Brianna Wettlaufer. Image provided by the author. Brianna Wettlaufer is the CEO and Co-founder of Stocksy, a platform co-op which offers a highly curated collection of royalty-free stock photography and video footage. In the run-up to OPEN 2017, where Brianna will be speaking, Oliver Sylvester-Bradley explores her experiences of setting up and running a platform business as a co-op.
OSB: Why did you and your business partners decide to set up Stocksy as a co-op?
BW: Stocksy launched in 2013 in response to a desire to set up a business that put the power back into artists’ hands through shared ownership, transparency of business, and collaborative planning through AGMs, resolutions and ongoing forum discussions. This was an important mission for us after having worked at other stock photo agencies where we saw artists [the producer-workers] being disenfranchised by having royalty percentages clawed back with little control or stability over their futures - we wanted to change that.
We also wanted to change what “stock” meant in the creative world. We wanted to reinvigorate the passion in photography and design and change the landscape of the common content found in most stock collections. To achieve this shift we focused on the work we loved, what inspired us, and ensured content was hand-selected to guarantee a high calibre, while leaving behind all the tired cliches.
OSB: How did you obtain the funds required to set up and launch Stocksy?
BW: Stocksy was started with an initial private shareholder’s loan of $1.2 million from co-founders Bruce Livingstone and I. Working with a bootstrapped budget and a small but strong team, we were able to keep overhead costs low and reach profitability by our first year in business. We paid back the loan in full by 2015, in addition to paying out our first $200k USD in dividends to our members.
OSB: Stock photography, with distributed suppliers and customers transacting via an online platform, seems to fit very well with the Platform Co-op model and Stocksy is often referred to as one of the best examples of a viable, working, Platform Co-op. How practical do you think it is to imagine platform co-ops succeeding in other industries?
BW: The co-op model is incredibly complimentary to online platforms, we just need more leaders, executives and innovators who are interested in creating a financial model that benefits the many over pursuing millions for a select few or seeking to create a product designed with an exit strategy. As an old model that is becoming new again, there is still a lot of education and understanding to be created and shared around the benefits of trusting your community and investing through transparency as a business model.
We just need more leaders, executives and innovators who are interested in creating a financial model that benefits the many over pursuing millions for a select few
What we’ve experienced running Stocksy is that the accountability to our membership is no different than the reports required for investors or boards within traditional business models. The beauty of the member-shareholders is that they are not only incredibly familiar with what and how your product is used, but they’re additionally very focused (and therefore invested) on the long term vision and strategy for the business to achieve success. This creates incredibly valuable feedback and collaboration for your product, while maintaining its long term integrity.
Over the last year, we’ve had reach-outs from a number of incredibly unique businesses doing interesting and valuable work supported by communities of workers. Those communities include anything from engineers, artists, chefs and even scuba divers, all with inspiring ideas about how their collectives can set up business models to have better profit sharing. We’ve yet to see any limitations around exploring a profit sharing model in any industry; the “how” just has to be adapted to serve each community and their needs - how they gather feedback, achieve transparency, and have a profit sharing model that still maintains not just the financial sustainability of the members, but the business as well.
OSB: How did you find the process of establishing a co-op?
BW: It was definitely an exploratory process setting up an online platform as a co-op back in 2013/14. We had legal advice but there weren’t a lot of established practices or businesses that we could look to as examples. So we approached it with the same goals as you would a normal business, establishing bylaws that support and protect the long term success of the business and our members.
The one thing we knew that could hinder a business was taking democracy to an extreme at the expense of experts being unable to do their jobs, operate efficiently, and in the world of tech, be able to move and adapt quickly to business demands and challenges.
We, of course, always aim for 100% support from our members in everything that we do, but not being able to move forward without unanimous support or participation would be unrealistic.
Another common considerations is how you’ll put value on shares. In our case, we value them at $1 USD, and a share is a share, so you can’t own more in order to have more voting power.
Lastly, you’ll need to outline what onboarding and offboarding means to you. Do members have to meet a certain criteria in order to keep their membership? If they don’t meet that criteria, how aggressive will you be to cull your membership - and is that a sustainable solution?
