[P2P-F] Fwd: [NetworkedLabour] HOW PLATFORM COOPS CAN BEAT DEATH STARS LIKE UBER TO CREATE A REAL SHARING ECONOMY?

[Michel Bauwens]

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Subject: [NetworkedLabour] HOW PLATFORM COOPS CAN BEAT DEATH STARS LIKE
UBER TO CREATE A REAL SHARING ECONOMY?
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http://commonstransition.org/how-platform-coops-can-beat-death-stars-like-uber-to-create-a-real-sharing-economy/

HOW PLATFORM COOPS CAN BEAT DEATH STARS LIKE UBER TO CREATE A REAL SHARING
ECONOMY
On: Nov 11 <http://commonstransition.org/2015/11/11/>Categories:  Articles
<http://commonstransition.org/category/articles-and-resources/articles/>, Neal
Gorenflo <http://commonstransition.org/category/authors/neal-gorenflo/>, Open
Cooperativism
<http://commonstransition.org/category/subjects/open-cooperativism/>, Platform
Cooperativism
<http://commonstransition.org/category/collectives/platform-cooperativism/> No
Comments
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We have an epic choice before us between platform coops and Death Star
platforms, and the time to decide is now. It might be the most important
economic decision we ever make, but most of us don’t even know we have a
choice.

And just what is a Death Star platform? Bill Johnson of StructureC3
<http://www.structure3c.com/> referred to Uber and Airbnb as Death Star
platforms in a recent chat. The label struck me as surprisingly apt: it
reflects the raw ambition and focused power of these platforms,
particularly Uber.

Uber’s big bet is global monopoly or bust. They’ve raised over $8 billion
in venture capital, are on track to do over $10 billion in revenue this
year, and have over one million drivers who are destroying the taxi
industry in over 300 cities worldwide. They’ve done all this in just over
five years. In fact, they reached a $51 billion valuation faster than
Facebook, and plan to raise even more money. If they’re successful, they’ll
become the most valuable startup in history. Airbnb is nearly as big and
ambitious.

Platform coops are the alternative to Death Stars. As Lisa Gansky urged, these
platforms share value with the people who make them valuable
<http://www.fastcoexist.com/3038476/collaborative-economy-companies-need-to-start-sharing-more-value-with-the-people-who-make-th>.
Platform coops combine a cooperative business structure with an online
platform to deliver a real-world service. What if Uber was owned and
governed by its drivers? What if Airbnb was owned and governed by its
hosts? That’s what an emerging movement is exploring for the entire sharing
economy in an upcoming conference, Platform Cooperativism
<http://platformcoop.net/>.

Shareable helped break the platform coop story last year in a Nathan
Schneider feature entitled, “Owning is the New Sharing
<http://www.shareable.net/blog/owning-is-the-new-sharing>” along with Trebor
Scholz of the New School
<https://medium.com/@trebors/platform-cooperativism-vs-the-sharing-economy-2ea737f1b5ad>.
These two thought leaders, also the conference organizers, identified a
wave of platform coops forming, but we’re still in the early days.
WHAT FORCES ARE DRIVING THE RISE OF DEATH STAR PLATFORMS? AND WHAT’S AT
STAKE?

Uber signifies a new era in tech entrepreneurship. Its leaders express an
explicit ideology of domination and limitless, global ambition. In fact,
the global tech sector may be one of the most powerful stateless actors on
the world stage today. And Death Star platforms are the tech sector’s avant
garde.

Death Star platforms deftly exploit today’s growing economic insecurity and
political vacuum. Their business model relies on precarious 1099
contractors. They mix technology, ideology
<https://en.wikipedia.org/wiki/The_Californian_Ideology>, design, public
relations, community organizing, and lobbying in a powerful new formulation
that’s conquering cities and users around the world. They wrap themselves
in the cloak of technological progress, free market inevitability, and even
common good. As a result, cities allow them to break their laws with
surprising frequency (Uber and Airbnb are simply illegal in most cities).
Weak city governments either drink the Kool-Aid or struggle to contain them.

