Future Here Now: Come together. With your money.
Signals
Limiting to two articles today because both of these responses got long. I’ve taken a little different approach — let me know if you like this more direct angle better.
A good place to live… together
https://nonprofitquarterly.org/a-good-place-to-live
One of the Sea Changes that mainstream media typically misses is how much easier it is for several unrelated people to own something together today versus just 30 or 40 years ago.
This example focuses on cooperatively owned mobile home parks, but you can find a similar story in small business cooperatives, and community-invested real estate, and co housing, and a variety of other models. And because this is happening in such a scattered fashion, in all kinds of environments and all kinds of situations, we don’t have any kind of comprehensive measure. But indicators from people who work on cooperative models for business and real estate tell us that the number of queries they get are exploding.
There’s at least two reasons for this. One is that standard internet technology makes it easier than ever to find other examples, reach a wider range of prospective participants, coordinate a lot more owners and generally operate in manner than a pencil-and-paper world couldn’t have imagined. The other reason? Despite the popular fawning over billionaires and tech bros, a larger and larger number of very rational local participants are deciding that they want more control over their business, their life and their local economies. And if you’re going to pay rent or take a paycheck, they would argue, you might as well be paying yourself. Which is not only good for them, but much better for your local economy, since it keeps more of the money that people earn circulating within their own communities.
How can you help more cooperative business and property ownership take roots in your city? Some nonprofits, like Co Op Cincinnati, have established training and coaching programs to help businesses manage the process of establishing cooperative ownership (it’s easier, but it’s still not easy). Others, like Lyneir Richardson’s Buy Back the Block, combine residents’ small investments with impact investments or other institutional funds to help local people build equity and learn how to invest, while at the same time protecting their funds and keeping a building’s ownership local.
Cooperative ownership models should have a central role in the toolbox for every economic development, community development or other organization that is trying to make a place better. And as more and more small business owners are nearing retirement age, cooperative models should be incentivized.
The bigger they are, the harder they….
https://www.linkedin.com/news/story/white-collar-recession-hits-tech-6250412/
This article feels like it’s clickbaiting the topic, and I think the concern may be a little overblown. But the trend doesn’t surprise me.
We made a mistake 20 ish years ago when we (the generic we, I don’t mean you specifically, bud) stumbled into this model of funding technology, and especially software development, through venture capital. People embedded in the industry will tell you that they had to do it this way, how else would you come up with enough money to pay all those expensive people who live in the expensive place to build your Uber for Dog Walkers app?
The problem is that it’s a devil’s bargain, even when the VC investor is well intentioned. The demand for a 10X return common in venture capital (because 9 out of 10 of their investment picks fail) closes off any other route to success other than selling to a bigger company or going IPO - becoming a publically traded corporation. That’s the only way the VC can get their money out. Making a reasonable profit and reinvesting it, the way businesses have growth for hundreds of years, isn’t an option. Remaining at a size that is manageable for the founders and lets them maintain a comfortable lifestyle without having to create the Next Google, counts as a failure.
The result is that the tech industry, which one might expect to be the most likely to create new ways of doing business that better fit the realities we are moving into, has basically doubled down on becoming a bunch of Rockefellers. That means that they had to grab all the growth they could possibly grab, consequences be damned, and treat those supposedly coddled tech employees in basically the same manner as an assembly line worker, once the market cooled a little bit or the AI tools got good enough.
It doesn’t have to be that way. Tech businesses got into this bind because they didn’t have any concrete assets - equipment, buildings, etc. - that would make them more palatable for a conventional loan (most banks have also become completely sucky at loaning to actual real businesses that aren’t in the Rockefeller category, but that’s an issue for another day). And that probably made some sense in the early days of tech, when the blue bloods at JP Morgan couldn’t imagine that anyone would ever want one of these computer things in their homes, let alone in their pockets. But part of the problem is that we have also lost most of the opportunities that businesses used to use to line up investments: the local stock exchanges, where the stakes and the returns could be set at something reasonable instead of the Highest Possible Return. Some tech companies have survived and even thrived at arms length from the VC world, but their options are far too limited.
The article by Michael Shuman that I cited in that last paragraph lays out the history and a model for local stock exchanges. Like the cooperative models in the first story, a local stock exchange would represent a powerful alternative for a tech founder, as well as for any kind of business - and once again, would keep more of a community’s money circulating within it, rather than sending it to a bottomless pit somewhere else.