In both professional and personal settings, there’s a growing understanding of the critical role communities play in our lives. The next step after buying into this premise is to start exploring how once can be more intentional in shaping those communities and monitoring their health. Similar to culture, while there are no good ones and bad ones, there are strong ones and weak ones. What sets the former from the latter is the degree to which the various elements that shape a community are defined and in alignment with one another. While much has been said and written on the topic, none competes in clarity and comprehensiveness with the work Fabian Pfortmüller, Nico Luchsinger, and Sascha Mombartz did in creating the
The Community Canvas is a framework for creating, analyzing and improving communities. It lays out all the elements that define a community in a coherent canvas format.
The canvas is divided into three main sections, each in-turn is broken down into more specific themes:
Section 1: Identity — who are we and what do we believe in?
Purpose — Why does the community exist?
Member Identity — Who is the community for?
Values — What is important to us as a community?
Success Definition — How does the community define success?
Brand — How does the community express itself?
Section 2: Experience — what happens in the community and how does it create value for the members?
Selection — How do people join the community?
Transition — How do members leave the community?
Shared Experiences — What experiences do members share?
Rituals — What rituals happen regularly?
Content — What content creates value for members?
Rules — What are the community’s rules?
Roles — What roles can members play?
Section 3: what gives us stability in the long-term?
Organization — Who runs the community?
Governance — How are decisions made in the community?
Financing — What is the community’s plan to be financially sustainable?
Channels & Platforms — What channels does the community use to communicate and gather?
Data Management — How does the community manage the data of its members?
Thinking about a particular community that you are part of, makes it easy to see the framework’s strength (and minor weakness) — Themes with clear and well-defined answers are areas in which the community is strong. Themes with no-so-clear answers, present opportunities for strengthening the community. My one nit of the framework is that while it’s fairly comprehensive, it’s not perfectly MECE some themes seem to have some overlap between them so there’s a structural opportunity to eliminate this overlap and likely simplify the framework a bit in the process.
Juho Makkonen is the founder and CEO of a Finnish company called Sharetribe and his unique perspective first came across my radar in a more recent post he’s written about shifting the licensing for Sharetribe’s product from “open-source” to “source available” (Specifically, from MIT to Sharetribe Community Public Licence), closing a big, exploitative loophole in the standard open-source license by preventing organizations that utilize their code to use it in a product that competes with the company who made the code available in the first place. For example, if you’ve built a web browser and made its source code available, under an “open source” license another company can just take that code and build a competing browser with it, while under a “source available” license, it can’t.
Smart. Thoughtful. Progressive. The kind of impression that often leads me to an “I wonder what else they’ve written about” inquiry. And I was up for a big, pleasant surprise.
You see, a year ago, Jujo wrote a profound piece called
In the post, Juho outlines how he restructured the governance structure of Shaerscribe to ensure that the company stays true to its purpose and not succumb to the pervasive profit and shareholder value maximization paradigm.
The new structure consists of 4 key pieces:
1. For-purpose corporation
In most countries, the default articles of incorporation require the management team of an organization to use the maximization of shareholders’ profit as the north star in corporate decision making. Failure to do so can make managers liable to a lawsuit for violating their fiduciary duty. Sharescibe made an explicit change to their corporate bylaws overriding the default with the following: “The purpose of the company is to democratize the sharing economy. The company aims to foster an economy where resources are utilized efficiently, created value is distributed fairly, and people have control over the conditions of their work.” So in cases where there’s a conflict between making a profit and pursuing this purpose, management is not legally bound to abandon the latter for the former.
Furthermore, acknowledging that the purpose, as it is defined today may evolve over time, Sharescribe created the option of changing the company’s official purpose as long as the people owning two-thirds of the company’s voting shares support it (with an important caveat we’ll cover in part 4).
This governance piece is not too novel in and of itself. It is very similar to other progressive governance structures like Public Benefit Corporations that also eliminate shareholder primacy. But it gets more interesting when tied with the other pieces.
2. Employee ownership (voting rights)
Sharetribe aims to be in control of the people who hold active roles in it. Namely, its employees. Therefore it is governed by the people working in it, guaranteeing that the management of the company will be in the best interests of employees and all other stakeholders. At Sharetribe this is done by issuing 4 types of shares:
Class A — voting rights shares (not entitled to a share of the profit) — available only to employees and people in a service relationship with the company. Must be sold back to the company at a nominal cost if the relationship is terminated.
Class B — a single veto vote share granted to a foundation (see part 4)
Class C — profit-sharing shares (no voting rights) — given to investors (see part 3)
Class D — profit-sharing shares (no voting rights) — given to employees (see part 3)
3. Reliable returns — Redeemable shares for investors and employees (no bonuses, no dividends)
To avoid the “go big or go home” financial returns pressure that’s inherent in the standard VC model, Sharetribe opted for a different funding model:
Sharetribe offered its investors to buy (Class C) shares at the company at 20 Euros a piece. In return, the company commits 40% of its annual profit to redeem these shares at 100 Euros a piece (x5 return) until they have been fully redeemed. If the shares are not redeemed within 10 years, 100% of the company’s annual profit will be directed towards redeeming the outstanding shares. Sharetribe currently estimates that they’ll be able to redeem all outstanding shares within 7–8 years.
Juho walks through the economic business case for investors in using such structure which essentially boils down to the lower per-company return being offset by the lower failure rate, yielding the same average returns as a high-returns high-failure-rate portfolio.
In many ways, this is similar to the funding and investment strategy pioneered by indie.vc in the US.
However, Sharetribe also opted to extend this model even further, and use the same vehicle with its employees as well, granting them Class D shares rather than the typical ISOs or RSUs since the liquidity event that such vehicles depend on (IPO, acquisition) is no longer possible. The Class D redemption schedule is designed in a way that most of it take place after the Class C shares have been fully redeemed. It’s not fully clear whether this mechanism is meant to be a permanent part of the compensation scheme, or just be a “one-time” fix to compensate the founders and early employees for accepting below-market wages in the early days of the company. If it’s the former, transitioning to a profit-sharing scheme like the one outlined here may be in order.
4. Safeguarding the structure — veto shares held by a foundation
The final piece in the puzzle is ensuring that the transition to steward ownership is permanent. History has shown that changes in management can pose a risk to maintaining the steward ownership governance structure and open the door for reverting back to a more conventional governance mode.
To address that risk, Sharetribe granted a (Class B) veto voting share to a foundation with no economic stake in the company. This veto share can only be used to veto any change in the company’s articles of association that would attempt to dismantle the steward-ownership structure. The foundation is bound by its rules to veto any such change, and whoever is on the board of the foundation must respect these unchangeable rules.
Stepping back, it’s easier to see how these four pieces fit together.
While no governance scheme offers full immunity to the “human condition” in addressing challenges such as negligence, illegal activity (corruption, bribery), etc. the steward-ownership implementation outlined above seems to masterfully address some of the more systemic issues with conventional capitalism governance structures.