Millennials, who Pew Research described as detached from institutions and
networked with friends
<http://www.pewsocialtrends.org/2014/03/07/millennials-in-adulthood/>, may
be Death Star platform’s most ardent users. 50% of millennials are
political independents, a huge increase over prior generations. And while
Millennials are detached from traditional institutions, they increasingly
connect through Death Stars. Most use these services and implicitly accept
their ideology as Death Stars mask the complexity of their services—and
their politics—behind slickly designed apps. As a result, they along with
many others unknowingly join a movement with totalitarian goals, all for
the sake of often negligible income, savings and convenience. It’s scary
but understandable. US Millennials suffer from the highest debt and lowest
employment of any generation since the Great Depression. Not to mention
that Death Stars often deliver a better service. I use them occasionally
too.

Peter Thiel, founder of PayPal and leading sharing economy venture
capitalist (VC), epitomized this ideology in a 2014 Wall Street Journal
op-ed entitled, “Competition is for Losers
<http://www.wsj.com/articles/peter-thiel-competition-is-for-losers-1410535536>,”
in which he encourages entrepreneurs to establish monopolies. Marc
Andreessen, another leading sharing economy VC, wrote a similar op-ed in
the same publication three years earlier titled, “Why Software is Eating
the World
<http://www.wsj.com/articles/SB10001424053111903480904576512250915629460>,”
in which he declared that there was no industry that couldn’t be disrupted
by web technologies.

Behind the bombastic rhetoric are powerful real-world drivers. There are
sound, if not self-serving, reasons for these VC’s bold calls to action. A
technology gold rush dramatically larger than any before has only begun to
unfold, and Thiel and his ilk have the most to gain. Jeremiah Owyang’s
Collaborative
Economy Honeycomb
<http://www.web-strategist.com/blog/2014/12/07/collaborative-economy-honeycomb-2-watch-it-grow/>
infographic
shows a large and growing universe of companies challenging dozens of
major industries. Indeed, a recent IBM survey
<http://www-03.ibm.com/press/us/en/pressrelease/47989.wss>identified corporate
executives’ top fear as the Uberization of everything. Zipcar founder Robin
Chase <http://www.robinchase.org/> believes that everything that can become
a platform, will become a platform
<https://medium.com/the-wtf-economy/everything-that-can-become-a-platform-will-become-a-platform-216bcfb89855>.
If so, then the sharing economy is just the tip of the spear. Silicon
Valley could become *the* power center of the world, with its leaders
joining the small-but-growing ranks of stateless, above-the-law plutocrats.

That’s a big claim, but not out of the realm of possibility.  There are
some compelling leading indicators.

There’s a surface explanation, but much more below that. Technology
startups are building platforms to compete in nearly every brick and mortar
service sector, and on a global basis. These platforms coordinate economic
activity, but do not need to own the key physical assets or employ any of
the end-service providers to profit. Uber owns no cars and employs no
drivers, but has decimated the taxi business in San Francisco
<http://www.shareable.net/blog/is-ridesharing-killing-san-franciscos-taxi-industry>
.

With incredibly low costs, global reach, scientifically developed user
interfaces, and massive funding, Death Star platforms have a shot at
duplicating this kind of success in every major city and service sector
around the world. This has VCs salivating. The multitude of incumbents
spread across many industries and geographies that play by the rules face
steep odds against the lawlessness, network effects, and focused power of
Death Stars.

At a deeper level, fundamental changes in the startup world are underway.
Tech startups *have to* venture into the brick and mortar world as the low
hanging fruit in information-intensive industries has been picked. Google,
Facebook, Apple, Microsoft, Amazon, and more have established their global
monopolies. Tech must leave the nest, and its newest startups can because
it’s significantly faster, cheaper, and less risky to start companies than
before.
SHOCK AND AWE ENTREPRENEURSHIP

The assembly line creation of technology startups has been largely
perfected. Silicon Valley’s VC-driven ecosystem has significantly reduced
the considerable cost and risk of starting a venture. Funding is at record
levels
<http://nvca.org/pressreleases/annual-venture-capital-investment-tops-48-billion-2014-reaching-highest-level-decade-according-moneytree-report/>.
There’s large corps of professionals who specialize in building startups.
The technology is also cheap, meaning that startups need significantly less
funding than before…unless they want to “disrupt” a brick and mortar
industry.

