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Startups Have a Sellout Problem. There’s a Better Way

by Shashank
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One-time startup like Meta, Twitter, and Amazon are now part of the world’s infrastructure, serving as today’s local news, phone lines, and postal services. They don’t just run the economy. They are public goods that serve a social purpose and define and enable myriad aspects of society.

The problem is that companies like this are not being held accountable to the communities they serve. Like most companies, they are structurally obligated to maximize shareholder value and have no real obligations to the public. Society is forced to deal with a profit-obsessed, rent-seeking, inexplicable infrastructure that ignores or exacerbates social problems. example of the result a lot.

These challenges have their origins in the early days of tech startups, when founders had only good ideas. Leaders often sacrifice control of a company in exchange for investment capital to make their dreams come true. This is a natural trade-off, especially when the goals of the company and investors are aligned. But over time, inconsistencies can arise, especially when demand for exponential growth in shareholder value increases. no matter what Replaces the company’s core mission.

Startups find themselves stuck between rocks and hard places. You need money to make something special, and your only options are to grow infinitely, run away, or sell. And the options for selling, also known as an “exit,” are limited. A company can go “public” through an initial public offering or act like it is acquired by another company through an acquisition. In both cases, the company loses focus and is at increased risk of being watched by stakeholders who do not include the target community. Neither can live up to the mission the founder set out to accomplish in the first place.

So how do startups chart a new course?

open the collective I’m looking for answers. Thousands of communities around the world that foster projects in areas such as mutual aid and technology rely on open source financial platforms. These groups have raised and spent more than $65 million to date, and their financial activities are open to the public, ensuring complete transparency.At the same time, the Open Collective Venture capital invested A tech startup that is owned by its founders, investors, and employees and is obligated to make a profit.

Navigating the space between these two realities required concentration from the start. Early on, the company determined that co-founders (rather than investors) would need to maintain control in order to achieve its goal of becoming a digital infrastructure for the public good. (Her Pia Mancini, one of her co-founders, is the author of this article.)

Across three investments, the co-founders not only retained majority ownership, but also all seats on the board, which is unusual. They knew they didn’t want to jeopardize the Open Collective’s purpose in exchange for capital, so they found investors who shared their dreams. As clarified in 2016“A global infrastructure that makes starting an association as easy as creating a Facebook group, anywhere in the world”.

The co-founders also chose to set the stock vesting period to 10 years. This is much longer than the four years it usually takes for a founder.As co-founder Xavier Dammann wrote at the time“There’s something to be said about setting expectations right from the start.” By taking a long vesting period, co-founders signal their intent to slowly grow their long-term impact mission. I was.

The founder’s control over the company’s first seven years has enabled Open Collective to balance building a now profitable and steadily growing business with the company’s mission. But founders aren’t here forever. So who can hold on to their dreams in the long term?

Over the past year, Open Collective has been in talks with other similar companies. question On how to avoid the problem of mismatched incentives and future-proof the platform for the communities around the world that depend on it.With the help of groups like common trust, zebra unite, MEDLabWhen E2C Collective; and other collaboration projects E2C.howand in conversations with many others, the company has hints as to what the road ahead might be. It is the “exit to the community”, the transition to stewardship, and the community he governance.

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