OSB: Most people think setting up a co-op is harder than setting up a Ltd company - what would you say to them?
BW: Setting up an Ltd may initially seem easier by virtue of its familiarity and I hope one day setting up a co-op is held in the same regard.
The difficulty, like any business, will likely be the resources you initially have available. In the instance of a co-op, you need a product and a community from the outset, which poses different challenges than a traditional business model. You have to be extremely pragmatic about how you grow and prioritise those two things. Focus too heavily on having a community first and your product may suffer. Focus too much on your product without enough engagement or governance and you may not build the momentum and investment from your community to create a successful product.
The answer to that challenge will be unique to every business.
OSB: What other advice would you have for anyone who is thinking about setting up a co-op?
BW: Don’t feel inundated or overwhelmed by getting your legal perfect or over-documenting rules in the beginning. Set up bylaws that ensure transparency, accountability and engagement, but don’t over-define it. Be ready to trust and explore the parameters and measures you need with your community as it grows, evolves and develops its own culture, and then be able and willing to adapt to ensure the success of the business.
Being a co-op creates deeper purpose and a richer experience when building a product that you believe in.
But really, I will emphasise trust. Choosing to set up your business as a co-op means you have to truly believe in absolute accountability to your community. When you set up your business to invest in open conversations from the beginning, your ROI will pay itself back twofold. Don’t be afraid of varied opinions or worry you may lose control of the company by having co-owners. Being a co-op creates deeper purpose and a richer experience when building a product that you believe in.
OSB: People often think it must be really hard to make decisions and achieve consensus if everyone gets a say in how a business is run. How do you make decisions at Stocksy?
BW: I think one of the big points of confusion is understanding what a business driven community resolution process looks like. We use our forums and resolution mechanisms to gauge and understand ideas, product direction or issues that need to be addressed. This often requires a deep dive in conversation to assess proposals and understand the pervasive needs within the community.
Common mistakes to watch out for are solution proposals that lack true understanding of what they are trying to solve. It is the business’ (and board of directors') responsibility to facilitate that conversation to make sure that everyone has comprehensive insight into the why of a problem or challenge.
As a business, once we’ve identified the issue or idea that we’re trying to address or solve, as experts in their fields, it is the business professionals who conclude the how that follows. This isn’t to say we don’t love input from our members, but ultimately the business needs to access ideas and scope, how it relates to a product roadmap and goal strategies, and report that back to the community of shareholders.
OSB: So, I presume you are a multi-stakeholder co-op with different classes of members?
BW: Indeed we are a multi-stakeholder co-op. From conversations I’ve had with others working in/with cooperatives, I’ve often heard multi-stakeholders are a less commonly used setup, but this model works especially well in the platform co-op sector. It allows every level of people involved to be stakeholders, in our case that is:
Class A) Founders and advisors (5 cap)
Class B) Staff (a latter development after we realised how hard and invested our staff were in helping grow the business, we realised they needed the same sense of ownership as our members. Early founding staff are represented here, and new staff that complete 2 years of commitment are now eligible.) (20 cap)
Class C) Our artists membership (1,000 cap)
OSB: And how do decisions actually get made?
BW: Our goal is that decisions are a continuous conversation that allows us to always be adapting and improving upon what we’re doing. This has definitely gotten more challenging as our membership has grown and headquarters takes on more layers and responsibility as the business scales. This is currently a huge priority for us, improving our monthly member newsletter, monthly/quarterly reporting on analytics, and facilitating conversation from submitted resolutions by our membership (a process that’s open year round) now lead by our VP of Operations, which is one of our most recent changes in communication. We’ve explored multiple staff and roles to make our resolution process as engaged and timely as possible, but its definitely challenging making this a seamless process. We’re really excited to be connecting our members directly with a person on our executive team, in particular the person responsible for managing our backlog of priorities and working with departments to create solid documentation in order for projects to get prioritised.