These new dynamics explain Uber. Uber didn’t raise record amounts of
venture capital to develop a new technology. Their technology is
pedestrian. Most of it was developed by taxpayer-funded US government
programs decades ago. They have combined old technology in a new way, but
that’s relatively cheap to do. The $8 billion they’ve raised is to
establish a global monopoly—in the real, physical world—in as short a time
as possible. That takes a lot of marketing and lobbying muscle, and that’s
really expensive.

What are indicators of the Death Star platform’s rising political power?
Uber’s David Plouffe, formerly President Obama’s campaign manager,
literally besieged Portland’s mayor, ultimately forcing him to create a
favorable policy
<http://www.cnbc.com/2015/04/30/portland-makes-uber-lyft-legal-for-now.html>.
Bloomberg’s “This is How Uber Takes Over a City
<http://www.bloomberg.com/news/features/2015-06-23/this-is-how-uber-takes-over-a-city>”
gives an eye opening account Uber’s strong arm tactics. As of this writing
this, Airbnb is running an $8.3 million campaign to defeat a San Francisco
voter proposition (Prop F) designed to limit Airbnb’s negative impact
on the city’s skyrocketing housing costs. This lobbying activity is just
the tip of the iceberg. Uber and Airbnb are using a good bit of their
$10 billion+ collective war chest to hire a global army of lobbyists. In
their language, they’ve put “boots on the ground” in hundreds of cities.

This is a big departure from the past. Tech investors used to
avoid startups with significant regulatory risk because there were plenty
of better, less risky opportunities. That’s not the case anymore. Now tech
investors must and *can* take on the physical world.

Moreover, the huge investment raises and regulatory friction add up to much
more than the sum of their parts. It’s like 1+1=10. The more money Death
Star platforms raise, the more press and customers they get. The more they
break the rules, the more press and customers the get, which enables them
to raise even more money. Taxi drivers strike? Jackpot! And the cycle
repeats. It’s a blitzkrieg. It’s shock and awe entrepreneurship. It’s the
sound of a new hegemonic bloc coming to power.

Here’s what’s at stake. As Detroit shaped the world in the image of the car
in the 20th century through an alienating and resource intensive system of
highways and suburbs, so might Silicon Valley shape the world in the image
of Death Star platforms in the 21st.

If you’re outraged by the power of tech giants now, just wait until tech
dominates the majority of services you depend on to live. If you’re worried
about how tech companies use your personal information now, just wait until
they can track you 24/7 online and off. If you’re frustrated by how tech
companies wield power over you as user now, just wait until you’re
algorithmically fired by a Death Star because of one random bad rating. If
you think incumbents like taxi companies suck, just wait until a
win-at-all-cost tech titan like Uber’s Travis Kalanick rules the roost. If
the diversity of your city’s locally-owned businesses is already suffering,
just wait until sterile, centralizing Silicon Valley apps create an even
more boring and unresilient monoculture. If you’re worried about housing
costs, just wait until every city’s housing market is like San
Francisco’s, where
one bedroom apartments rent for an average of $3,500 a month
<http://sf.curbed.com/archives/2015/09/03/san_franciscos_median_rent_hits_yet_another_new_high.php>,
the highest in the US. If you’re pissed by today’s unprecedented
inequality, just wait until Death Star platforms destroy millions of jobs (Uber
can’t wait for driverless cars
<http://www.theverge.com/2014/5/28/5758734/uber-will-eventually-replace-all-its-drivers-with-self-driving-cars>,
yippee!) while shifting more risk and cost onto providers.

