#7: The Future of Tech Worker Cooperatives: Institutions, Not Startups

Hello, everyone, and welcome back to yet another episode of Lifestyle Democracy, where we talk about different ways that people around the world are organizing themselves to create democratic organizations so today we have a special guest his name is steven diobald he's a serial entrepreneur

and the founder of Nilenso, which is the first tech worker cooperative in India. Without much further ado, I would like to ask my guests. So, Stephen, thank you for coming to the show today. Can you tell me a little bit?

and tell the audience as well a little bit about yourself and what you have been working on. Because if I look at your LinkedIn profile, it says that you've been consistently occupying the position of janitor. Except for one instance where you've been an executive janitor and now you're back to janitor. It seems like you really like the janitor role. So please tell us a little bit about yourself.

Yeah, I suppose I can probably dovetail that into an explanation of why we started a technology co-op in India. This was sort of a, it was a joke that I started back when I was working in finance. I found myself repeatedly ending up on software teams where there was always some kind of mess to clean up. Sometimes it was. social sometimes it was technical um and so the janitor thing was just I don't really like job titles I think people want to sound fancy and

That didn't sound fancy, but it also reflected the work that I was doing. And I think that actually starting Nalenso, so it was seven friends and I, we started Nalenso. There was... Another organization was shutting down and these folks were essentially out of work. And we started debating with each other if we could start a small consultancy.

How would we structure it? Initially, we didn't default to a co-op. We kind of arrived at a worker co-op as like a solution to the problem of what's an organizational structure that's sort of self resilient. If founders leave, if people get bored or give up, can the organization sort of maintain itself as a bit of an institution? And so the janitorial work there was kind of cleaning up after.

All of us who were working for another organization effectively ended up out in the street. And we were kind of like, well, we're jobless. Should we start a company? What kind of company? And so we ended up starting a worker co-op. So I'm actually not there anymore, but Nelenzo still exists. So I guess the idea has merit. There's some sustainability and longevity baked in there.

Tell me a little bit about your background. So are you a software engineer by training and what's your relationship to the tech industry? Yeah, so I... I have a computer science degree. I spent, over the last 20 years, I tend to sort of break it up into two 10-year chunks. So I wrote software.

as a developer and then kind of like a tech lead, team lead sort of person in the first 10 years. It's a very long story, but I had a bicycle crash actually while I was at Nolenzo and I damaged one of my eyes. This was over a decade ago now, so I don't feel particularly bad about it anymore. But initially, I had a lot of light sensitivity issues, so I couldn't use a computer. And so I started kind of moving fully into...

a sort of management, uh, hiring and sales and, and that sort of thing role within the lens. So, um, obviously it's gotten better now I can use a computer to. to talk to you. I do a bit of programming again, but so for the last 10 or 11 years, I've kind of been in management roles at Nalenso and elsewhere. A bit of product development, a bit of kind of like researching and startups. Most recently I worked for... a fairly old 25-year-old nonprofit in the open source space. So I've been...

My career trajectory for a decade was fairly clear. It was like, oh, write software and then get better at that and start leading teams. And for the last 10 years, it's been a little bit more chaotic, but it all still sort of falls under that janitorial banner. It's like... Clean up some sort of mess or the other. Okay. So you're from Canada, but you've worked in India. How did you end up working in India? So this was actually, I worked for...

a company called ThoughtWorks. They are a fairly large global consultancy now. They were a bit small. They were kind of... Their staff... numbered in the hundreds when i worked there um but they had an office in china and they had an office in india and i was really interested in working internationally i thought that that was really cool that they had offices all over the globe

And so I went to Pune, which is a city just outside of Bombay, for a year when I worked for them in 2006. And then I went into finance, essentially. around the time of the financial crisis in 2008. So consulting companies do badly, proprietary trading firms do well. And so I moved to... a trading firm in Chicago for a few years. And...

It was good work, but it's not terribly satisfying to work in that kind of finance, at least not for me. And so after a few years, I was kind of like, you know, India, like maybe maybe I'll go back there. And so that was actually the organization that. had its kind of uh uh it's closing out and then Nalenso began that that was sort of my first year in Bangalore and

Originally, I had thought I would be in Bangalore and India for a year or maybe two, and it ended up being closer to a decade. So it was sort of Nilenso was the thing that... kept me there uh once we started it because it was kind of like a fun fun adventure to first you try to make a company that works and like has revenue and and people want to work for and then

Once you sort of have that stable base, then it's like, can we do something interesting technologically? Can we get some clients on board that we think are sort of, you know, worth working with, who are doing something like valuable in the world? I realize that's... That's the usual story. It's like, oh, we're trying to find meaning or whatever. But I think everybody's trying to do that. So that was sort of our roadmap for ourselves. We did reasonably well. I think they still do well.

Oh, yeah. So can you tell me a little bit about what is Nilenso? And what does Nilenso do? It's kind of a... The label on their website... Now, maybe even while I was there, I'm not sure, is this term boutique consultancy? So if you think of a company like ThoughtWorks or an even larger company like... Accenture or Infosys or something like this, where they have thousands or tens of thousands of employees across the globe. Nalenso is quite small. And so Nalenso...

tries to hire sort of very high-performing developers and designers, both. At least while I was there, we had a small design team. It tries to take on software problems that are not necessarily just large in scale. So not just like getting 300 software developers to write like a big, you know. insurance system in the United States or something like that, but trying to find problems that are interesting and sort of require a bit of digestion to resolve. That's kind of been the Nalenso MO kind of.

from its beginnings. I think that the folks that still work at Nalenso, there are a few sort of... originals, I guess, from the early days of Nolenzo, still at Nolenzo. And I'm putting originals in quotes there because I think they're probably people who came along. halfway through Nolenzo's existence who feel like they're old timers now. It's over a decade that the company's been around. But yeah, they still kind of operate in the same sort of capacity.

slightly over 20 people, I think. So not huge. So when was Nilensoh founded and were you one of the founding members? Yeah, it would, it sort of... The idea began in 2012, I guess, and technically it's founded on paper was 2013. So it was...

me and seven other folks. So eight of us got together and came up with the structure and the idea and... solidified sort of settled on this idea of doing worker co-op together and very much for the first year or two is very much that we were treating it as an experiment because we weren't sure if it was going to work we hadn't none of us had really heard of

many other or any other technology cooperatives or like software cooperatives um around the world there were one or two that we'd heard of but it it felt pretty rare um back in

2012, 2013. So how did the eight of you decide to come together and start a firm? You mentioned that ThoughtWorks was closing out. Did you know each other before?

What were the circumstances? It wasn't ThoughtWorks. It was another small company. I won't name them because they actually booted up another company later. So we were actually working for this small... consulting firm together um the this other consulting firm kind of wound down its operations um and So we decided, we sort of said to the people that were running that organization, we said like, look, you're going to get rid of your clients anyway if we pick up.

the three clients that you're working with right now could we try and carry this thing forward and that was sort of happening in 2012 that's why we weren't legally incorporated yet and then once we actually incorporated in 2013 um The original client list that we'd sort of adopted from this old organization was mostly gone and we'd found clients of our own. So 2013, we started working with...

like staples in the United States and sort of like larger names like that. Some sort of deeper technology companies in India because around... 2014, 2013, 2014, there was kind of this early explosion of tech companies across India that were trying to... like satisfy a lot of needs corresponding to the sort of growth of the economy there. So there was a lot of kind of neat work that was happening by coincidence at the same time when we started Nolenso.

So how did you secure clients? You mentioned some clients in the US, some in India. What was the strategy for securing clients? Yes, I mean... Personal connections and luck, I think. It was, I mean, especially early on, we weren't really confident that we would do very well with securing clients that aligned with us. So we sort of, we had a kind of, we had a big sheet on the wall of our office where we actually drew out together. We sort of said like, oh, okay, over here in the bottom corner.

are like things that we will never do. And then as we move up the sheet, we're kind of like progressing from stuff that we don't like, but are willing to do just to keep the company alive to things that we think are actually good. And so things that we would never do were things like weapons or anything that would harm someone. Obviously, we wanted to build the company on a sort of foundation of, you know.

ethics and high integrity and i i think that that's actually something that stuck with the organization as long as it's been around um early on we took on stuff like say the contract with staples e-commerce isn't exactly the like You're not saving the world by selling somebody like a bigger pack of...

you know, pencils or like an extra sheet of printer paper or whatever. But it was fun work. There was kind of like data science and machine learning work pre-LLM days, like kind of classic machine learning work that we were doing with Staples. And it was neat. We were working in a fairly esoteric programming language called Closure that we all really enjoyed. And it was a good team in California that we were working with. So we spent some time like...

going to California, having meetings with them, collaborating in person. Some of the folks from California would come to India and meet us. So that was kind of cool, I think. us as sort of new business owners. And then over time, we started finding, there's like a payment processor, for instance, in India that Nalenza worked with.

and got to work in sort of the local economy so it's kind of like building tools in india for india where sure in the us you have like Stripe and PayPal and whatever else, but we actually had this opportunity to work with like Indian agencies that were relatively new and starting to serve.

our own market so it was kind of cool for people inside of Nolenzo to say to their parents like oh yeah like I worked on this thing that like you have on your phone like you see it I helped build that um and then I think that one of the sort of high bars for Nilenso, at least while I was there, was simple.org. So it's still, the domain is still there, simple.org. And it's actually, it's a nonprofit.

