Mutual Companies: The Next Step for Co-Working

November 5, 2010

Inspired by my friend Jeremy’s recent thoughts on co-working, I wanted to take a moment to briefly outline my own thoughts on the benefits of co-working, and especially what I’d love to see from the trend.

At the Web 2.0 summit in 2006, when EC2 had not yet redefined what Cloud meant, Jeff Bezos refers to “muck” and “undifferentiated heavy lifting” that takes up to 70% of the time you spend on your idea. He’s speaking, of course, about a platform that will make him and his company extremely wealthy, as it enables a raft of startups– a platform based on elasticity of compute and disk resources.

As software development consultants, Jeremy and I both spend our professional careers utilizing compute and disk resources. The Cloud, whatever it means now, is a part of our professional lives. We are among the few (we happy few) who can differentiate what Jeff Bezos characterizes as “undifferentiated”. As a businessman who will have two startups survive their first year as profitable companies, I have a different feeling about undifferentiated work.

As a software consultant, I am in constant need of contracts and legal review. When I searched for a retainer contract, the results were terrible. Further, when you use documents that you find on the Internet, it’s clear that your enterprise is unlikely to get the upper hand during litigation, as you’ve had no counsel.

Although Jeremy intimates that taxes are something for which “tools exist” that cost “pennies a day”, this has not been my experience. I believe a good CPA is essential to any young business, and yet they seem to take pleasure in not being differentiated. CPA’s evoke the first lines of Anna Karenina: every good one is the same, but the bad ones are all different– unique in their particular brand of incompetence.

Unhappy Cubicle Code Monkeys

That cliche turns my stomach after Chad Fowler’s incomparable The Passionate Programmer makes it clear how both of those situations are the programmer’s own responsibility.

You want recognition for your work? Earn it. Make it impossible to miss your impact on your business.

You want to be better understood? Go spend the time communicating with the people who matter: those in your organization. Many programmers feel that management doesn’t speak their language. Why shouldn’t you have to speak management language? I understand the arguments, but I don’t think this question is widely considered, and it harms developer’s lives.

Just because it’s common in our community to be victimized by the processes that I believe Jeremy would claim are inherent in all industries doesn’t make it any more desirable or acceptable.

One point that I feel Jeremy is very right to point out is the benefit of low overhead of our industry. It removes one element of the many that keep “code monkeys” tied to cubicles in jobs where they are under-appreciated and misunderstood. There are many others. How will I find work? How will I keep it once I have it? I don’t know any lawyers. None of the lawyers I know do business contract law. I don’t know any good CPA’s. I don’t know anyone who knows any good CPA’s. How will I manage my time working from home with the distractions there? I hate timecards! How much am I going to have to pay for insurance for my family? Obama, Obama, Obama! The list could be endless, and its effect is to chain developers to those unhappy cubicles.

I feel, as Jeremy does, that co-working can address many of these questions. While I feel that the ideas he proposes may require no encompassing formal entity, I think there exists a model for a company that does have formal structure to provide different benefits that directly address the above concerns. It can lower the overall costs of what are typically large one-time or annual expenses, as well as provide a convenient payment scheme for freelancers and small development shops. It can provide access to group health care over time. It can optionally provide many related services, as Ask Sunday or Freshbooks might, either directly or through discount codes. It can provide professional community, not just in the physical world, but in the connected virtual one. In other words, some undifferentiated heavy lifting.

The element I’m most excited about is that of having membership equate to ownership. With a proper set of bylaws and founding members, I believe it can be demonstrated that two concerns of freelancers and small shops can be addressed in meaningful ways. Most developers are used to receiving a predictable sum every (say) two weeks. This is unlikely how they’ll be paid by their clients. By collecting receivables jointly, and distributing among all owners, it can function much in the way a credit union does from day to day. It can provide a payroll service that allows developers to just get the direct deposits and have less to worry about when it comes to managing receivables. As the concept matures, I believe that paid, “workless weeks” can be introduced to those who are billing enough. There is a set of numbers to be cracked, and I don’t even know any lawyers that would be up for this, so I can’t really move the needle farther than this. But it’s a great idea. If you use it, let me know, and I’ll sign up and sit on the board.