Bottom line, what seems like a bad situation for the 99% today could become
much, much worse tomorrow.
PLATFORM COOPS, YOU’RE OUR ONLY HOPE

If platform coops are our only hope, then we’re in big trouble. The
movement is in its infancy. There are several fundamental, interrelated
legal, financial, and organizational challenges to the process of
forming platform coops. New organizational forms need to be worked out,
which will take years. Meanwhile, Death Star platforms will conquer more
territory at a new, faster version of Internet time. Their global
blitzkrieg will continue apace.

The aforementioned conference, Platform Cooperativism
<http://platformcoop.net/>, hopes to address this through what organizers
are calling a coming out party for the cooperative internet. Over 1,000
people have registered. Activists, entrepreneurs, lawyers, union officials,
financiers, and academics are gathering to conceptualize the movement and
begin to work out the key challenges of creating a democratic alternative
to Death Star platforms. Its organizers hope to catalyze a movement of
provider-owned sharing economy platforms, where the drivers or hosts wield
the power, not VCs. The conference is a direct response to rise of Death
Stars and their treatment of providers.

The central premise of platform cooperativism is that those who create the
most value for the platforms— providers like drivers and hosts—should own
and control the platforms. Current arrangements tend toward exploitation of
providers as Death Stars shift the cost and risk of providing a service to
providers. Unlike most incumbent service providers, such as taxi companies
or hotels, Death Stars providers are 1099 contractors who do not enjoy the
benefits and protections of employees. Death Stars rely on this arrangement
to avoid the costs of managing a workforce and grow quickly. It’s true that
Death Stars often provide superior service by leveraging technology, but
they probably wouldn’t be viable if they did not exploit this huge
labor-related cost advantage.
THE RISE OF THE REBEL ALLIANCE

Examples of platform coops abound. A wave is forming, but most examples are
brave experiments at best. Shareable’s “Owning is the New Sharing,” lists
many examples. There’s Loconomics <https://loconomics.com/>, the
cooperative version of task marketplace TaskRabbit. One of the most
successful experiments is Enspiral Network
<http://www.shareable.net/blog/enspiral-changing-the-way-social-entrepreneurs-do-business>,
a New Zealand-based coworking community plus digital collective that allows
hundreds of freelancers and social enterprises to work together for mutual
benefit. Lazooz <http://lazooz.org/> is the blockchain version of Uber
where drivers mine digital currency by giving rides, while Swarm
<https://swarm.fund/> is the blockchain version of Kickstarter.

These examples represent three common developmental patterns for platform
coops. First, there are legally-defined cooperative versions of sharing
economy platforms like Loconomics. Second are hybrids like Enspiral
Network, which aren’t legally cooperatives but operate on similar
principles leveraging digital technology. Then there’s the most scalable
option: blockchain-based platform coops like Lazooz. They leverage the same
technology Bitcoin uses —a distributed digital ledger—to coordinate,
govern, and compensate platform work on a democratic basis.

All of these paths are worth pursuing. As we do this, we must take care not
to duplicate the organizational monoculture of Silicon Valley. However,
it’s important to acknowledge that this movement will not produce viable
competitors quickly. It took Silicon Valley decades to perfect the assembly
line manufacture of startups. It shouldn’t take this movement that long,
since Silicon Valley has paved much of the way. The movement can artfully
adapt Silicon Valley startup methodology, business models, design, and its
innovation ecosystem to launch a wave of platform coops.

While much of the path has been paved, plenty of work remains. Below are
five things platform coops must do to beat Death Stars platforms. What else
would you add to this list?
1. INCUBATE THE TEMPLATES

It will take focused, well-resourced, and consistent effort to work out the
interrelated legal, financial, and organizational challenges of forming
platform coops. Platform coops aren’t an incremental step up from typical
startups, they’re a transformational leap. The path is currently uncertain,
expensive, and time consuming. For instance, Loconomics has been working on
their structure for going on two years, and aren’t even in beta yet. A
better way is needed. Platform coops need to face this challenge together
with long-term support of a stable anchor institution, like a
university. This high barrier to forming platform coops must be lowered or
this new movement will die in its crib.