um financed by foundations like the gates foundation and things like this and they they work on international hypertension um and so that was it was open source it was a big complicated distributed computing problem um working with like mobile apps out in the field and things multi-language um it it was a cool problem that felt like oh okay we're kind of hitting our stride in terms of

actually working on a thing that we think is both technically challenging and interesting for society at the same time without, you know, going broke. Yeah, this reminds me of the approach that... tech worker cooperatives from the UK that I've interviewed in my research, they would emphasize working with ethically and socially responsible clients and projects as one of the main reasons why they would.

organize a tech worker cooperative. And in Argentina, the predominant motivation was removing oneself from the dependence on an employer. And given the different markets in the UK, they could afford to find ethically and socially responsible clients to work with within the UK. be able to pay them the bills, usually less so than if they were to work for a private company or a private client or some corporation. And in Argentina, they wanted to do...

that as well, but sometimes they were compelled to work with foreign clients. So I see some patterns in your experience that blends this both both worlds to ensure both the viability of the organization, but at the same time, ensuring that this ethical focus and ethos is still somehow exercised. So going off of that... What was the idea for Nilenso and why did you decide to establish it as a tech worker cooperative, given that there were very few points of reference in 2012?

when you were thinking about establishing this tech worker cooperative. So what are some of the ideas that you had as a team to establish a tech worker cooperative without having much of a guidance?

from other organizations? Yeah, I think, so you mentioned at the beginning that I'm from Canada. I was born and raised in Saskatchewan. i live in nova scotia in halifax now so i'm back in canada thank you very much covid um because i was living in india before that but um Nova Scotians and people from Saskatchewan will argue with one another about like which province was the birthplace of like co-ops in Canada. I don't think it really matters that much, but there's there's a.

strong sort of sense of community in both of these provinces. And as Canada gets richer, actually, like the... The more you move away from the 1930s and the 1940s, the more that legislation and people's ideals kind of move away from this idea of like working in a necessarily collaborative sort of way. But Saskatchewan in particular... It still has big co-ops. So we have co-ops that do like, there's an oil refinery outside of Regina, Saskatchewan that's owned by a co-op oil refinery and upgrader.

gas stations are owned by co-ops grocery stores are owned by co-ops so these are like i i think a lot of people in the 2020s when you tell them about co-ops they're like oh yeah like a cute You know, you make earrings or you have a little coffee shop or something. It's like, no, you can be like a billion dollar corporation and also be a co-op. And so I had this kind of baked into my head that this was.

a fairer way of doing business and necessarily, in some cases, a fairer way of treating employees or allowing employees. And in the case of consumer co-ops, your customers, like a way to vote in how the business operates, which direction it goes. So beyond that, so I kind of made this case when we started Nilenso. It wasn't a given that we were going to do a co-op, but we looked at other structures and we sort of settled on a co-op because it felt like the simplest possible thing.

And we chose a worker co-op over a consumer co-op because a consultancy changes customers all the time. So a consumer co-op isn't really meaningful for a software consultancy. Can you just explain? No, go ahead. What is a co-op? What is a co-op? I didn't want to cut you off. I'm sorry. So I just wanted to ask what is a co-op? So for those who may not...

or listening who may not be familiar with a co-op and the distinction between a worker co-op and a consumer co-op? Yeah, I mean, I think this is... This is a point of contention to a degree. We were talking before we started the interview about the legal distinction where you have like legal structures in certain countries where...

A corporation is legally a cooperative. So at least in Canada, we have a lot of different cooperative structures. In most other countries, you have a lot of cooperative structures for incorporating a company or. like an organization that's not necessarily a company so housing cooperatives for instance kind of like move in a different direction um a co-op Kind of by the Wikipedia definition is any organization that stands by the seven cooperative principles. And so I don't.

Oh, no, I'm being quizzed. I remember like rattled them off off the top of my head. But I'm guessing most of your listeners are probably familiar with the seven cooperative principles. But so the distinction, at least. Given Canada especially has like dozens and dozens of cooperative structures, but I make this kind of like

simple distinction between worker co-ops and consumer co-ops in terms of who owns and controls the business. And so traditionally you have... public corporations where shares are out on an exchange and anyone can buy a share and get involved in private businesses where like maybe it's owned by a family or an individual or a group of individuals and they own and control the business

And then with co-ops, I think that these broad strokes categories make a lot of sense. It's sort of like consumer co-ops are your customers. So especially if you're a grocery store. You have repeat customers every week. They keep coming back. And so it makes sense for them to, they sign up for a membership, they get a vote.

And then when it comes time to elect a new board or, you know, make big decisions pertaining to the organization, voting members of the co-op can throw their vote into the mix. And with worker co-ops... It's similar, but it's the employees. So the employees are the ones who hold the voting power over the organization. But then you get into this question of...

How do you make day-to-day decisions? Because obviously you don't want, like, what are we ordering for lunch? Like, should it be a referendum every single day? And I mean... To be honest, with Nalensa, we actually started in that direction. We were kind of like making a referendum out of everything. And we sort of discovered like a representative democracy.

structure over time where we were sort of like, you know what, actually we really want, we didn't want just one. We didn't want like a single CEO. We wanted two people to take kind of executive control of the company. And then for really big decisions, like, should we stop doing this? Should we close down the company and we'll just take the money in the bank and pay it out to the employees?

That would be obviously how we would dissolve an equally owned co-op between a dozen people or whatever we had. That should be something that's put up to a vote for all the voting members. And then it's a bit of a balancing act to decide which kinds of decisions are those kinds of decisions versus which kinds of decisions are the small sort of everyday decision.

Do you take on a new client? Do you give up on a client because, you know, they're not a good fit for the way that you work and you want to wind down the relationship? I mean, those sorts of things are... They're sort of in between. And so I think that they probably still at Nalenso have these kinds of discussions as to what's operational and what's kind of fundamental to the organization.

I think that that sort of reached a fairly sane point before I left or maybe shortly after I left where people were relatively happy with. the couple of people they had in the executive and the decisions that they were making. That's very good. I just wanted to go back a little bit and...

What was the rationale for choosing a tech worker cooperative? How did you decide to form a tech worker cooperative? Why not another type of... organizational type? So we... We actually watched. So I gave a keynote a couple of years into Nalenso's existence. I think it was 2015 or something at a technology conference in Bangalore.

my friend who was a founder in this company the company was called active sphere it may or may not exist now i'm not sure but um he founded it with a friend uh and two more friends so the four of them founded this small consultancy not dissimilar to Nilenso in the early days and one of them left and then another one of them left and then at some point it was the case that all four of them had left

And so they had staff, they had employees who were running this consultancy, but the four people who owned the company didn't work there anymore. And I remember... The two most senior people at ActiveSphere came to me and like asked me to go out for brunch with them one day. And they just kind of were like, what should we do? Like we're operating this company.

that we don't own or control technically like but we're doing all the work we're and i mean it wasn't it wasn't malicious or anything it was just what happened and i think that many times we saw this happen in india at the time it was just kind of like a lot of people sort of a decade into their career were starting companies and then they would

maybe sell the company off or they would go somewhere else because they got a better offer they would go overseas and the company would sort of wind up in this zombie state and so this was this was a component of

what we wanted to avoid. So there was this sort of like, uh it wasn't a thesis it was maybe an antithesis we were sort of like oh we don't want to allow the company to become a zombie company um we also didn't really want to sell out so we were kind of like We'd prefer if the company was a bit resilient against being bought up because...

There are huge firms that operate in Bangalore now. It's kind of like Flipkart and Amazon and Google and Gojek, which is sort of like Southeast Asia's Uber or one of them.

these are big companies and they would tend to like just not necessarily google but gojek for sure like go along find a consultancy with like 10 15 20 employees and just be like we're gonna buy the whole thing like we just want to hire all 20 of your people and we're just going to gobble up your company and then the company would be gone and if they were doing good well good work elsewhere

that would sort of get dissolved. And so with Nilenso, we were kind of like, how do we guard against that? And we went through a couple other structures of like having equity in the company and like... It was even proposed the option of like having decaying equity. Like you get equity when you come in, but if you leave, then like over the course of three or four years, your equity dilutes if you're not involved in the company anymore.

And we just decided all of those structures were silly and complicated for a company. We weren't even sure if it was going to work. So we wound up just solving the problem by saying, The people who should control the company are the people who are working in the company. And especially with a software consultancy, there is a hierarchy, but it's not...

it's not a factory, right? Like you have a lot of people who are kind of doing very similar work. So even if somebody is a business person, they're not necessarily... The quote unquote boss of the other 19 people who are doing software development or QA work or whatever. So it was relatively easy in that respect to get people to sort of buy into the idea that.

oh yeah, you know, the eight people in the company or the 20 people in the company, eventually they'll all have an equal stake. And if you stick around and you work for the company, that means that you continue to...

steer where it goes and decide what it's trying to do. And you've mentioned that Nilenso has had some success. It's still operating successfully. Even though it's been now 13 years and generally, according to some statistics, startups tend to have the highest failure rate within the first five years. So what do you think has made... the lens was successful i actually i think kind of like it's probably layers of things i think at the bottom layer it is actually this this

sense of integrity that people have there. It's still a relatively small company, like 20-ish people. And so this... desire to be honest with their customers and to kind of be honest with one another about what they're able to achieve and what they want the company to be um allows them to kind of grow the organization in the ways that they want to grow the organization. So we never really had

And beyond being a worker co-op, we didn't have much of a constitution in terms of saying like, these are our goals. We actually had a lot of sort of self-referential conversations in the early days about like... What do people want? And especially the younger folks really weren't accustomed to having a voice in those kinds of conversations where it's like,

What do you want the company to be as it grows up? Like, what do you want it to be in five years, 10 years? Now it's on its way to being 15 years old. Over the course... of that time, the folks at Nolenzo have made some choices. So definitely everybody was really, really interested in building a company that was technically proficient.

