Obviously they exist. But they are only certain types of business. How is a company that requires hundreds of millions of dollars before it's profitable supposed to be a co-op? Step by step?
It would be nice to have a legal framework for companies to increase employee ownership, but be able to do it incrementally with no requirement to go straight to 100%. Or ever.
For instance, even public companies might increase the percentage of employee ownership over time.
But capital needs could still be met, as the public or private non-employee stock class would still exist.
Owners are bought out. For a public company that just means buying back shares.
A company whose employees care very much about share price sounds good to me. It is not much different from companies who let employees “take” options.
> For a public company that just means buying back shares
But in practice, what does it mean? Do you want to make illegal a shareholder selling when they want to? They have to sell at whatever the price is when the company needs their shares?
Plenty of companies at various times have shareholder agreements that make it a breach of contract to sell shares, or that regulate conditions under which you can be dragged along on a sale on terms you have no say in. It affects risk, and so will affect your ability to raise funds on those terms but structuring it ways that allows the company to buy back but ensures an investor or lender with shares as security will get sufficient profit potential to outweigh the risk is still entirely possible.
Companies can issue new shares to dilute existing investors. I feel like on HN of all places, this should be common knowledge? Like, this is literally the scheme under which every tech company already operates, and yet on HN of all places some of ya'll can't conceive of a system where employees automatically get some stake in the business?
It would be straight forward to require companies over a certain size to issue and distribute some number of shares based on current pay to employees. Existing shareholders will have their stake diluted but are welcome to buy more shares on the market while employees are welcome to sell or hold. If the investors are actually good at allocating capital, they should have plenty of profits from previous investments to maintain their % ownership despite the share inflation. If they aren't, then they should find a different job.
Under this scheme, Bezos would still have become a billionaire, and we know this because Amazon and tech companies already do this exact thing by offering stock options!
And the neat thing is, when a company does a stock-buyback, this is literally the same giving a dividend of the profits to employees.
> Companies can issue new shares to dilute existing investors. I feel like on HN of all places, this should be common knowledge? Like, this is literally the scheme under which every tech company already operates, and yet on HN of all places some of ya'll can't conceive of a system where employees automatically get some stake in the business?
I know you said "literally", so all bets are off in how you'll parse a reply, but yes, I do know about share dilution. You're describing practically the same thing. You want people to risk all their capital, and if the business does well you auto-dilute them. That's fine if it's what they signed up for, but it will have a chilling effect on investment.
> Under this scheme, Bezos would still have become a billionaire, and we know this because Amazon and tech companies already do this exact thing by offering stock options!
Again, the "literally" made it clear that this wasn't going to be great, but you're committing the apex fallacy. If you only consider the highest of high performing companies in how your instincts guide you, you're going to commit some very obvious errors.
> I know you said "literally", so all bets are off in how you'll parse a reply, but yes, I do know about share dilution. You're describing practically the same thing. You want people to risk all their capital, and if the business does well you auto-dilute them. That's fine if it's what they signed up for, but it will have a chilling effect on investment.
We can lower interest rates for CapEx business loans to encourage investment. Do we really believe that if Bezos could have only become a single-digits billionaire that that wouldn't have been enough motivation?
> Again, the "literally" made it clear that this wasn't going to be great, but you're committing the apex fallacy. If you only consider the highest of high performing companies in how your instincts guide you, you're going to commit some very obvious errors.
Are we to believe that if Amazon hadn't formed, the hole in market would remain unfilled? I find this very unlikely. Someone was going to be Bezos. And we don't have to begin diluting their share in the first year of the company. And lets be real here, they're going to be paid the highest salaries at the top. They can buy shares that their employees sell on the market like everyone else. I mean, if you're a CEO of a company, you should want to buy shares right? Because you believe in your leadership? So they can pay themselves a large salary and reinvest as much of it as they want.
There are multiple legal frameworks for that. The simplest way is to "just" have the company buy back shares and re-issue them to staff over time. Depending on jurisdiction there can be more tax efficient ways. Some places it may be more practical and/or tax efficient to use trusts (e.g. the John Lewis Partnership in the UK, with 80,000 employees, is a trust for the benefit of employees - it means shares can't be cashed out, but all present employees share in dividends) and sell or give shares to the trust bit by bit.
> It would be nice to have a legal framework for companies to increase employee ownership, but be able to do it incrementally with no requirement to go straight to 100%. Or ever.
But this framework exists, and is used by a huge number of firms.
Nowhere did I mention or apply mandates. “Framework” is not a work that means mandated.
There seems to be a lot of sour grapes that pro employee arrangements are inherently scammy. For no good reason. None of the ESOP companies were mandated!
Thee is a legal framework for those.
There is a legal framework for changing an S-corp to C-core
There is a legal framework for going public
There is a legal framework for declaring bancruptcy
They have NOTHING to do with mandates.
Frameworks are developed over time to handle complex and not always obvious issues in a rational way.
The benefit of a legal framework is its accumulated wisdom developed by law and courts. And the fact that it becomes a recognizable thing for all parties to consider, and makes that path easier to take if that is the decision.
But any transition would (by any reasonable process) be at the agreement of current shareholders. So issues of compensation, and other issues should be dealt with sensibly.
The most sensible way for this to be an easier option, that works out well, is to develop a well thought out framework.
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Open source is a very valuable recognized legal framework. Between evolved OS licenses, supportive court cases and the general law, we are better for this framework.
It makes it easy for small actors to take advantage of that approach to publishing software with little legal risk (if they handle known issues, such as not including non-OS work, etc.)
