Can a tech business thrive in a co-owned, anti-capitalistic model, or is every startup doomed to a race towards the almighty dollar? In the first of our How Does It Work series, we spoke to Benedict Lau and Yurko (who, "like Cher", only goes by one name) at Hypha, a worker's co-operative focused on emerging technologies, about decision-making, accountability, and the reality of "flat" org structures.
Nora Jenkins Townson, Co-Editor of Early Magazine: Thanks for hanging out with us! First off, what's a worker cooperative, for those that don't know? I think a lot of folks are used to seeing the model at like, a crunchy grocery store, and not a tech company.
Benedict Lau, Hypha: We are a worker cooperative. We primarily serve the people who work here. Everyone who works at Hypha as a long-term employee must also be a member of the cooperative, which means you can't hire someone indefinitely and not make them have ownership. Your decision-making structure is also democratic; every member of the co-op has one vote. It doesn't matter what your role is. Everyone has the one vote. And we are guided by the seven cooperative principles.
NJT: So there are employees, but also members? Are those separate roles in a cooperative?
BL: We're a non-share capital worker cooperative. This is very uncommon because it's kind of like the nonprofit version of a worker cooperative. It means we don't have share capital, and we don't buy shares. We can't sell shares to someone to take investment, so we need to get financing in other ways if we need it. The reason why we chose this structure is to basically make a pre-commitment. We are mission-focused and we want to hold ourselves accountable to that. We're not looking to grow a thing that can be sold to someone, which is a common outcome in the tech space.
NJT: Yeah. So, what are you looking to do, then? You mentioned, in checking you out online, you mentioned that you have a distinct anti-capitalist streak, which kind of fits into this theme. What's the main aim, then, of Hypha?
BL: Well, our official mission statement is that we're looking to cultivate collective growth and meaningful livelihoods through learning and building technologies together. I think a lot of us have this discontent with the dominant tech narrative, that chasing of uncapped growth. We want to build a different story, and I sometimes think of us as building the infrastructure for the future story people tell about working in tech. Right now, as tech workers, you can choose to work in a comfortable employment or, if you work in free software, you often times end up providing free labour. There's very little money in open source and very few institutions that can support working in it and making a livelihood.
NJT: What about funding?
BL: There are funding sources, but if you look at traditional venture-backed product companies, it’s likely that every app on your phone is venture-backed. And this is actually a failure of society that more aren't publicly funded. There aren't many other institutions (outside of venture) that will fund you more than $100,000. But then if you look at how much it costs to build these platforms like Slack or Zoom, it's way over $100 million. And because open source doesn't pay, projects often get to a certain point, lose grant funding, and there's nothing that can capitalize them enough to succeed. So, we're quite interested in solving that larger problem.
We also recognize that tech products are super high-risk and front-loaded, cost wise, so we're not anti-investment or anti-capital. But we think that there can be better ways of navigating these tensions. The way that growth happens, the way that venture capital is often funding one winner in each space and dominating that space entirely..... we don't think this is the way that technologies should evolve.
NJT: Yeah. So, maybe we're not working for a huge venture-backed firm in the valley, and maybe we're not volunteering our time, but we're talking a lot about meaningful livelihood. That's something that you've written about and you've mentioned. What does a meaningful livelihood look like to you?
Yurko, Hypha: I'm in this very odd cohort where I remember the time before constant connectivity. So, I have this unique perspective on that. And quite frankly, most of the technologies we use today, it's this drive towards basically the all-mighty dollar. Everything you look at, everything that's happening, it's all about pushing that agenda. So, the question of meaningful livelihood is what are you working towards? What's that end goal? How do we make this world better for not just ourselves, but for everyone? The future generations, the current generations. It's not just paying the bills, but also doing something good for society in general.
NJT: Absolutely. And Benedict what does a meaningful livelihood mean to you?
BL: A meaningful livelihood is different for each member, and a worker cooperative allows us to have the space to talk about that. And we recently did an exercise to talk about what this means to each of us. Whether to work with a client or not, how we hire. This is the core of the organization, that we have a consistent set of values that we all respect. Without this, we're not expensing our labor to contribute to a world that we want. So, that would be a not meaningful livelihood to us.
NJT: So, for people who might be interested in this particular model, I have a few quick structural questions. So, with your current model, are you subject to the same kind of employment laws that others might be? Do you have to follow the same standards that anyone would for an employee?
