Anthony Behar/Sipa USA via AP Images
A driver protests Uber’s decision to cut fares during a February 2016 demonstration in New York.
When most fathers and sons get on the phone, they might chat about the latest episode of Succession, or last night’s Cubs game, or the grandkids. Greg and Howard Brodsky are different. They talk about co-ops.
The father-son duo are two of the biggest movers in the co-op world. Nearly four decades ago, when Greg was still in elementary school, his father, who owned a carpet store, started a business owners co-op with a handful of small firms across the country. Today, that original small co-op is a multibillion-dollar empire, having expanded into a myriad of other services. (In 2019, Howard Brodsky won the Rochdale Award, known as the “Nobel Prize for co-ops.”)
Now, his son Greg is on a mission to bring the co-op model to tech startups through Start.coop, an accelerator program designed to launch co-op businesses. And recently, the three-year-old program had some major success: The Drivers Cooperative—which was showered with attention when it launched a few weeks ago in New York City—is one of Start.coop’s graduates. But the Drivers Cooperative is only the latest in a greater movement of entrepreneurs and activists rethinking business models and whom they benefit.
Like many co-ops arriving on the market, the Drivers Cooperative is pitched as a more equitable antidote to the notoriously exploitative practices of its competitors, chiefly Uber and Lyft. The Drivers Cooperative’s members are paid a significantly larger commission on each ride, and any profits go straight to the drivers. With 2,500 drivers, the new co-op has already established itself as a force to be reckoned with.
The idea of a cooperative business, or co-op, sounds almost utopian: a shared-ownership model where profits are distributed to various stakeholders as opposed to shareholders only. Instead of an oligarchy—as is the case with Bezosworld, for instance—cooperatives are democratic. The collective group of owners—the workers, consumers, or small-business owners—share the profits and often have a say in the company’s governance.
“People know it’s better than the winner-take-all extractive economy that we’re in,” says Greg Brodsky.
Co-op zealots say it’s no surprise the progressive business model is taking off. Wealth and income inequality are at an all-time high, as the 0.1 percent continue to only get richer while wage earners’ incomes remain largely stagnant. Even as many Americans consider the country’s own democracy in peril, the democratic structure of co-ops strikes many as preferable to the corporate model in which the largest shareholders rule the roost and gobble up the rewards. The model’s biggest supporters say co-ops are an economic panacea.
The co-op model bucks the traditional venture capital approach to funding a startup.
Nathan Schneider, an assistant professor of media studies at the University of Colorado Boulder and author of Everything for Everyone: The Radical Tradition That Is Shaping the Next Economy, saw the early stages of this movement firsthand in the wake of the Occupy Wall Street movement.
“At that moment, there was this generation in response to 2008 and the crisis that was really clamoring for a deeper sense of democracy in everyday life,” he says. “They were a part of this movement that was obsessed with democracy. So why not get involved with companies that practice democracy?”
The co-op model bucks the traditional venture capital approach to funding a startup. Nearly every major tech company today—Facebook, Airbnb, Zoom, and WhatsApp, to name a few—started with VC funding. In the VC world, these highly lucrative startups are known as “unicorns” for their phenomenal rates of return. But launching a company using this sort of funding often comes at a cost.
“It’s a model of investment that’s based on highly risky companies that have a very high potential for return,” says Schneider. “It’s not something I’m universally opposed to. But when we rely on it too heavily, when a company is successful, the VC wants very, very high returns. And they’re going to push companies to achieve scale at all costs.”
This sort of high-stakes financial gambling often hits workers and consumers the hardest, as prices increase—as seen in Uber’s “surge pricing”—and workers’ pay is slashed. Congress opened the floodgates for VC funding in 1979 after making changes to the Employee Retirement Income Security Act, which allowed pension funds to invest in high-risk assets, such as venture capital funds. Schneider says this is what “supercharged” the phenomenon.
Such companies also have effectively limitless resources to protect their advantages. In California, Uber, Lyft, and kindred companies spent over $200 million last fall to persuade state voters to enact Proposition 22, which created a new category of workers for the gig economy who are barred from accessing basic labor protections and benefits—no sick leave, no workplace discrimination protection, and so on.
Programs like Start.coop are hoping to usher in a new generation of platform businesses, like Amazon and Google, designed as co-ops from the outset.
Although consumers instinctively like the sound of co-ops, most of them can’t accurately describe why they prefer them over traditional business models. A survey a few years ago found that although 78 percent of respondents would prefer to buy a good or service from a co-op, 89 percent couldn’t accurately define them.
Turns out co-ops aren’t just the local alternative food market, procuring local produce and bulk granola. Credit unions are co-ops that often fly under the radar, and so are household company names like the Associated Press, Land O’Lakes, REI, and Ace Hardware. These legacy companies prove that co-ops can be brought up to scale.
“People think small, local, cooperative grocery stores,” says Jessica Mason, co-director of Start.coop. “But this ownership model is actually viable for large businesses at scale.”
Now, programs like Start.coop are hoping to usher in a new generation of platform businesses, like Amazon and Google, designed as co-ops from the outset. Platform businesses famously scale astronomically, which means they are opportunities for extreme exploitation, or—if they’re co-ops—for equitable profit-sharing. Other organizations, like the Platform Cooperativism Consortium and Platform Co-op, are also taking part in this large-scale effort.
Some major producer and banking co-ops have long had the economic heft to win considerable political clout. “There is significant cooperative power in Washington,” says Schneider. “If you’re in Congress, you do not cross the rural electric co-ops and the credit unions. But they’re very siloed because they have distinct interests and specific policy. That’s why I’m interested in overlapping policy strategies that connect all these sectors.”
The Drivers Cooperative is far from the only new co-op attempting to take on the biggest platform tech giants with equity and social justice at the business’s core. Kinfolk, for example, is a new platform marketplace devoted to selling Black-owned brands. Consumers can become “member-owners” by clicking on a menu item on its website labeled “What the hell is a co-op, sis?” Companies like Kinfolk are harnessing the long-standing history of African American co-ops, which date back to Black-owned credit unions in the early 20th century, to direct profits directly back to the Black community.
With co-ops, “the profits go to Main Street and not Wall Street,” says Mason, the co-director of Start.coop. “That’s why we see the Drivers Cooperative getting so much attention: There’s a very clear David and Goliath [scenario]. If Kinfolk were able to grow notably in the next 18 to 24 months, then you could see the same scenario.”
