[vimwizard]

The dynamics of Mondragon participating in free trade are no different than any other corporate entity. The internal dynamic works because most people that are participating share the same core values of shared ownership, and there is no corporate ladder to climb. IMO, leadership making these values core to the business is going against the grain, putting your probability of survival below or equal to that of others, which is why they are a rare occurrence

It's objectively a better model for ensuring the sustainability of a corporation, with respect to operating in a free market. I would say that being an employee at a high productivity co op is the same as being a highly skilled software developer working for a contracting firm or maybe a sizeable startup. You have a valuable impact and have skin in the game.

I think there is a tipping point where greed can end a corporation, but e.g. for western corporations, the beast is fed by central banking. The problem with that, is that there are clear winners that are chosen, which go on to buy out their competition. At that point, you have management making working conditions less and less favorable, for the sake of share holder bottom line, to the point of societal unrest. Take a look at Amazon.

[ceeplusplus]

But do high productivity / high demand employees earn outsized compensation? Software engineers at Uber, for example, earn probably 10x what drivers make. If you look at some of the recent ridesharing coop attempts in the US, they advertise wages of 70-80k for devs, which is just not going to work in a competitive market.

[kqr]

Generally you won't find investors pouring millions into co-op because investors do this in expectation of ownership and control -- the opposite of what they get in a co-op. So it's harder for a co-op to raise the ridiculous amounts of money they need to pay outsized compensation.

Instead, part of the compensation package is to not be beholden to corporate overlords and quarterly report-driven shareholder value-based crap. I'm absolutely willing to take a financial pay cut for that.

[ceeplusplus]

I'd say the number of people willing to take a 5x paycut (it is literally 5x) for feeling better about themselves is pretty small. The number of those people who are qualified to work on matching algorithms and pricing algorithms is even smaller. And you need matching and pricing algorithms to compete against Uber and Lyft, because they can price discriminate (e.g. airport rides) against consumers and get better utilization out of drivers, so if they have to compete, they can pay drivers more than you.

[sangnoir]

> I'd say the number of people willing to take a 5x paycut (it is literally 5x) for feeling better about themselves is pretty small

What do you suppose is the median salary for devs in the US? Tech salaries are increasingly bimodal, take care not to be deceived by big tech/bay area salaries.

[ceeplusplus]

Sure, but then you are hiring less skilled talent that is probably incapable of working on pricing and matching algorithms (which along with scale are the real advantage Uber has, since everyone can make a crappy iOS app and call it a day).

If the algorithms didn't matter then Uber wouldn't be maintaining 70% marketshare in the US.

Also, a quick look at levels.fyi says salary at IBM (i.e. your median salary dev) for a senior is 192k. Compared to 80k for a ridesharing coop, that's still quite the salary cut. Don't forget a lot of these coops are based in HCOL areas like NYC.

[sangnoir]

> Sure, but then you are hiring less skilled talent that is probably incapable of working on pricing and matching algorithms

This sounds like a variation of the just world fallacy to me: in a just world, talented folk who solve hard problems get paid more, and the less talented ones - who are unable to solve hairy problems - get paid less. In such a world, you can identify the talented ones by how much they are earning. Yet in the real world, geography, and luck/ability to bootstrap to HCOL areas plays a huge part

> Also, a quick look at levels.fyi says salary at IBM (i.e. your median salary dev) for a senior is 192k.

I think you're underestimating how wide the gap is between the bimodal peaks. $192 is too high[2] still; it slots just below Senior executive average ($200k) and right above EM ($180k) in the 2022 StackOverflow salary survey[1] for the US

1. https://survey.stackoverflow.co/2022/#work-salary

2. the survey doesn't distinguish between junior & senior engineers, but I'm guessing even the seniors earn less than CxO's.

[jack_pp]

Won't it work though? The market isn't full of rational salary optimizing actors, there are some (probably a small percentage) that care more about their work env and culture than salary. This might be either because they already feel they have enough money or simply hate the normal corporate culture.

