Transforming into a multi-stakeholder cooperative

Discuss The Industry
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I want to salute the fact that FairPhone refused to take on investors to preserve its independence. This is very respectable, especially in the tech industry.

I would however like to see FairPhone go one (or two in fact) step further. I believe the FairPhone must be seen as a common good, a product that serves the community instead of profit. But the only way to truly make the FairPhone a common good (and to prevent a future corporate takeover for example) is to legally embed ‘commoning’ in its DNA. That would mean transforming from a Limited Liability Company towards a multi-stakeholder cooperative.

Concretely, that means that not only would FairPhone employees be legally granted some control over their work, but FairPhone users would, too, have a say. Many of us invest in this product because we believe in it, we share the company’s values and we want to see it succeed. And this forum is certainly a step in the right direction in terms of involving FairPhone users in the decision making process, but I do believe FP must go further.

FairPhone is an incredible opportunity to revolutionize not only the electronics industry, but the economy as a whole; to prove that quality, ethical and open products that put people before profits can succeed; and to move towards a just economic system. But that can only happen if FairPhone is managed democratically, which includes giving a voice to its users.

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I don’t know much about co-ops, but wouldn’t your suggestion make it possible for a big company to purchase and resell a big batch of fairphones and then have a “big say” in fairphone’s decisions?
The company may not believe in fairphone’s core values but only jump on the bandwagon because they believe ethical electronics will boom and earn them lots of profit.

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Hi Paul,

It would be up to FairPhone to decide (when drafting the legal documents to transform into a co-op) how users become members. For example, buying a FairPhone may not be enough, you might need to also sign a membership agreement outlining the company’s values and business model. More importantly, only humans could become members, not corporations.

Also, granting a voice to users does not mean 1 person = 1 vote. Usually, there are quotas defined for each group of stakeholders. For example, users who decide to sign the membership agreement and to pay a small registration fee could, altogether, make up 20% of all the votes (regardless of whether there are 100 users members or 100,000). Another 60% of the vote could come from employees and the last 20% from suppliers (all these numbers are made up for the sake of the example). And of course within each of these groups 1 person = 1 vote.

The idea is that because the FairPhone impacts the lives of all these people, users, employees and suppliers, all should have a say.

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Sorry, I just checked and no group can hold more than 50% of the voting power (which makes sense as the goal is to avoid one group making decision too detrimental to the other groups of stakeholders).

It is at least like that in France but I would assume the Netherlands has a similar legal form for companies.

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The 50% thingy is international as far as I know. That is why some companies give out only 50% of their shares because then they can not be outnumbered by anyone.

Although this forum might give the impression that everyone supports FPs ideas and goals and every now and then someone critically looks at the situation, I do not think most owners do. The majority of the owners is silent. They like the goals but trust FP to make the right decisions. I do not think it is useful/neccesary that FP gives some responsibility away. They stayed in this legal setup so they are not influenced by the way they chose their path.

Imho FP still needs to consolidate the path it wants to go and then can find partners who don’t necessarily try to change this path but rather support it, invest in it and believe in its future.

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A future corporate takeover would be possible only if fairphone goes on stock market, i am right ?
If yes, then there is no problem with corporate class action :smiley:
Also, you are recommending something with "normal "people influencing its functioning, which mean :
-People driven by sentiments (no tough decision, or bad choices for the company future)
-people with little to no knowledge about how a society works
-people who aren’t seeing the company in the way its creator wanted to
-people who are not aware of the “everyday life” of the fairphone employee, thus won’t know “how to work better”

you get it, i disagree a bit with you.
For more “community driven” products,events, etc… i would suggest a place where people can give ideas and others can vote for the ones they want the most, thus giving hints on where to aim development for the fairphone team, this concept is pretty widespread among companies like Microsoft (for W10), or Switfkey (i don’t have other examples, but i’m sure there is a lot more !)

