The world's infrastructure is now acting as local news, phone lines, and postal service. They are public goods that serve a social purpose and enable many aspects of society.
Businesses like these aren't accountable to their communities. They are obligated to maximize value for their shareholders but have no obligation to the public. Society is left to deal with profit-obsessed, rent-seeking, unaccountable infrastructure that ignores or even contributes to social problems.
Tech startup founders have little more than a good idea when it comes to these challenges. In order to build their dream, leaders sacrifice control of the company in order to get investment capital. If the company's core mission is replaced by the demand for exponential growth in shareholder value at all costs, there can be a case for misalignment.
They need funding to make something special, but their only other options are to grow or to sell. There are no options for selling. Companies can either go public through an initial public offering or through an acquisition. The company is at risk of losing focus and being beholden to stakeholders that don't include the communities it serves. The original mission of the founders can't be protected.
How might startup chart a new path?
The Open Collective is looking for answers. Thousands of communities all over the world rely on its open source finance platform. Over $65 million has been raised and spent by these groups in full transparency. Open Collective is a venture capital funded tech startup with an obligation to make returns.
From the beginning, it was necessary to focus on the space between the realities. In order to achieve its goal of becoming a digital infrastructure for the public good, the company decided early on that it would need the help of the co-founders. One of the founding members of the group is an author.
All of the board seats were retained through three rounds of investment, which is rare. They didn't want to jeopardize Open Collective's purpose in return for capital so they found investors that shared their dream of a global infrastructure on top of which anyone can start an association anywhere in the world.
There is something to be said about setting the right expectation from the start. The intent to slowly grow a mission was signaled by taking a long time to vest.
During the first seven years of Open Collective, founder control allowed the company to balance building a business with its mission. The creators won't be here forever. Who can hold on to the dream?
Over the past year, Open Collective has been talking to other companies like it, seeking an answer to the question of how it might avoid this problem of misaligned incentives and future proof its platform for the communities around the world that rely on it. With the help of groups like Common Trust, Zebras Unite, MEDLab, and E2C Collective, the company has an inkling of what its path forward might be.
All Rights Reserved © 2024