[nine_k]

Ideally the pay cut would be smaller than he expense of buying antidepressants and regular therapist visits.

[jack_pp]

I don't know about you but I'd rather not spend years of my life sedated on drugs just for money. There are places to live outside the states that don't require you to make 100k per year to have a very good life.

[nine_k]

Exactly my point.

A soul-crushing job may be not worth it just from the financial perspective.

[sudosysgen]

That's 80k + a share, which may have a lot of value.

[jonas21]

Though you have to buy that share.

[msk-lywenn]

It’s usually progressively deduced from your salary, you don’t need to buy it upfront

[jonas21]

At least in this case, it sounds like you buy it upfront.

> Mondragon’s co-ops share the same detailed information with worker-owners, who buy into their co-ops by making one-time payments of roughly sixteen thousand euros in most co-ops.

[sangnoir]

I'm sure Mondragon's financing coöp will happily assist with funding a loan, underwritten by an insurance coöp and paid through the bank coöp. It's turtles^w coöps all the way down.

[djokkataja]

> IMO, leadership making these values core to the business is going against the grain, putting your probability of survival below or equal to that of others, which is why they are a rare occurrence

The rarity of co-ops is definitely not from survival rates, because they completely trash regular businesses in that regard:

> A 2013 report published by the UK Office for National Statistics showed that in the UK the rate of survival of cooperatives after five years was 80 percent compared with only 41 percent for all other enterprises.[5] A further study found that after ten years 44 percent of cooperatives were still in operation, compared with only 20 percent for all enterprises.

> In a 2007 study by the World Council of Credit Unions, the five-year survival rate of cooperatives in the United States was found to be 90% in comparison to 3-5% for traditional businesses.

(This figure seems kind of hard to believe... Maybe there's some self-selection bias in that people in the US might be much more willing to personally risk starting any number of different kinds of businesses for themselves and at most one, maybe two others, whereas they might only be willing to start a co-op with multiple other people if it looks like a pretty sure thing with a well-established model?)

> A 2010 report by the Ministry of Economic Development, Innovation and Export in Québec found that the five-year survival rate and ten-year survival rate of cooperatives in Québec to be 62% and 44% respectively compared to 35% and 20% for conventional firms.[53] Another report by the BC-Alberta Social economy Research Alliance found that the three-year survival rate of cooperatives in Alberta to be 81.5% in comparison to 48% for traditional firms.

https://en.wikipedia.org/wiki/Cooperative#Economic_stability

There are probably many reasons why co-ops are rarer, but the obvious one of relevance to the startup community is that you wouldn't start a co-op if you were hoping to make tons and tons of money rather than a "merely" reasonable income.

[monodeldiablo]

Co-ops are rarer for three reasons, chiefly:

1. Less access to capital. Investors want to exchange capital for ownership. Co-ops oppose this model. There are alternative methods for raising cash (subordinated capital campaigns are a successful example), but banks are conservative in nature and are just not eager to underwrite things they aren't very familiar with.

2. Discriminatory taxation. Are co-op member-owners to be taxed at the earned income rate, the capital gains rate, or both? The IRS has intentionally left this unclear and repeatedly refused to give strong guidance, putting co-ops at a distinct disadvantage in paying members and structuring membership.

3. Consistent legal structure. Unlike with the relatively standardized form of the limited liability corporation, the definition of the legal corporate form for co-ops varies widely between states and countries. This lack of standardization makes each incorporation process a custom, costly, time-intensive exercise.

I am of the opinion that cooperatives are a superior legal structure to LLCs for lots of reasons internal and external to the firm. But until these core problems are addressed, cooperatives will remain relatively rare, despite their many advantages.

[nine_k]

Two hypotheses.

- Many companies are tiny, created to pursue a small idea as a side project, and to optimize taxes while doing so. Certainly most of such companies close quickly and likely painlessly.

- Companies more often go for high-risk, high-reward projects that a co-op won't touch. This self-selects co-ops into the niches of stable, long-term, lower-risk business.