Part of the magic of tech startups is that there’s a well understood
organizational structure, financing method, and developmental path for
entrepreneurs to use. In other words, there’s a template. Platform coops
need templates too, but ones which support a diversity of organizational
patterns. What’s needed is a small number of incubators in different global
cities working together to give birth to the first wave of platform coops.
The trick is to get the first few platform coops off the ground, and then
develop a global ecosystem that encourages replication of working models
across industry verticals and geographies.
2. OFFER A BETTER SERVICE AT A COMPETITIVE PRICE

Let’s not forget business fundamentals. Platform coops must offer a better
service at a competitive price to beat Death Stars. A lot hinges on simply
executing better day in and day out, but strategy plays a big role too. The
key strategic challenge is figuring out how to leverage platform coops’
social mission, democratic structure to help them compete. User ownership
and control offers inherent advantages that stem from a more engaging and
empowering relationship to other users and the enterprise itself. For
instance, platform coops could attract more loyal users at a lower cost
than Death Stars by offering user-ownership. All else being equal,
user-owners will likely deliver better service than 1099 contractors.
Platform coops may be able to create a deeper community experience than
Death Stars, which routinely feign community ethos for profit. The social
mission of platform coops could help them access less expensive labor and
capital like traditional cooperatives. They could also gain a cost
advantage by developing a common software infrastructure or using open
source platforms by ShareTribe <https://github.com/sharetribe/sharetribe>
 and GNUsocial <https://english.lasindias.com/some-keys-to-gnu-social-camp>.
3. TAKE COOPERATION TO THE NEXT LEVEL

It goes without saying that platform coops should cooperate, as that is
standard operating procedure in the cooperative world. In fact, it’s number
six of the sector’s widely embraced Rochdale Principles
<https://en.wikipedia.org/wiki/Rochdale_Principles>. However, platform
coops should take cooperation to the next level to exploit a potentially
decisive competitive advantage over Death Stars. Death Stars’ closed nature
which make it nearly impossible for them to engage in the deep
collaboration between cooperatives seen in regions like Quebec, Canada,
Emilia-Romagna, Italy, and Basque Country, Spain. Clusters of small to
medium-sized cooperatives in these regions often compete successfully
against large multinationals through networking, formal collaborations, and
shared infrastructure such as market research centers, banks, and
universities. These cooperatives collaborate in a much deeper way than tech
companies. In fact, they act almost as if they’re one organism.

Platform coops must act similarly. For examble, the replacement for Airbnb
shouldn’t be another centralizing global platform even if it’s a
cooperative. It should be a federation of locally-owned cooperatives that
are interconnected technologically (Fairbnb!). GNUsocial’s microblogging
platform is an example. Each node is on a different server, but users can
interact across nodes. The advantage is a much more resilient,
user-controlled, distributed infrastructure. At Somero 2015
<http://somero2015.lasindias.club/en/> last month, GNUsocial took a big
leap by unveiling the alpha version of a hospitality module called GNUbnb.

Platform coops can share much more than software including data, digital
reputation, knowledge, marketing, public relations, legal, lobbying, and
physical space. And share all of this on a global basis — as Michel
Bauwens’ open coop proposal
<http://p2pfoundation.net/Open_Cooperatives> advises
— and across industries. Cities should get in on the action too. They
should cooperate with each other and with platform coops to mold the
sharing economy in the public interest as Janelle Orsi
<http://platformcoop.net/participants/janelle-orsi>of the Sustainable
Economies Law Center <http://www.theselc.org/> recently suggested
<https://www.thenation.com/article/5-ways-take-back-tech/>.
4. CREATE AN ECOSYSTEM TO DISTRIBUTE WEALTH