BL: So yes, we're subject to all the same laws, but we are also subject to cooperative laws, meaning we can't have a (full time) employee for more than one year without extending an offer for them to join as an owner. So, there's this one year where you're kind of on probation. We either say, "No, we can't work with you so we don't work together anymore," or we have to give you ownership and decision-making power in the organization.
NJT: So if you're all equal, how does feedback happen? How do you hold each other accountable?
BL: That's one point of tension that I have with worker cooperatives. We tend to favour people who can self-manage, because it's so flat. And it's actually difficult for more junior people to grow. So, how do we do better with supporting missing skill gaps of other members?
NJT: Yeah, that's one issue that I have with flat companies. For a certain type of person, it can be really great. But also, when I hear a company doesn't have managers, or coaches or anything,, I hear, "There's nobody in your corner who's looking out for your growth." And how do we manage things like that? So it looks like that's one of the challenges in this model that you're looking to address.
Y: Yeah, and we actually recently changed this a little bit. We started off having workgroups with a lead that would take on that responsibility for that one project. We learned that sometimes the only way a project will move forward is if you have that person cracking the whip, metaphorically.
We're trying to have more of a constant feedback loop, where it's not a criticism, it's constructive criticism. So, at our AGM, one of the things we've done was put time aside to actually do some of this face-to-face peer review, where we can talk to our peers and say, "I like that you're doing this. This is where you can work on. How can we help you work on that?" And I think that's one of the biggest keys, is how can I help you, as a co-owner of this co-op, to be better? This is something that we're trying to do organically. One of the things I really hated working in the corporate world is the annual review where it's, "We're not going to tell you anything for a year and then one day of the year it's, "Surprise, here's all the things you're doing bad and here's all the things you're doing good. And quite frankly, I'm doing this because I don't want to give you a raise." Or whatever the reasons might be.
NJT: Do you pay salaries? Or do you divide money that comes out of our project? Or just generally, how does it work? How does one get a raise in an organization like this?
BL: We get paid for client projects, and the cooperative takes a 35% cut from that rate, and then that becomes the wage. So, basically, it's hour-based. For our first two years we were not paid for the internal labor (outside of client projects), which was a big problem because it's a lot of work. Only as of this July, we were finally able to make budgets from the cooperative incomes (the 35%) and pay for all internal labor.
Y: So, in short time, how do you get a raise? You get more projects. You do client outreach, that's how you get a raise. You do the work.
NJT: How do you collaborate?
BL: We don't have an office. Most of us are in Toronto, but we're fairly distributed. Because of that, we started remote working before COVID, but recently we've been fed up with working alone, and some of us get together in person.
NJT: We've always had a hybrid model ourselves, where we have a clubhouse type of office, where it was never necessary to come in but if you wanted somewhere to come in, or someone to hang out with while you work, you can. But I think that has to be consciously designed, because you want to make sure that decisions aren't happening without other people. And I think that's the challenge a lot of people are going to have, trying this hybrid thing for the first time when they haven't before.
BL: Yeah, and there's this intention that we always have, especially since we're cooperative, where we lean towards consent-based decision-making. And it means in the early days we get pulled into a lot of meetings, everyone is meeting for everything. And over the two years, we've managed to figure the right boundaries. Like, these are the decisions that this working group can make independently and you don't have to consult absolutely everyone.
NJT: That's interesting. I've been in cultures which are very consensus-based and ones that are highly the opposite as well, and one's not necessarily better than the other, but it's interesting to see the differences in culture it brings about.
BL: A lot of times people imagine horizontal organizations being without a decision-making structure. That's what we're actively against. We have been in a lot of these spaces where there isn't a structure like that, and they're dysfunctional. And we are not doing that.
NJT: Yeah, there's a classic essay that I love, "The Tyranny of Structurelessness", that I'm always sending to founders that want a non-hierarchal model. Someone is always in charge, and if you're not calling it out, it can get toxic quick. So, if somebody's out there thinking they might want to explore this model and start a co-op, what are some high-level key learnings that you would tell them?
Y: Don't do it. No, no. Well honestly, I think the big one is to be ready for upfront work. It's not as simple as filing some paperwork. There was a lot of effort that was put into setting this organization up.
BL: I think my recommendation would be don't underestimate the amount of peer work that needs to happen to keep this thing in harmony. Establish a decision-making structure early on, make sure there are ways for everyone's voice to be heard.
To learn more about Hypha and how they work, check out their open-source handbook.