This idea of being a relatively small boutique consultancy and that they do difficult work that maybe other companies have failed to do or a client's staff has failed to do for themselves. That was sort of like... the next layer so it was kind of like we want to be honest with ourselves and our and our customers and people who maybe interview um and then everyone was kind of like okay we want to build a company that's really good at what we do we want to be like

technically superior to a lot of other consultancies out there. And then around the time that I left, maybe slightly before, maybe slightly after, there was a real push. And I think it's an interesting one to hire more women. And this was from inside the organization. It was just like people really felt strongly about this, that.

Obviously, the gender gaps across the world are a problem in every country, but it's really difficult in India where there are some more... kind of traditional religious and family values and things like that and as an organization everybody inside the company really said to themselves like we want to

find we're a small enough company that we can like balance out the gender gap internally or we can work toward that and so they really pushed to do that and they actually have quite a few women on staff now um and I think that it's something that I see elsewhere that people want to do. They want to do the best thing. They want to do the right thing.

They don't have the stamina because I think it took Nalenso like five or six years to start even approaching the situation where they were balancing out the gender gap. It takes a long time to do work like that. Like, you have to go to the colleges. You have to talk to, you know, university grads who...

And most of them aren't going to work at your company. And so you have to be willing to have all these conversations and figure out. And I mean, they're not necessarily just hiring university grads. It's also about. establishing this as an image that like oh yeah like we we have a lot of women on staff so if you're a woman in tech who's really good and you're looking for like a switch in your career that this is maybe a place you want to land up

Building that brand takes ages. And so it's an interesting thing because people, I think, speak to folks at Nalenso and people occasionally talk to me about it. And I'm like... It took them a long time. It's a hard problem to solve. Like you don't just solve it overnight just by declaring, oh yeah, we want to hire more women. It's like, no, you need to stay committed to that year after year. So I think it's...

It's stuff like that. It's stuff like working with Indian-based businesses. So they work with like a telecommunications provider now. They still work with simple.org. these kinds of organizations that they have as clients that they, they try to stay focused and balance this interest that they have in deep technical work and actually doing something that's like socially useful.

Well, at the same time, I think being honest with themselves about maybe there's a year, I mean, especially in the more difficult times during COVID, right, or shortly after COVID was really sort of winding down to some degree. um that it was harder to run the business and they were just honest with themselves it's like now is a difficult time and so we'll be honest with ourselves that the the business is harder to run um

And push through it and get to the other side rather than, you know, like, it's easy to be nihilistic if you have a difficult year. And I think that they, yeah, they kind of have the integrity to get through that stuff.

I was curious now that you've explained about some of the composition of the team and the values. What type of workers did, or if you know... Does Nilenso still attract? I think you get... You get a lot of people who are... interested in the cooperative structure, but maybe mistake it for something it's not. So definitely we had one or two people that we hired while I was even there who misunderstood.

and they were just kind of like oh because it's a co-op i get to do whatever i want or i get like a say in every financial conversation or whatever or like i'm gonna decide what compensation should look like right it's like no no like you have three years of experience like you're not you've never run a business before why would you be involved in compensation discussions outside of what a normal employee would be involved in um so i i think that

There's this kind of, like, odd attraction. You get people who are, like, curious about Nalenso for... They're curious about it because they misunderstand what a co-op is. And... Then you get other people who know Nalenso not as a co-op. Like maybe they don't even know that Nalenso is a co-op. They just know that they're kind of this high performing.

small consultancy that's been in Bangalore for over a decade, and they work with some of the biggest, most significant firms, and they do interesting work. And I think that they tend to attract a lot of people who...

kind of come to them and say like oh i keep hearing your name like over and over i saw Shri Hari gave a talk at this conference and I saw Ned give a talk at this conference and like I see the names around and I see your logo around like what is your company about and those folks tend to be I think sort of in the middle of their careers often. So Seisel, for instance, she's been with Nolenzo for quite a few years now.

she had a lot of experience from like other roles um and i think that she's the sort of person who's just interested in working somewhere that's like cool and different I don't know her that well. I've met her a couple of times. She came after I left. But my impression of a number of folks, not just Seizel, but like a number of folks seem to be interested in...

working for a company that's not just the same as every other company. Because I think especially with consultancies and with modern software development, it can be a little bit cookie cutter. and Nilenso sort of escapes that mold a bit. Yeah, why do you think Nilenso escapes that mold apart from being a cooperative?

I, well, I think being a cooperative is sort of part of it. So because you're a cooperative, you can sort of feed people's opinions back into the company a little easier. Every company wants to do this. Like you get these sort of. You get these ideals in technology companies where it's like, we want your best ideas and we want you to help us improve, but...

And it's really hard to do unless employees feel like they have a sense of ownership over the company itself. It's like, yeah, I work for Microsoft. I work for Google. I work for Amazon. Like, what's the difference? They're all kind of. some big tech company or i work for this bank i work for that bank like i'm doing banking um

I'm not an owner of the bank. I don't control the bank. I don't decide what its business model is. And so there's this sort of tension, I think. There are people who come to Nolenzo or had when I was there.

who would come and be like, I'm going to change the world. Like, I'm going to change everything about the way this place runs. And it's like, well, that's not true. But you get people who come in and they're sort of dumbfounded that they get to be involved in the conversations at all. It's like you're involved in compensation.

You're involved in conversations about which clients the company picks up or not. You're involved in conversations about how much capital to retain. Do you want to make investments? Do you want to try and build a product? Do you want to do this? Do you want to do that? Um, and so those people who have fewer expectations actually tend to do better with that over time, like after a year or two of working in the lens. So then they find their voice and they'll figure out a way to express.

how they they want the ship to steer and it is a ship right it's like moves slowly even as a small organization um like nilenso you have some momentum. And so if you want to go in a different direction, it's going to take some time to sort of decide what that is. And so I think that over the course of a decade, if you've been watching them, I guess... You've watched Nalenso sort of like arc through the ocean and find its path. And it's changed in a variety of ways over time.

That change is reflective of the people who work there inherently. So you end up with a company that... people are happy to work at hopefully um and that they feel satisfied and that they feel satisfied with their level of control and the direction that the organization is headed in and so as a consequence you get customers who tend to be

happy with the work that's being done and the way that they're being treated by the company. And I think a lot of it really, really comes back to this high integrity thing of like, You start with people of high integrity and you kind of bake that into the organization. And then you wind up hiring for high integrity. Like you can sort of tell through the interview process that somebody is going to be.

honest with you that they're honest with themselves that they they want to do the right thing even on a small scale it's just kind of like a negotiation around a contract or something like that that they don't want to take advantage of anybody that that's not why they're there. And so I think that that's been an advantage for Nolenzo over the years. As an outsider now, it's been a long time since I've been there, but it still seems to be true.

I've written down a lot of follow-up questions to a lot of the points that you've raised. So I have a few different tangents. So we'll start off one by one. You've mentioned the importance of the feeling of ownership. So what's important in a work setting for workers to feel like they have ownership? I think... I think that there's a... I'll start with the opposite end of the spectrum. When I...

I initially pitched the idea of Nolenzo to folks. I remember, I have this feeling very strongly in me that I want to, I don't want to be the only owner. but I want to be involved. Like I want to have something to do with the way that the company is structured and organized and like, which direction does it go in? And what was funny to find out.

especially in the first four or five years, is that there are people who just don't care. Like they might work for a company like Nalenso, but they don't want to be involved in the big discussions. They don't want that kind of complexity.

hanging over them. They don't want to worry about whether or not we're going to make next quarter's revenue targets or whatever silly business problem business people have. And so there are definitely people who just want... someone else to deal with all the overhead of a business and they just want to you know write code or design a cool mobile app or or whatever um

That was a bit of a revelation to me because I always had it in my head. I'm like, oh, everybody wants to be involved. It's like, no, some people don't want to be involved. And so that was a learning where... And early on in the first couple of years, we found that, oh, actually, there are people that don't want to do this. And you should give them the space to not do it, right?

If what you want to do is write code all day, you should still be allowed to join a company like Nolenzo. And the ownership that you get as a person like that... is in the final moments right it's kind of like if you decide that you want to like sell the company off if that's even a thing that an option which it kind of is for Nalenso it's not for most co-ops because just because of the legal structures

um or you want to wind the company down or or something or you want to make a big investment maybe is a better example it's kind of like we want to keep the company going but we're going to reduce our salaries and we're going to make a big investment in this experiment. We want to try it out and see if it works. That person, even if they don't like running the business, may want to have a say in a big choice like that. And I think that especially...

if people feel invited into those conversations, they feel empowered with the option to participate at that level. It makes them feel good. So I think that that sense of ownership... It changes your relationship to the company. It changes your relationship to your coworkers. I think that regardless of...

of what kind of organization you work in, whether it's for-profit, non-profit, unionized, not unionized. There's a tendency for their, for... an explicit or implicit hierarchy to build up and then the people who are lower on the hierarchy have this kind of like oh those people right like the management like the board, the CEO, the COO, like, I like this person, I don't like this person. And there's this kind of tension between these two parts of the business.

