamond, and credit unions. These examples demonstrate that cooperative ownership is not limited to small or local enterprises but can scale to large, successful businesses. The fundamental principle is ownership as a model that distributes voting rights and profits among community stakeholders, rather than concentrating wealth among a few. Jessica Mason shares her journey from consulting to adopting a cooperative ownership structure, emphasizing the ideological and practical appeal of cooperatives.

The discussion emphasizes how cooperative ownership can serve as a tool to address wealth inequality, especially racial disparities in wealth. Inspired by examples like DoorDash and Airbnb, Brodsky argues that involving stakeholders like drivers and hosts as owners change the dynamics of value creation and wealth transfer. Cooperative models can ensure that those who generate the most value, such as gig workers, are compensated more fairly, sharing in the successes of the enterprise. The episode highlights Jessica Mason’s DriverSeat Cooperative as an illustration of how gig workers can benefit from ownership, especially through data sharing and participatory governance.

The episode tackles the misconception that cooperatives cannot scale. Brodsky points out that large cooperatives like ACE Hardware and REI prove otherwise. The conversation also focuses on how cooperatives handle investment differently—favoring long-term community ownership over quick exits. Instead of aiming for IPOs or acquisitions, cooperative investments are repaid from company revenues, aligning investor incentives with sustainable growth. The discussion underscores that cooperatives can generate profits and invest in R&D while maintaining a shared ownership ethos.

A key challenge discussed is how governance and accountability operate in cooperatives. By designing ownership and voting rights into the business from the start, companies can include members like workers and consumers in decision-making processes. Brodsky mentions that including diverse voices can potentially influence company behavior positively, leading to more equitable and sustainable practices. The narrative contrasts this with traditional corporate structures where profit motive and investor dominance often overshadow broader stakeholder interests.

The episode reiterates that cooperatives can and do scale effectively. Brodsky and his team support entrepreneurs aiming to grow cooperatives in terms of revenue, ownership, and community impact over time. The goal is not only financial growth but also expanding the number of owners and stakeholders involved, thus building community wealth and broadening access to ownership. The importance of foundational design in embedding cooperative principles into startups from the outset is emphasized, along with the support provided by the accelerator.

A significant departure from traditional startups is the approach to investment and exit strategies. Brodsky explains that cooperative investments are repaid from profits, not through exit events like IPOs. This long-term approach encourages sustained ownership and community benefit. The episode also discusses the creation of the Equitable Economy Fund, aimed at investors interested in supporting shared ownership ventures. The importance of aligning investor incentives with cooperative goals—such as community wealth and stakeholder participation—is highlighted, along with the need for entrepreneurs to operate as profitable, sustainable companies.