The resolution process is there to identify new business opportunities, improving upon our existing product, as a means to improving our co-op and member engagement, etc. Something that’s important working together collaboratively and in as flat of a hierarchy as possible is that we still respect the business experts so they can bring their experience and expertise, but they can only do that when a resolution successfully identifies the problem it’s trying to solve first instead of jumping to the solution.
OSB: From your experiences, how would you compare decision making within a co-op structure to that within a Ltd Company?
BW: Being accountable to a community versus a board of removed executives or VCs, is hands down my preferred method. Accountability to a community creates a much richer and more fulfilling experience. Having an engaged community drives business in a direction that you can always feel good about at the end of the day.
I will note, you have to invest in the education and communication with your community first, which can be more work up front than a traditional Ltd company, but in the long run it amasses a group of people that share a common value set and ethos which generates the framework for attainable and sustainable company trajectories.
OSB: What software do you use to manage Stocksy?
BW: Stocky’s online platform for transaction, managing our content library and managing our online community is all custom built.
On the day to day, we use JIRA as our project management system across all departments and Google Docs for collaborative documentation. All staff and remote contractors use Slack everyday to maintain constant communication. And we all keep energy up by sharing music through Spotify.
OSB: Do you use any open source software?
BW: Our controlled vocabulary is based on Wordnet, an open source dictionary / lexical database from Princeton.
OSB: You seem to be a fan of democracy, as am I, however, I'm not sure I have ever experienced it. What do you think real democracy is?
BW: Democracy, to me, is creating a system that values fairness. It levels the playing field across all walks of life involved, so that everyone can feel heard and have a say in the control of their futures. A democratic system is enforced by shared accountability that invests in creating success for the many, (instead of just the few), by championing support, mentorship and education so that everyone’s involvement in the system can be as valuable as possible. Finally, I think democracy aims to create a feeling of respect, pride, ownership and an end goal of sustainability through focusing on the long terms goals.
Democracy, to me, is creating a system that values fairness. It levels the playing field across all walks of life involved, so that everyone can feel heard and have a say in the control of their futures.
OSB: We are often exposed to the vision of a world full of hate and extremism and scarcity but rarely hear about a positive alternative. If platform co-ops, the solidarity / generative economy takes hold it strikes me we could be living in a very different world in the future. Can you describe what you think this world might look like?
BW: I think the co-op model, as an old model becoming new again, provides amazing opportunities for companies looking to achieve a more collaborative financial model that creates deeper purpose and involvement. To envision a world where everyone is using the co-op model I would say is taking one extreme and replacing it with another. It’s important to celebrate diversity and individuality as a key component to fostering innovation and we need a variety of approaches, models and ideas to achieve that and maintain that momentum. My ultimate hope is that as more Platform Co-ops are created and more people become familiar with it’s structure, it will become something more common, that more entrepreneurs will turn to.
Deloitte Global’s sixth annual Millennial Survey stated, “76 percent say businesses, in general, are having a positive impact on the wider society in which they operate”, and that they “view business positively and believe it’s behaving in an increasingly responsible manner”; however, “Overall, only 36 percent of millennials expect the social/political situations in their countries to improve during the next 12 months.” Which I think demonstrates that our values in business are changing, but it's up to us to make that difference happen.
OSB: What do you see as the main stepping stones for this vision to become a reality?
BW: There seems to be a lack of easily accessible information about co-ops and this lack of information makes it difficult for more companies (and people) to become familiar with its values and structure. A next stepping stone is to use the momentum that cooperatives currently have to connect with educational institutions to include cooperative education within programs for the next generation. This will ensure that students are entering the workforce with a functional knowledge of the ethics of values they can bring as entrepreneurs and executives.
As more Platform Co-ops gain traction, we’re seeing many come together to combine knowledge and experience to empower other co-ops. My hope is we start seeing tech based co-op incubators, mentor programs and investment programs to support the next wave.
OSB: At The Open Co-op we're working with The Hive, a co-op incubator here in the UK, so hopefully the change you describe is beginning to happen! Thank you for your time Brianna, we look forward to hearing from you at OPEN 2017 and we wish you every success with Stocksy.
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