At least in my experience with Nolenzo, that didn't really feel like it was there. It didn't feel like you had people who were like viewing. whoever was elected into the executive positions um much differently because they had this voice and so it's not like us versus them it's more like oh we're all in this together even if these people are making some more regular and possibly difficult decisions um i'm glad it's them and not me was kind of more the attitude than

I wish they would do things differently. Because if you do wish they would do things differently, you can just get involved in a co-op. Great. Very nice way to summarize and to emphasize the importance of the feeling of ownership because in the industrial and labor relations and organizational behavior.

literature, there are discussions about also psychological ownership, and there are different kinds of ownership. Sometimes tech workers have some stock options, so they may have some kind of equity or stocks. Maybe they may have some voting or non-voting shares. How do you think that differs these other aspects of ownership, be that psychological ownership or... if a tech worker who works for let's say a big tech firm has some stock option is there a difference between

that kind of ownership or even the psychological ownership? I'm a worker. I'm an employee in a company. I don't own any shares of that company. Is there a difference that you see between psychological ownership? between ownership that let's say a tech person may have with stock option in a big tech firm or ownership that let's say a tech worker in a worker cooperative has yeah

This is a funny question in terms of timing. I think, yes, there are definitely differences between those kinds of ownership. Even if you take it to its absolute extreme.

And you imagine a situation where tech workers at an organization owned stock in an equal proportion, but it wasn't... cooperatively owned like the thing that you get is just money right it's kind of like i own there are 150 employees so i own one 150th of um of the organization or I own that much of the upside of an exit event because a huge trillion dollar company bought us out or something like that.

I've been working recently this month with a friend who is, he started a startup some years ago and there's these questions. um that he has about ownership and stock and these sorts of things and his startup is not it's not worth millions of dollars right it's very

It's years old, but it's still fairly early stage in terms of like revenue and structures and stuff like that. And when you have these conversations with him, it's all about money, right? It's like, it's all about like... financial upside and it's about your kind of like personal stake slash commitment to the money that you can extract out of this activity and i mean obviously you wind up with some intellectual investment in or emotional investment in this thing over time he certainly has um

But I think that this is why... you wind up with these structures in the technology industry of like cliffs and stuff like that it's like you have to stick it out for four years right like commit four years of your life and then Then you're in, then you get your money, right? At the end of the four years, or you get 25% every year for four years or something like that. But there are these structures that...

They incentivize you exclusively on paper with the financial upside. There's nothing about the mission of the organization, what you're trying to achieve. the way that you collaborate with your coworkers, the way that you're trying to decide what the organization is doing, or even what some tiny feature of the software is trying to do, right? That's not really connected to the money upside that you have. And I think that it's interesting. It's interesting. I worked executive janitor title.

on my LinkedIn. I worked briefly as executive director of the GNOME Foundation, however you want to pronounce it, which is kind of like a Linux desktop environment that's now more commonly available on phones in recent years. And there's a movement with a lot of the folks who work with GNOME to try to get away from singular ownership of code.

And so this is sort of at the other end of the spectrum, right? There's no money involved at all. You can't really extract money out of a free software open source project. But you can have somebody who... completely owns a piece of code and they know it inside and out and they control whether things get included in that or not. And this is sort of an intellectual ownership, a sort of emotional ownership of something.

And it can be equally unhealthy, which is why the project is trying to figure out ways to sort of dissolve this ownership so it's more collective, so it's more cooperative. Because this has been the kind of like historical thing. I mean... The classic canonical example is Linus Torvalds and Linux, right? And there are other people who get involved, but it's still Linus who decides what goes into the Linux kernel at the end of the day, and he's finding successors and things like that.

It doesn't have to be money that causes you to get... engaged with something with a sort of ownership model that isn't collaborative or that isn't cooperative or that isn't shared. It's also not the case that I would argue that that's wrong. I don't think it's bad for somebody to be totally committed to a thing intellectually and emotionally because they feel like they own this thing, even if it's not a financial upside.

owning it gives them i think that the cooperative model is interesting because it sort of says from the get-go it's kind of like you have to let go of both of those things to a degree like you're gonna let go of the sort of crazy potential financial upsides being like a company founder or employee number three or whatever and

to a degree at least a company like nilenso you have to let go of some of this kind of like intellectual and emotional attachment that you have to your piece or to the company as the whole um And not every co-op operates that way. But I think that that's sort of like, if you go and look at the seven principles, that's the sort of feeling that it has, right? It's sort of like...

a sort of community effort originally was what co-ops were supposed to be. And I think they've gone off in lots of different directions. So that's... It's an interesting thing to debate with people who work for other co-ops because it's kind of like, oh, what kind of structure do you have? Who makes the decisions? How much ownership do the members of your co-op have?

How much do they feel like they have? Because all of that can be kind of like on a pretty big map in terms of like the reality and the feeling. Yeah, just wanted to, since you... I mentioned a few times the seven principles. I'll quickly review them. So the first one is voluntary and open membership. Second one is democratic member control. The third one is member economic participation.

So the first one means voluntary and open membership. Anybody can join voluntarily. Second one, democratic member control. Like you were describing, Stephen, workers have a sense of... control over decision-making, member economic participation. It means that they have some kind of ownership, financial stake in the organization. Fourth one is autonomy and independence. Cooperatives can, like you were deciding.

autonomously choose who to work with as clients and how to develop the strategy of the company of the cooperative Fifth one is education, training and information. So it's about providing education to both the members of the cooperative and also to the general public. Sixth one is cooperation among cooperatives.

That's pretty self-explanatory. And the seventh one is concern for community. So this ethos you were describing is tied with that principle. So thank you for bringing them to the attention and also elaborating on the... differences in ownership. You've also mentioned some time ago now that some of the workers that you've interviewed had

or that you were trying to recruit to Nilenso had misconceptions about worker cooperatives or cooperatives in general. Can you explain or share some of the common misunderstandings that you've heard through... your experience and work. Yeah, well, so it's funny. I think you get the similar sort of misconceptions.

around open source so i've spoken to people about open source before and someone who's unfamiliar with the world of open source or free software will say like oh no no like i can't just have any random person committing code into the into the repository like i need control it's like well you don't just you don't just take whatever code comes around. You still have some control. You'd still decide how this thing is structured.

And so I think in the early days of Nalenso, especially, we would mention this to people and people would be like, well, there still needs to be like a founder vision. You still need to have like some direction. You still need some way of making decisions. I think that it's maybe indicative of... a broader mental context that people have these days that people really love a dichotomy right like even if it's a false dichotomy and they're kind of like

Over here is a traditional startup or the traditional business. And over here is the co-op. And it's kind of like this, you know, hippie chaos and anarchy and like nobody's a decision maker and nobody's organizing anything.

And so I think that the misconceptions that you would see from outside would be stuff like that, where it's just kind of like, oh, how can you manage all this chaos? And it's like, oh, it's not chaos. It's pretty... boring normal software consultancy actually like if you come in on any given day most of the people are writing code and anyone who's not writing code is probably in a spreadsheet like it's not a lot of like arguing about big decisions usually um

And then people who would come in would maybe have some variation of that idea, like a lot of degrees of freedom and lots of maybe chaos or maybe... lots of control handed out and they imagine that it just magically works somehow without some sort of organizing principles um and then they would come in and want to execute a lot of that control so we had we had one young guy he was very smart

um he joined us and like within a couple of months he was declaring that we should pay ourselves like he's like we have all this money in the bank like we should pay ourselves at least like a 50 bump in salary And it's kind of like, well, if you've never run a business before and you don't really have the foresight to imagine that you're projecting into the future and then you might have other investments you want to make, whether that's...

buying an office for yourselves or buying new hardware or, you know, investing in a product or something. But even all of that aside, you need to keep some money around for... a rainy day and also to pay people more money in the future because they will keep wanting salary bumps year after year like you don't just dial it to 11

today because you can like that's kind of a silly response and i mean it was just sort of innocence on his part but you would get occasionally these these sorts of things we we had um one young woman similar age right um she just didn't have that much industry experience and she kind of came in and was sort of dictating aspects of like

the brand and the way that the the company would organize itself and ways that we would interact with our customers and we were kind of like no like we have a bit of a plan Right. Like we don't just start over from scratch with every single person that joins. So you need to kind of come in and get involved in the conversations with people and learn how to collaborate with folks. And that's actually I mean, it's.