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Vinni, I’m not sure whether your claim that ‘most owners trust FP to make the right decision’ is true, but regardless my point here is that they are probably silent because in our economy raising concerns to a company is not a normal thing to do. As a consumer, you buy a product and if you are dissatisfied, you buy from a competitor. There just isn’t a culture on the part of consumers of getting involved in the decision-making process or investing some time and energy to contribute to the product, but FP could be at the vanguard by moving towards this model.

As you point out, FP “stayed in this legal setup so they are not influenced by the way they chose their path”. But if FP really means to create a better world (and I truly believe they do), having users participate in deciding the path of the company is a great way of having an even more positive impact on society.

Just like FP seems to be moving towards its own open source OS to “create a path for developers to contribute to the software of the Fairphone 2”, it should apply the same principles of transparency, longevity and ownership it emphasizes for the software to other aspects of the FairPhone (hardware and corporate structure).

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I don’t think they actively refuse investors.

“We are now in a better position to start attracting the strategic investors who can support both our growth as well as our social mission.” (FP Blog)

They just have some kind of standard.

I once tried something like this, but the idea was dead pretty fast and got me in trouble. Also there is often this misconception that the FP project is a “community driven thing” or very DIY friendly … it’s not. They have a community, but they develop their phone the way they want it. And sometimes they listen to input or not. Most often they just seem to be very busy. The community can discuss the product but has no real influence on the company or the phone or the information they publish. If this is better or worse, I don’t know. But this is the way it currently is.

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Hmm, thanks for clarifying the part on investors.

And thanks for this draft manifesto, I see we are very much on the same page. How did it get you into trouble though?

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I asked to many questions too often :slight_smile:

No sure if we are on the same page, but very briefly: I fear the project cannot work any other way right now. Most people have very idealistic ideas how green and social capitalism could work … but how they work still has to follow the basic business rules regarding money - for their products, for the information management, and for their employees. Grub first, then ethics. And looking at the FP2 specs and the current gold report they managed it pretty well so far, even without all our input that they cannot process. It’s just too much.

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For me eventually there always lures the question what a human society (made from the same DNA that kept humans busy with wars throughout for centuries) can achieve. Will the majority keep stuck in the idea that chances for personal profit are highest when being competitive? Or will there be a day when most people think that personal profit is best achieved by being cooperative? Or will there even be a day, when people will be convinced that being cooperative is a good thing, even if immediate personal profit is reduced?

I really hope that FP will endure, that it will inspire along with other initiatives and that it will not just be a small local hype.
But talking to well-educated friends it seems as if there still is a long way to go. Too often there is a: “Realistically things in this world couldn’t be much better than they are.”

So for now I agree:

Probably the only chance right now to get and keep this thing rolling. Until “ethical” isn’t a mocking term for so many folks anymore.

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Yep, you’re both right, we’re just not there quite yet. I am disappointed the FP community and FP aren’t interested in thinking about ways of moving further than mere ‘responsible capitalism’, but it makes sense given the fact that the proposals for the kind of post-capitalist economy we’re advocating here are so recent.

I am still happy that FP is doing what it does. Let’s hope that as we work on getting the new business models known to the public, and as Open-Source Circular Economy and Commons Transition initiatives gain traction, FP will jump on the bandwagon.

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So you buy a fairphone because you think the company does what you think it does. So you trust the company by buying the product.

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Transforming Fairphone into a workers’ cooperative would be an exciting development. Some aspects of the existing company structure appear to mimic big business (such a having a CEO!) - which seems inappropriate given Fairphone’s basic principles.

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I disagree.
Their basic principle is exactly to show that it is possible to make an ethically responsible smartphone in the current economic situation. If FP would become too much of an curiosity, what would be the example towards other brands?
By working as a normal company, they can prove it should be possible to use non-conflict materials, pay workers a decent wage and respect the environment and still be profitable! This example can be interesting to other players in the smartphone branch.
If FP would no longer resemble a (more or less ;)) “normal company”, others can easily say they can’t follow the example of FP, because it would not work “in the real world”.

It’s the same reason why they are mining in DRC, working with Chinese suppliers etc. For all these resources, there are alternatives. But FP wants to prove it is possible to solve the problems, instead of avoiding them, even in the current economic situation. For me, this was one of the most important reasons why I decided to get a Fairphone.