9 Comments

  1. Jeremy Weiland
    November 5, 2010 at 11:44 am #

    I think my last comment may have gotten eaten, but here’s the gist of it: the issue with formalization is merely one of putting the cart before the horse. The point of the organization is not to build a brand or be anything in particular, but to solve the problems we share. Until we know what those problems are, why provide the solution? Let it grow organically. That’s the link between co-working and something more than co-working; that we grow the relationship from a real basis in trust and mutual need rather than some

    • Jeremy Weiland
      November 5, 2010 at 11:45 am #

      My original comment:

      The concept of a mutual makes a lot of sense, but what you’re proposing has the same danger as what I’m proposing: if it doesn’t address the real and perceived needs of those in our business, it will fail – even if it’s a fundamentally good idea. That’s why the co-working element is so important: instead of pushing the “product” to our fellow techies, we pull the “product” from a community that grows organically and whose needs actually get articulated first before they are addressed. It’s why a mutual makes so much sense: because it is in coming together to solve our own problems that something viable emerges – as opposed to simply outsourcing the functions, to answer Denny’s question.

      I credit Jim’s approach for being far more business savvy than mine (I haven’t gone through a tax season as a business owner yet, so listen to him on that matter). I’m focusing on an experimental, incremental approach that doesn’t assume the organization should accomplish A, B, and C necessarily. Jim has a much better idea of what businesses need, having a background in it, so maybe that’s the difference. I also have politics wrapped up in my approach, and Jim’s is admirably much more constrained.

      For me, it’s about coming up with a mode of working together that is authentic. The main reason you want to work for yourself is to do it your way. What both of us are suggesting is a way to do it your way that builds on economies of scale with others who have similar ways. I hope we see something come of this, no matter how it ends up evolving. Evolution means it’s alive, and it doesn’t have to be something in particular as long as it’s meeting its purpose.

      • bigfleet
        November 5, 2010 at 11:57 am #

        I praise both the concept of authenticity, and the spirit of a “bottom-up” approach to the problem in contrast to a “top-down” approach that I reflect.

        • Mel Riffe
          November 5, 2010 at 12:00 pm #

          In a sense, “top-down” vs. “bottom-up” is the basis for my extended reply.

          Each approach has its merits but each has different motivations and, possibly goals, especially on the out-set.

          • bigfleet
            November 5, 2010 at 12:07 pm #

            I would welcome a chance to read it.

    • bigfleet
      November 5, 2010 at 11:56 am #

      This post has two conceits, rightly pointed out: that small providers ought to value things like a stable paycheck, management of receivables, and the like, and that I am able to (over time) produce marketing material sufficient to explain and convince others they are worthwhile.

  2. Denny Abraham
    November 5, 2010 at 10:35 am #

    I’m sorry if I don’t understand the nuance of the proposition, but how does this differ from some small shops that handle administrative and sales overhead collectively and market their specialists under a shared brand?

    • bigfleet
      November 5, 2010 at 10:49 am #

      Great question, Denny! It’s getting more of “the answer” out of my head.

      I think where this has its clearest value is in becoming a member. Let’s say that you are choosing to become a freelancer after having just learned the “language of your dreams” which is in high demand.

      In the system you mention, in such a situation, it would be exceedingly unlikely to reap the benefits of ownership (e.g. the workless week concept.)

      Also, the notion of this being a co-working idea presumes that the co-workers are not otherwise inclined to start such an enterprise among themselves. In the system you present, those parties will need to be aligned toward some sort of shared goal, lest their management break apart the company. No such shared vision need be present in this proposal. The business is the CPA/Lawyer/Admin teams, and the freelancers are customers and owners. This is the New York Life model of insurance, and I find it fascinating. Its fiscal durability is unprecedented.

  3. Mel Riffe
    November 5, 2010 at 8:20 am #

    Having read both articles, it is clear there are two, possibly competing, possibly complementary, goals being addressed. I have already promised a reply to Jeremy\’s article; I guess I\’ll have to blog my thoughts. However I will need some time to noodle over a coherent response besides, “Yeah!…Sometimes!”

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