The hardest part of any business probably is figuring out people and figuring out how to collaborate with them in a way that you are happy to keep coming back day after day because not every conversation is easy. But those were some like common early misconceptions for sure. Yeah, that sounds like working in any company with a difference that people seem to have the feeling because of the ownership aspect.

and that they're also co-owners, equal co-owners compared to other co-workers. They believe they can take more charge in changing the organization, but if... in my experience working with other companies that there has always been that that challenge of learning how the company operates and even though i may have had or other colleagues who would join may have had

ideas to improve something, the norm is usually learn why things operate the way they operate. And then once there is this deeper understanding to actually...

use the structures within the company and push for those changes. But after having understood what those initial reasons for that particular practice was, because after learning, you may... some workers may realize well there is room for change but sometimes it seems easier to keep it the way it is because of the cost to change that in terms of time and energy and effort and so forth so

But I find this, what you're describing, more typical of younger or workers with less experience perhaps in work in general, maybe. But were there any other philosophical differences and misconceptions about worker cooperatives apart from these, let's say, aspects that may also relate to a traditional enterprise? any kind of philosophical difference or maybe misconception.

I don't know about misconception, but definitely philosophical differences. So partly because we decided to structure the organization in the self-referential way where it's like we decide what we want the organization to be.

There were plenty of differences about what it is that we want to do. So there were some people who they really wanted to work in specific programming languages or programming environments. They wanted to write a certain kind of code or... work on a specific technology um there were people that wanted to work in certain industries and then there was kind of this like larger organizational choice

of either trying to fork the business off into like a product kind of company where we had a different revenue stream in addition to consulting or not. And we tried a few times, quite a few times, actually, to do this kind of product development thing. And I think it's still something that people at Nalenso consider.

But it's also a depth of consideration. It's kind of like, how seriously are you taking this product experiment? And so that was sort of... like a, a self healing system or like a self correcting problem where I think when I was there, there was a lot of, um, difference of opinion between people like me for instance who I really wanted to like go off and do this other thing build a product let's get like a non-linear revenue stream going and do something interesting and

there were other folks who were happy to just keep plugging along with the consultancy and like we're successful at this people are happy with the work that we do so let's keep going with that and then there were people in between who were kind of like maybe want to try the product thing but not take it so seriously um and so i think that they've had some chance to play with more

I would say like experimental academic kind of products since I left. Like there's one fellow, his name is Prabanchu and Ravi Chandra, Nina. They worked together a couple of years ago. I don't even remember when they were doing this, but they were trying to kind of build like a spreadsheet and like dynamic database thing.

together which is a huge i mean your competitor is microsoft excel or like google sheets or something right that's a huge undertaking and so i think people knew that this was a big academic experimental kind of project and maybe it could be a product but there's a good chance it won't succeed commercially and

the company had room for that they were kind of like this is cool we'll just try and do this thing um and so that's definitely a new direction um since i've been there and so i think kind of ending up in those spaces is a sort of like resolution to those sort of philosophical differences or like what do you want the company to be it's kind of like well maybe sometimes the company can just be something fun like if you have the bandwidth you can try this thing out that's hard to do

And maybe won't make any money, but we're going to try it anyway. This ties to...

the concept of meaning you mentioned earlier. And it seems like there is this need, implicit need to balance this pragmatism of sustaining the company, paying workers their salaries. And this idealism of we want to try something fun. So how does the concept or the idea of meaning for workers tie into a worker cooperative? You mentioned...

the idea of meaning being an important driver, if I'm understanding and remembering correctly. And now does this pursuit of meaning in the workplace, how is this shaped by that balancing of this? pragmatism to make the company the cooperative financially sustainable and ensure it's being salaries on in a timely fashion and this idealism of We want to do something fun. We want to serve ethical, social clients or clients that are aligned with our values and principles. I think...

I think when it comes to this sort of thing, it really helps to have a steady hand on the wheel. And so this is kind of like in a representative democracy. which a worker co-op like Nalenso kind of is. You have... So Deepa is the person who's kind of like leading, managing Nalenso to... to a large degree from sort of a business perspective. And I think more of the senior folks who've been around Nalenso for a while, have a bit more industry experience, are large participants in that.

But I think that every conversation I've ever had with Deepa, she's a very practical sort of person. She will take a look at kind of like, what does the next 12 months look like? What does the next 24 months look like? What are our desires collectively inside of the organization? And how do we want to take the first step?

toward that thing um and when it comes to exploring territory that's either these Two sort of major aspects for Nolenzo, kind of like deeper technological work or more meaningful social and kind of like community. Point number seven, the concern for community, like kind of whether that's a global community or those local community, balancing those with the well-being of the company. I think that she's done a really good job.

of centering the organization around the idea that if you take too big a risk... there might not be a company next year for you to take another risk with. And so you need to be realistic about your... limitations inside an economy like if people want to earn salaries and you want the company to persist and to be you know cash positive and everything else which you do um

then you need to be honest with yourself about the times when you either need to maybe take on a client that isn't... the most exciting ever like the work might be a little boring or um you know something that you've done before or something like that um or In really difficult times, you need to like eat into your capital reserve or maybe you even, I don't know if they've ever done this, but I know that this was certainly a thing that we'd.

spoken about while i was there like the possibility of ever reducing salaries so usually your salary just keeps going up and up and up year after year as you go through performance reviews and it's kind of like Would people be comfortable reducing their salaries across the board, right? It's not just like a big evil corporation where the CEO gets his usual bump or her usual bump and all the foot soldiers.

um have to take a pay cut or people get laid off um those sort of hard decisions that any business needs to make at some point and in the most unpleasant cases it winds up in these sort of like abuses of workers in a situation where you have an organization that is managing itself and that the workers are managing like the organization from inside you can make

humane decisions for one another by saying like oh like we yeah we'll all take a 10 pay cut this year and then we'll restore our capital reserves and the company can stay solvent. I mean, those sorts of choices are possible in a co-op because you can have those conversations with one another. And so...

That's uncommon. I don't know that Nalenso has ever done that. I don't think they have. But at least we've opened up the conversation so people could have that discussion if they needed to. And then... The more common conversation is kind of like we have these, you know, two, three clients in the sales pipeline. Like, which one are we going to pick up? Or is this work good enough for us? Is it fun?

Maybe it's not, but you just want to work for six months, keep doing something that is enough to keep the company going so that next year you can pick up the more fun work because... It's not that easy to find 19 other people that you want to spend every day with doing this kind of work. It's a challenge to find a work environment that you're happy in.

If people are happy there, then they can find sustainability, even if it costs them something else sometimes. Not always, obviously. Not always making these choices.

Yeah, well, good, good. So you talked a lot about, you mentioned now trade-offs a little bit, but also talked a lot about compensation and in the experiences of other cooperatives, for example, The biggest and most famous example of a worker cooperative is Mondragon in northern Spain in the Basque Country. Last time I checked, they had a difference between...

pay ratio between the CEO or the highest paid worker to the lowest paid worker of nine to one. And usually that's way lower than what's typical in. major corporations in the US, the difference between the CEO and the average pay of workers can be 300 to one, not the highest to lowest, but... the highest to the average is 300 or so to one. And what's the salary difference between workers in the lens? Okay, given that it's smaller, probably the...

the ratio between the highest and lowest paid, if there is any, would be a lot smaller. But traditionally, even in large settings, like let's say Mondragon, which has 80,000 workers and has a... over 10 billion euros or i think it was 13 billion last time i checked 13 billion euros in annual revenues which is over 15 16 000 us billion us dollars

still a multi-billion dollar organization has very low difference between the highest and lowest paid workers. So what... can you talk a little bit about the compensation from your experience what was the salary difference if there was any how did the salaries compare to the market the tech market For example, for similar kind of work, were workers within the Lenzo paid similarly, or they were paid above what they would get paid in the market or below? Yeah, I think...

Um, so Nalenso, uh, the blog, um, just like a blog. Nalenso.com. Um. They have a few blog posts, one that I wrote ages ago and one that Deepa wrote, and I think they have a couple other ones that kind of discuss. the compensation strategy and the thinking, and it's obviously evolved over the years. We definitely... never had huge variations in like what people were being paid, partly because we were so small.

but also partly because we did transparent salaries internally. So everyone could see everyone else's salary. This was kind of a, this was a big thing for us when we started because we wanted to. eliminate that not so much it wasn't so much about transparency it was actually more about i mean transparency was there but you wanted to eliminate the sort of distrust and um

feeling like somebody's keeping something from you. And it was a bit funny because new employees after a while would join and they had access to this salary spreadsheet where everybody's salaries was tracked and they wouldn't even go look at it. Like you would think that that would be like the most exciting thing for some people that were like, oh, I just joined a company and I can see everyone's salary and people just wouldn't care because as soon as you expose that kind of information.

It's no longer a secret. It's no longer special. And so people forget to be even interested in it. And then when we would come around to um sort of like performance reviews and compensation reviews which tended to sort of go hand in hand um everyone could see what everyone else was being paid and i think that people generally felt like salaries at Nolenza were quite fair. People with more experience were generally better paid than the usual. We did try to come up with a...

We tried to come up with a system whereby we would sort of set an upper bound because I think this is... This is a real problem with the industry today, the software industry today. You wind up with all these titles, and I don't know what any of them mean. So you wind up with like... Senior engineer, and then it's like staff engineer, and then senior staff engineer, and then principal staff engineer, and then principal staff engineer. And I...

I saw while I was looking for work a couple of years ago, I saw a place that actually had like senior principal architect of architects. And it was just like, what do any of these words even mean anymore? And so. I think that we knew this when we started. And so our upper bound, we said, was kind of like, not even that high, but a decent salary internationally, which would be like half a million dollars.