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A workers cooperative needn’t be seen as a ‘curiosity’ - in fact it can be seen as a shining example. There have been nurmerous examples recently throughout Europe of workers taking control of failing or abandoned companies and making them work. These cooperatives are profitable, but the profits are shared among the workers. And they have proved decisively that management hierarchies can be ditched without terrible consequences. Fairphone doesn’t need to impress ‘The Industry’ or ‘Other players in the smartphone branch’ - it should just strive to do the right thing on as many levels as possible.

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That’s up to FP to decide. If they choose to convince other smartphone-makers, one strategy is the best. If they choose to do “the right thing on as many levels as possible”, they will have to choose an other strategy. Knowing the communication of FP, their roadmap etc, I get the impression their goal is more oriented to the first.

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18

In truth, there is very little information about Fairphone’s current legal structure in the best document I could find - here.

The statement that Fairphone is a social enterprise is made several times, but without elaboration.

As far as I am aware (and I was told this by a representative of Bethnal Green Ventures, who gave initial funding to Fairphone as participants in their accelerator program - which incidentally implies that BGV own 6% of Fairphone as those are their stated terms. I think that BGV are some sort of venture capitalists - albeit ones with a social motive - which throws a little cloud over Fairphone’s claim that they have not taken any VC money), the term ‘social entrepreneur’ or ‘social business’ has no legal definition or status. In other words, anyone can say that they run a social business.

What this means is that whether or not you consider that a business’ claim to be a ‘social business’ is based on trust. Do you trust them?

For me, the answer is easy - I trust the founders and current team at Fairphone a great deal. As an FP1 owner who has participated in this forum sporadically for the past 18 months, I consider that the team have followed through with their commitment to transparency, to their stated aims, to the development of a 'phone that can make a real difference.

That said - and said emphatically - I would like to have more detail on the legal company structure that Fairphone uses - which is presumably based in the dutch system. I’d like to know this to be able to make my own mind up about a question raised several times in this thread - the question of how vulnerable Fairphone is to some future boardroom coup / corprate take-over.

We have seen what happened to Ben&Jerrys, whose ethical approach is now used as window dressing by multinational Unilever (an Anglo-Dutch firm), and to Green&Blacks, an organic chocolate company now owned by multinational Mondelez - formerly Kraft Foods. It would be horrible to see Faiphone go that way, but as the OP points out, there appears to be little structural impediment to that as a future possibility (emphasising once again my total trust in the motives and decisions of the current team).

While I am doubtful of the wisdom of transforming into a co-op an organisation not founded as one (enormous sea-changes of corporate culture are often disastrous), I would welcome a move by Fairphone to register itself as a B-corp.

What is a B-corp? From their own website;

" B Corp is to business what Fair Trade certification is to coffee "

In other words, a social business can choose to register itself with the non-profit B-Corp lab, committing itself to meeting the B-corp ‘performance requirement’ (a series of questions, under the headings Governance, Workers, Community and Environment, on which a score is based - a minimum score of 80 is required for certification) , and in return being able to present itself as a ‘certified B-corp’. To put some specific meaning into the rather vague assertion of being a ‘social business’.

Anyone else know about B-corps? Is the certification good enough for Fairphone? Any other suggestions?

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Fairphone is already B-Corp certified. https://www.fairphone.com/2015/05/26/fairphone-earns-b-corporation-certification/

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Yup, FP is already a B Corp (and as you can see on their assessment, FP is doing worse than the median B corporation when it comes to governance).

Generally, B Corp shouldn’t be an objective for initiatives that truly want to revolutionize our ways of producing and consumming. It is extremely easy to obtain, especially for European companies: B Lab is a US nonprofit and they are simply not as stringent with foreign companies (I personally contacted them to know how to get a B Corp certification for my France-based start-up, and I was very surprised to hear how easy it was). It may be meaningful when it comes to established multinational corporations, but for start-ups that claim to act for the bettering of society, it shouldn’t be taken too seriously.