Silicon Valley arguably creates and concentrates more wealth than any place
on earth. Behind this phenomenon is a powerful ecosystem
<http://www.slideshare.net/EpicenterUSA/hbcu-innovation-summitbyers> that
includes Stanford University, the biggest venture capital firms in the
world, an enterprising culture, top notch professional services, and more.
This ecosystem birthed the Death Stars, and they’ve benefited greatly from
it. Platform coops need a similarly powerful ecosystem to compete, but one
that distributes wealth instead of concentrating it. That’s a tall order,
but platform coops may have natural allies in creating such an ecosystem
including city governments, unions, nonprofits, universities, the free and
open source software movement, and social investors like credit unions,
social venture funds, and foundations. It took many decades for the Silicon
Valley “miracle” to unfold. Similarly, it’ll take an ecosystem to raise
this movement.
5. BUILD A MASS MOVEMENT

Platform cooperatives have the opportunity to channel the huge amount
of negative sentiment around Death Star platforms to power their movement.
They can also move into the slipstream of awareness Death Stars are
creating about the sharing economy to surge forward. However, the movement
must be reframed in at least three ways to take advantage of these powerful
forces.

First, platform cooperativism must become a populist, trans-partisan
movement. If Platform Cooperativism is the coming out party for the
cooperative Internet, then it’s a lopsided one. The guest list
<http://platformcoop.net/participants> reads like the line up for New York
City’s liberal all star team. That said, I give them credit for a long list
of partners including Shareable <http://www.shareable.net/>. That’s a good
start at building a movement; they only need to reach across the aisle more
going forward.

Second, it must shift emphasis from moral arguments for platform coops to
practical ones which convince ordinary folks that the vision is feasible.
Hope is essential! Like traditional cooperatives, platform coops could
offer inherent competitive advantages, including superior cost structure,
better working conditions, higher pay, better reputations, resilience, and
alignment between value creators and rewards. In fact, sharing ownership
and control with users may become a necessity, as Brad Burnham of Union
Square Ventures has argued <http://www.forbes.com/forbes/welcome/>, for
platforms to compete for customers as other advantages are leveled by the
market.

Lastly, the emphasis must shift from platform coops formed by providers to
a multi-stakeholder model
<http://www.shareable.net/blog/how-platform-cooperativism-can-accelerate-sustainable-consumption>
that
could include providers, customers, founders, investors, geographic
communities, and nature. Provider-driven platform coops are a good start,
but they will eventually run into the same problems that arise in any
organization when one stakeholder group calls the shots. Investors are a
normal part of the mix in traditional coops, so no reason they shouldn’t be
here, especially with their power in check as one of many stakeholders.

So an epic choice is before us. Do we accept Death Star platforms’ boring,
unresilient, monocultural domination? A domination that will be difficult
to shake off once established. A domination that puts the world at each of
our individual fingertips while disempowering us collectively. A domination
that could permanently damage the richness, resilience, and capacities of
our local communities, as Douglas Rushkoff <http://www.rushkoff.com/>
suggests
<https://medium.com/@rushkoff/my-problem-with-uber-all-along-has-been-that-it-s-optimized-for-some-really-specific-utility-but-4bcbeb863903>
.

Or do we work together to build, as Charles Eisenstein would put it, the
more beautiful world our hearts know is possible
<http://charleseisenstein.net/project/the-more-beautiful-world-our-hearts-know-is-possible/>?
A world where platform coops manifest the values of the commons in every
community. Where our capacity to manage our resources together is deeply
respected. Where polycentric control is a given. Where local laws, customs
and cultures are honored. Where self-interest and common good are aligned.
Where we are truly alive.

The odds against this more beautiful world are the same odds Luke Skywalker
faced against the Death Star in the original *Star Wars*. The key to
victory is the same too. We must use the force, but the force in this case
isn’t some mystical energy, the force is us.
------------------------------

Originally published in Shareable
<http://www.shareable.net/blog/how-platform-coops-can-beat-death-stars-like-uber-to-create-a-real-sharing-economy>





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