We were sort of like any of us would be happy making a half million dollars a year for the rest of our lives. USD. And so we were sort of like, that's level 10 out of 10. Like if you get to there, there's no more salary bump. That's the end of the line. And we decided that our persona for that role or that. level of employment was Leslie Lamport, who's a computer science researcher. I think he still works with Microsoft R&D. He's famous for a few different...

ideas and algorithms and things in the computer science world. We were sort of like, if you get to that stage. then that's how much you get paid. And along the way, then we have some markers to say like, oh, okay, once you, you know, once you've been sure enough that you can run a team of like five people or 10 people, then...

Like there's a certain level associated with that. And like maybe you're making sales or maybe you're interviewing people and hiring people. And that's a sort of skill associated with running a consultancy. Comparatively, I would say that... When we started in Alenso, our salaries were quite a bit higher than the industry locally. Things have changed in Bangalore since. You have...

The big tech companies all have offices in Bangalore, and it would be very, very difficult for Nalenso to pay people as much as Google pays their local Bangalore employees. At least they're more senior. employees. And so I think that that's been a challenge for them. That wasn't really Google was just kind of like becoming that. like a presence in Bangalore when I left, or when I left Nalenso anyway.

in the way that it is now. And so I think that this is actually, this isn't a problem for co-ops or like a problem that's specific to Nalenso. It's actually a very weird kind of like international.

compensation question it's like if you can make three hundred thousand dollars a year living in bangalore india even though real estate is expensive in bangalore it's not that expensive and so all of a sudden regardless of whether it's inside an organization or just inside society, you are making many orders of magnitude more money than, you know, sort of like the city average. And so what does that mean for the economy? What does that mean for, you know, fairness and...

Honestly, I have no idea. I think that India is such a complex economy. It's such a nuanced economy. It has so many aspects to the way that society operates. in this lifetime, I will never understand. So it's hard for me to comment on. But I think that Nalenso, even if they can't pay as much as Google or Amazon or Microsoft, the reason that people stay there is because they're happy.

Like, I think you might go get a big fancy job at Google, but would be really, you know, depressed working on just another way to steal people's data or whatever it is that Google does. I think that generally people are happy with the work that they can do at Melenso. They're happy with the level of control that they have and they're happy with the people that they work with. And I actually think that that's kind of, that's another aspect of co-ops that people don't.

necessarily appreciate is that you can build the kind of company and the kind of you can hire the kind of co-workers that you want to work with they're There are some unpleasant people in the world and you can avoid situations where they become a part of your organization if you have more self-referential control over.

what that organization is going to be. Great. You mentioned briefly evaluations. I just wanted to know how do worker co-ops do performance evaluations? So I'm going to assume that Nolenzo does this differently than... Actually, I don't know how they do it now. I haven't spoken to them. Well, now, no, of course. Like when you were there, yeah, of course. That's something that evolves over time, yeah.

when i was there we did it in the most psychotic way possible so we would just kind of and maybe they do something similar now i don't know but we would basically just get everyone in a room and we would like go around the room and we would all talk about each other And so it would be like, oh, like, you know, I'll use myself as the example. It was kind of like, oh, Stephen is like the person that we're talking about right now. And this is his self-review that he wrote.

And we'll just all go around and we'll all talk about the things he did well and the things that he can work on. It was like a big kind of collective feedback session. And it sounds, as I describe that, I realize that sounds like it could be... a disaster but mostly it wasn't like generally people are sweet and loving and if there was something that you needed to work on or like feedback that people wanted to give you they wouldn't like eviscerate you in a room with like

18 other people sitting around. They would try to provide you that feedback in like a loving and compassionate way. We had one developer, Tim. Over a weekend, actually, he's really, really good. He built a piece of software, like a review system.

where you could go in and you could submit review like feedback for a person and that person could submit their like self-review and stuff so we had kind of like a digital system for helping um with our review processes so we weren't just going in blind and like shouting at each other in this room or whatever we had a talking token like we weren't shouting one person would talk at a time but it wasn't

Exclusively that, like there was a little more structure, but it was, it consumed like a week every year that we would do the evaluation process.

Maybe things have changed now, so maybe they'll be able to hear and see that evolution in the organization. You've also mentioned that, just curious, because different co-ops have different ways of... onboarding and maybe we can talk a little bit about what we discussed earlier the legal structure and those differences and how they impact the formation and running of

of a worker cooperative. So how do people join in the sense that, for example, when I was interviewing tech workers in Argentina, they had... They have to be on board. I think it was within a month or three months. I'm blanking on the exact number now because their worker cooperatives are structured as a worker cooperative legal entity.

In the UK, there was a variation. There were some private companies, and internally, they would organize as a worker cooperative. In the Articles Association, they would define what a worker cooperative means. and define their governing principles. So their onboarding principle was different. Sometimes workers would be technically employees. Sometimes they would be owners. Sometimes they would be freelancers. So it would be...

some kind of a hybrid system in some cases. What was the structure like at Nilenso? So we... So as we were speaking about before we started, India has an odd set of cooperative laws. I think every country has different laws, but India's are... are very antiquated and so generally uh the legal structures that support co-ops in India. There are actually housing co-ops in India, but they're quite uncommon, actually. Otherwise...

Corporate cooperatives are sort of limited to agricultural and dairy cooperatives. So I can never remember the ratio. It's like there are two dairy co-op structures and like nine. agricultural or vice versa like nine dairy um but they have a lot of dairy co-ops they have a lot of agricultural co-ops um

Obviously, if you want to run a software consultancy, it doesn't fit into either of those molds. And so we spoke to a lot of lawyers. We spoke to a lot of accountants just to get advice when we started out. And they all kind of said they were like. you could do essentially like the legal structure that permits a housing co-op. Like you could pull that off, but it would look really weird. And you're selling things overseas and you're selling technology.

The tax department's going to come after you eventually, so don't do that. And the lawyers that we spoke to said, you know what, you can just structure this like a law firm. Just use a limited liability partnership and... That gives you kind of like arm's length safety from the organization. It was a relatively new legal structure when we started out. It was like only seven years that India had a LLP structure. But our lawyers...

basically said to us, they were like, we're an LLP, you can be an LLP, but instead of having capital P partner be like the end goal of, you know, being in a law firm, everyone's a partner. And so you just... have everyone included as a partner. So we open sourced our LLP partnership agreement. It's on GitHub. If you go to like GitHub slash Nalenso, you can find it. And...

The way that we would onboard people was we would just have kind of like a cooling period or like a warmup period, whatever you want to think of it as. I think initially it was six months. And now it's like 12 or 18 months, something like that, where somebody comes in, they're a contractor or an employee, or they're effectively on probation. And then once...

Everyone's happy with the situation, both the new hire and Nalenso. Then they become a partner in the organization. They also have another exception now, which is there are folks... who work for Nolenzo, who've moved elsewhere, in particular Toronto, here in Canada. They've had a few folks move out. And so obviously they can't be legally an employee or... They can't operate under the business in India as a partner of the LLP or as an employee of the LLP. So then they have to kind of like...

you know, do the dance of their kind of a contractor from Canada, and they're a partner in the business, or I don't actually know what the paperwork looks like for them. But Internally, they treat everyone the same way, as far as I know. And then it's just whatever legal hoops you have to go through to do the correct legal thing. So I think that...

From my perspective, I wish that more technology co-ops were co-op co-ops. I actually like hearing from you that... co-ops in argentina tech co-ops in argentina are real co-ops because they adhere to the seven principles they actually have the legal protections for the co-op the co-op becomes an institution in the way that it was meant to be. And I will say that the one that sort of stands out to me is number six, right? Cooperation among cooperatives or cooperation between cooperatives.

That's easier to do and that's easier to argue for if, one, you're legally bound to it because you are a capital C cooperative, and two... If other people see you as a cooperative, because if you're a private limited or a C-corp or an LLP even, even if you have all the trappings of a worker co-op, if you're not legally a co-op...

then another co-op in another country might look at you and say like, well, sort of. You're sort of a co-op, but you're not quite. And so maybe we're not interested in doing business with you. And I think that the cooperation among cooperatives thing is...

It's hugely important as these organizations start to branch out and start to communicate with one another and start interacting. I think that's a really healthy business model for the future that will make... tech cooperatives more effective um by kind of banding together and being like a bigger team internationally but

This is a bit of philosophy on my part. I don't actually know if that's going to work out or not, but I'm hopeful. Yeah, and some of the conferences I've attended on cooperatives, they do talk about federating among cooperatives, meaning... Precisely what you're describing, having smaller cooperatives around the world work together. And there is actually such a federation at the international level among tech worker cooperatives. It's an informal entity. It's called Patio.

Patio.coop, so P-A-T-I-O.C-O-O-P. And members are tech worker cooperatives from around the world, mostly from Argentina. the uk there's some from turkey japan over 20 countries are canada as well etc so yeah uh

I just wanted to ask, so you've mentioned that you are no longer part of Nilenso and that you've worked for several years. I was curious, how long have you worked at Nilenso and what led you to leave Nilenso? So I think I was at Nalenso for six or seven years, something like that. And I left... Well, it was a few things all at once. So it was kind of on the back of my...

Eye injury, I was kind of like, well, I don't know if it makes sense for me to stay in software where I have to be on a computer all the time. And so maybe I should try something else. I'd also started, this is going to sound a bit silly. I'd started a really serious meditation practice while I was at Nalenso. And there was a point where I had convinced myself that maybe I would go like ordain and become a monk.

like move to Thailand or Sri Lanka or something and, you know, go live in a monastery or whatever. And so I was kind of like, if I want to explore this thing. I need to leave the business world and go see if that's a thing that I want to do. But the really kind of... I'm not sure if I'm rationalizing my other decisions or the other reasons with this, but like really the thing I wanted to do and the thing that I'm happy about, I'm really happy is...

I wanted to walk away from Nolenzo and see it kind of stand on its own two feet. Like I wanted to see when the lawyers convinced us to take on the LLP as... like the legal structure that we would use, they kept using this word and they kept saying institution. Like the thing that you want to build is an institution. It's not about any individual person who's here today or is coming along or is going to go away. It's about the institution itself and people come and go.

but you want the institution to stand. And the only way you can really demonstrate that is by... proving it like you you have to have people leave and i'm not the only one right i of the original eight people only a couple are still around um and so there's been like lots of people who've moved out from nilenso and then work somewhere else, do something else, maybe even bring Nalenso in as like a consultancy that, that works with the new place where they work. But, um,

there's been a big shift in the way that the company actually operates. And I think that that's, it's really heartwarming, honestly. Like, it's great to see that that idea actually... carries through and that it that it works and i mean you sort of you know it works because you see these other large co-ops internationally doing this work um like

big corporations doing something significant where it's not about the people who started it originally. But I think it's actually something you need to prove again with tech co-ops because technology... as an industry is just it's so much different and it's so weird um that i i think that you need to sort of go through and demonstrate to yourself that like oh yeah like you can have

someone really significant like or Tim who constructed like the review app and things like that. These people who are around at the very beginning, they can leave. And Nalenso is still there and it's still doing its own thing. And so I think that that's true of other tech worker co-ops as well. they will need to have this experience to some degree that they'll, they'll need to have their, their kind of their founders in, in quotes, right. Walk away at some point and maybe.

Maybe the founders walk away after 30 or 40 years, right? Like maybe you stick with that co-op for your entire career and that would be super cool. But it does need to happen eventually. And I do think that that's kind of... That's special and nice. So I realize I'm just one of eight. But yeah, it was important for me to kind of step away from it.

I'm proud of the people who are there now who keep making it work. Yeah, it's a happy thing. Yeah, this is the first time I hear about the importance of creating an institution. the organization standing on its own feet despite the founding team leaving. And I have so many questions, but in the interest of time, I just wanted to move.

to the concluding topic and we'll dedicate a little bit of time to this. um the big topic in the tech world so i have so many questions we can go for another hour or two and you're you're very well versed so but again i think it's important to also touch a little bit about artificial intelligence or ai and And how that ties with tech work and tech workers and worker ownership. So briefly, what does AI mean to you? That's funny.

So I think... Oh, man. So I don't know if you know who Scott Galloway is. He's kind of like a... I don't know how you would describe him. He's a personality or something. I don't even really know what his job is. Oh, yeah, yeah, yeah. I'm looking him up. Yes, yes, I've seen him. Yeah, entrepreneur. Yeah, it's like, I know that guy's face. Yes, yes, yes.

him speak a few times so i have many issues with scott galloway but i i saw him give a talk once where he compared cryptocurrency to ai and he's like which one is the bubble and He said the way that he judges a technology is by how many white papers have been written in the academic space decade to decade. It is kind of like going back over the last 50, 60, 70 years. And he's sort of like.

When were all the cryptocurrency slash blockchain white papers written? And it's like this narrow sliver right at the end of time. It's kind of like the last decade. That's when all the blockchain white papers were written. This is not a serious academic topic in the computer science world. It's not that the ideas aren't valid. It's just the ideas were in database papers elsewhere.

blockchains really just kind of glue them all together they're not doing anything necessarily novel whereas he shows the graph of like ai white papers and computer science kind of like research into ai over the course of the last 70 years it depends how you measure and of course it's a steady increase it's just like forever forever we've been trying to do ai robots artificial intelligence whatever

whatever any of that means to you. And so in my head, when people say AI, I'm kind of like, well, which AI, right? Because there's like the 1960s AI, which was a sort of like... logic and like problem solving sort of a thing and then of course there's like an 80s brand of ai and then there's early 2000s brand of ai and we're sort of around like i don't know 2010 2015

There's a really practical application of AI that's incredibly boring. And this was the sort of stuff that Nelenzo did when we were working with Staples. It's like, hey, the customer lives in this small town in Nebraska. Will you, are you more likely to sell them their, you know, printer toner cartridge if you tell them that, like, if you get the delivery estimate? a little more right right and you use like huge data sets and you

digest all of that to figure out the answer to that question. And it's kind of like, oh, we can get it to you on Tuesday instead of Wednesday. And then they buy their toner cartridge. Yay. Okay. AI. And that's what AI meant for quite a long time. This is just this kind of like. pretty boring statistical analysis of numerical data. And I think that what most people mean when they say AI in 2025, 2026, soon, we're getting to the end of the year.

um is obviously generative ai and like oh i just have to type a sentence into a thing and the robot makes a whole movie for me right about my cat or whatever or i can get it to write me a short story or a novel even i can get it to write me a resume and i think that

I think that the people I respect the most are not very extreme about this state of the world. It's kind of like on one extreme you have the people that are... ai doomers or haters or something and they're like it's all garbage it's just like a random number generator or or it's burning the rainforest and wasting all this water and it's bad for the environment. There are all sorts of arguments or copyright violations.

There's all sorts of bad stuff about the way that LLMs are working today. And some of those arguments carry a lot of weight. They're valid. And then you have the other side of the equation where it's like, it's going to change everything and it's going to like upend society and blah, blah, blah. And I think that the people in the middle who are sort of like... It's real. It's here.

and it's about as impressive as it seems like it's a pretty cool new tool that we've come up with but it's expensive but it wastes a bunch of fresh water but it wastes a bunch of electricity, but it has no business model. Like the companies throwing money after this thing are burning money, not making money, right? Like nobody really, other than maybe Microsoft and NVIDIA who are really on the upside of this.

Most AI companies are just absolutely torching investor capital, right? So I think that there's a realism to that where you... You gain a lot by recognizing the ceiling. And I realize the ceiling is moving up, but like, what are the limitations of these systems? And where are they likely to... find their limitations over the next two, three, four, five years because it won't just keep growing indefinitely. Every AI cycle, whether it was the 60s, 80s, early 2000s, whatever.

Every cycle had a boom and a bust. We've had four or five AI winters now, and the next one is inevitable. This isn't the thing that happens before we get... AGI or, or whatever the new acronym is that people use these days, but. Artificial general intelligence. Yeah. Yeah. There's a, there's somebody came up with a new acronym cause they don't like the, but I've forgotten what it is already.

There's like AGI has been supplanted by something else, but. Okay. Super intelligence, maybe. Yes, that one. ASI? Well, just ASI, I guess, yeah. Super intelligence. Yeah, so I think I like those people. I like those people who are kind of in the middle, a little bit realistic about what AI is. Sorry, I realize that's a very long-winded answer to a very simple question.

Yeah. So just wanted to know, do you have any experience? Well, at Nilenso, you mentioned that you've used different kind of AI. Have you used... any potentially LLMs and what is your experience with using large language models or different AI tools in a cooperative setting? Is there any kind of difference that you've noticed? In terms of how that technology is adopted by the workers and the firm itself versus a company that's or a firm that's.

owned and managed by a single or a few individuals, but not the people who work it? Yeah, it's funny you ask because I've... So since I left the Gnome Foundation in the summer, I've been interviewing at a couple of places. And it's interesting to see which companies... non-profits companies governments wherever like everybody has a different take on ai and um governments and non-profits especially tend to be a bit

They're not pessimistic. They're cautious. It's kind of like, oh, we need to be really careful with this technology. And then some, not all, for-profit companies are like all in. right they they'll send you like a memo um if you're interviewing with them and they'll they'll tell you like we believe we 100 believe that this is a huge game changer and like you should use it for everything that you do at work. And like, we want you to exploit AI as much as possible. And I think that...

There's one person at Nalenso today who's kind of there like, I was just having a chat with him about distributed computing futuristic problems, actually, just before we had this call.

He is also extremely interested in AI, but it's not a top-down thing. Like he went out and started exploring AI, LLMs specifically, right? Kind of like... tools for software development he's like okay let me find the rough edges and figure out how do i make this thing usable um because i think that a lot of a lot of what executives

or a lot of what product managers see in the software industry is they'll take a Saturday afternoon and they'll open Claude Code or like Copilot or something. And they'll be like, oh, make me. this website, make me a mobile app that can do XYZ and like make an API that does blah. And they're amazed that it can do this from scratch, right? Like it builds them a whole system in a matter of hours.

And the difficulty with that is that if you're a product manager and you're not a technical product manager, if you don't really have any... skill in programming you don't know if this thing is doing a good job or is it just meeting the assignment it's kind of like yeah sure it made you a mobile app is it well written is it maintainable is it tested Well, you don't know. And what's funny is that a lot of software developers don't know either. So an LLM might spit out a bunch of code and...

If it is a technology stack that you're not that familiar with, it might do like a 98% good job, but the 2% that it gets wrong is actually really important. And you won't be able to detect it because you're not an expert in that particular technology domain. And so this happens often enough that...

It is a fair bit of a problem in that space where you're creating something new, but it becomes really obvious when you're working on something old. And so... and by old i just mean like the system has existed in production for some time so if you're working with like some telecom company or a bank or whatever

you don't just get to spit out a new mobile app every week. Like you have to work on some code that already exists and services their customers. And LLMs struggle with a lot of that because they can't read. these large old code bases they can't digest them they can't maintain enough context

And the work that they're doing is quite a bit heavier as a result. So you wind up burning a bunch of tokens and wasting a bunch of money trying to get your answer and trying to get the LLM to modify the thing for you. And there's often a lot more gotchas. in the space, even for a human. And so Atarva, the fellow who works for Nolenzo now, who's really excited about AI and NLMs and exploring this stuff, he's written a document, I think.

I think it's on his blog. I think it might be on the Nalenso blog. And it's essentially like a working guide to... doing this second thing. Like you want to take LLMs and apply them in the real world. Like you have a big old complicated system that you want AI to help you modify and grow. He has a lot of advice that I think is pretty sane for making good use of this stuff. And it's not as though management at Nalenso is telling him to go out and do this.

This is just something that he finds interesting. And I think that other people at Nalento maybe find AI and LLMs. variously interesting not everybody's into it and so he can go and explore it if he wants and other people if they prefer to kind of do things without ai assistance or minimal ai assistance or whatever

that that's fine for them to do. And so this is the, I was saying at the beginning, The question is interesting to me at the moment because I'm seeing these two sides of the industry where it's kind of like, oh, a space where people are allowed to go and explore if they want and a space where it's like. handed down from on high like you must master the llm tools of today because we believe they're going to change everything um and yeah it's it's a pretty stark contrast

And what do you think is a good way for workers to engage with new technology in the workplace, like now with AI? What do you think maybe more specifically? worker cooperatives offer or don't offer that traditional tech firms

do differently. So just contrasting the pros and cons of technological adoption like AI in tech work specifically. So I think with this example, I think the shape that I've seen from people at Nalenso that I've spoken to, I haven't spoken to everyone at Nalenso about how they're doing. AI these days or are they doing AI at all or do they care? But the fact that they get to choose.

um and decide because there are ethical concerns like oh like i feel really strongly about copyright or something so i'm not going to touch clod code or copilot or whatever chat gpt

or you have concerns about the energy usage or something. I mean, whether those concerns are valid or not, they're your concerns. And so if you have, I think... these couple of points from the seven cooperative principles is like number four you have autonomy and independence generally that refers to the co-op but i mean as a co-op member

depending on the co-op you may have more autonomy and independence as well where you can say like actually i'm not comfortable with this so i'm going to make a different choice and number seven concern for community Especially if you're talking about a data center that's been dropped into a community that has water shortages already, a data center is not going to help that situation. And so those sorts of things are...

I think in the traditional marketplace, they're easy for people to get on, you know, Twitter or Blue Sky or whatever and shout about. And they're just like, grr, AI, it's bad. But like being mad about a thing doesn't solve the problem. And so... The people who have the autonomy to make a choice actually have those degrees of freedom where they can say like, no, I'm not comfortable with this. And I think as well, when it comes to the democracy.

of a co-op you actually have a little bit more introspection available to you so one of the things that i've been speaking to people about is just vendor lock-in like if you buy Google Gemini and you buy their IDE and you buy their tooling and their service and whatever. And if it costs a hundred dollars a month in 2025,

It might cost $1,000 a month in 2027. Like Google's not going to give that to you for free. And can you afford that? Maybe not. And so either you need to figure out if you can live without it.

or you need to figure out if you really feel you need ai and llms for your business maybe you can run an open source in quotes right notice the open models are all a bit weird in terms of their licensing inherently but you can run a local model on a big machine in your office and everybody on staff can connect to that and maybe even if there's somebody who feels uncomfortable about like

the power water like kind of environmental concerns around ai maybe they would feel more comfortable with that option it still has the copyright issue um but you can start to tease apart the ethical constraints around ai and say like Well, like these things are at least better over here if we do it ourselves and you get a little bit more autonomy and you have a little more control over.

your relationship to that technology. I think co-ops are in a better position to say like, we want to control it this way because we can compared to like large corporations. Yeah, well, great. Stephen, I would like to just move to the concluding question, which is, do you have any final comments or any question that I've not asked you, but you wish I had asked you?

Because I have many more, but in the interest of time, yeah. Yeah, totally. Can I actually ask you a question? Oh, yeah, for sure. I'm actually curious.

um there's kind of like a venn diagram of these like technology co-ops that you've spoken to or interviewed um where would like is nilenso based on my description which is probably inaccurate because I haven't been there for a while but like is it kind of in the middle of like the different kinds of co-ops that you've been speaking to or is it kind of like out in a corner by itself and

what what's kind of the big difference that you've seen between the way that nolenzo works and the way that these other tech co-ops have okay yeah so that's what they work yeah so there is actually uh a report

I've written about varieties of tech worker cooperatives. I'm going to link it in the description below. And that paper, that report is actually... uh on the website platform.coop and so if someone looks at my name Stefan Ivanovski they can find it so varieties of tech worker cooperatives and the idea for that

report stems from the research that they did on tech worker cooperatives in argentina and the uk so how would they classify any lens given what was presented today which again is more of a historical reflection at the time when you were there at Nilenso, so we're not going to assume that it's an accurate classification of Nilenso, but assuming that, okay, assuming that with the following condition, so assuming that it's registered as a limited...

liability partnership, so a non-cooperative entity legal form. I would classify it from a legal perspective as a de facto cooperative. So it's not a de jure cooperative because...

a de jure and de facto cooperative would be one that would both be registered as a cooperative and embody the cooperative principle. And I specifically say de jure and de facto because there can be, there were some... cooperatives in other sectors the jure cooperatives this and the international labor organization has published a report on these pseudo cooperatives so sometimes the cooperative form

may be used to avoid paying employer employee benefits because in the cooperative workers are treated as employers and they're not subject to some employee benefits that that would incur additional cost so then they operate as pseudo-cooperative so that's the caveat but that's not the mainstream experience of cooperative so so the lens so from a legal perspectives would be a de facto cooperative

And then how it operates and how it attracts clients in the sense that how it's able to sustain itself. There are different spectra, but for the sake of simplicity, we can go and say there are those... who cooperatives that are more client idealistic on one spectrum they won't exclusively work with ethically and socially responsible enterprises and there are those that are more oriented towards

being pragmatic and business oriented. So then from the description that you've mentioned, some clients seem to be...

ethically and socially responsible and others are more pragmatic, it seems that it would fall somewhere in between. But it's a gradient. None of these scales are purely binary. They operate... on on gradients in the uk there the tech worker cooperatives i've interviewed are all exclusively focused on ethically and socially responsible clients that doesn't mean that within that realm they sometimes don't engage with clients that

ensure the viability of the financial viability of the cooperative but they have a large enough market that they've carved for themselves to be able to do continuously that kind of work, at least at the time that I was interviewed. Maybe things have changed. This was two years ago. And in Argentina, they seek to... find both clans locally, but also internationally, because Argentina has had challenges with their currency and hyperinflation, high inflation.

One way to hedge against this currency changes and instability was to get paid in US dollars from clients in North America or euros in Europe and then be able to hedge and ensure. that those dollars and euros that they're getting paid go much longer than the Argentine pesos that would be paid. And also there is a different...

budgets that some international clients operate with versus local clients like Argentina. Probably you've noticed that when you work with Indian clients, maybe the rates would be different than if you work with a client from... the US or Canada, or I don't know if that was also something that you've experienced as well, different rates with clients in India versus clients in the US or Canada or other countries that you've worked with.

Yeah, it depends. I would say definitely the smaller clients in India struggle to compete with the kinds of rates. that North American or European clients would pay out. But the large clients in India actually pay comparably, which is this sort of, it's another artifact of this extremely weird sort of economic climate hovering over.

India right now, at least in the technology sector of like, oh, money is, it's very weird. Yeah, I think this is exemplary of very large countries. I've seen that in Brazil, for example. there are the in mexico other larger larger countries that are called emerging market economies like india mexico brazil they're large countries but then there are these vast inequalities where some

Some workers or some companies have the means to pay comparable rates to what a North American or Western European firm would pay. But then at the same time, the average salaries are very, very low.

orders of magnitude lower than what they would be on average in Western Europe or North America, maybe five times less, but it depends on the sector. So then, yeah, I see that in smaller economies, that's not... as pronounced but in these larger economies with bigger inequalities that's more of a pronounced issue.

Yeah, that makes sense. I'm very unfamiliar with the Brazilian and Mexico kind of economic structure, but it makes sense that that would kind of mirror India's. Yeah, it happens in other larger economies. typical so do you have anything else that you would like to share or a question maybe that i didn't ask your comment

No, that was very cool. Thanks for sharing your experience with these other folks. And I look forward to reading your report. Yeah, well, thank you very much, Steven, for your time. And for those of you following... Feel free to like this interview and subscribe to the channels and comment if you have anything to add to the discussion. So Steven, thank you very much. And until next time. Thank you.