It’s unlikely that Migros and Vanguard will be the last examples of an enterprise that has become hugely successful after converting itself to customer ownership. It might be that these types of conversions will become more common. A movement
has recently emerged to advocate for this cause called “Exit To Community”. It seeks to create modern Duttweilers with a focus on founders of tech start-ups who currently have mainly just two paths, or “exits”, to choose from: sell their business either to a bigger company (often a tech giant seeking to get rid of a competitor) or Wall Street by entering the stock market. Exit To Community provides a third option: selling the firm to the community of users that has formed around it and without whom the firm is worthless - for example, the customers of an online shop or workers of a gig platform.
Many founders are unsatisfied with the current exit options and want to genuinely provide something valuable and useful for their users who they feel an emotional attachment towards. But they also have to pay their mortgage and want to be compensated for their work, ideas and risk-taking. They often feel that they have no one else to sell the service but to investors whose only purpose is to extract as much value as possible from the user community. For example, the founder of the world’s most popular genealogy site Ancestry.com Paul Allen (not to be confused with the ex-CEO of Microsoft), has spoken about some of his regrets. He said he agreed to deals without fully understanding them that gave away control of the site to investors who have since engaged in behaviour he finds contrary to the original mission that inspired him to start the company. For example, in 2014, the site closed down its social networking platform MyFamily.com and, by doing so, removed decades of correspondence between millions of people sharing memories and other information about their families. It is impossible to quantify the sentimental value this content had - but to the shareholders, it had no monetary value and was therefore erased. Allen has since become a critic of the conventional shareholder firm, calling it the “invention (that) has led to the most inequality in modern civilisation”. He has also shown enthusiastic interest towards models such as that of John Lewis Partnership, a large UK based retailer whose founder’s son transferred the ownership of the company to a trust controlled by the employees.
There is no polling on how many founders end up unsatisfied with what big tech or wall street decides to do with the company after an exit (which could be an interesting area of research). Still, it does seem that it is at least not uncommon for founders to feel that the new owners have failed to uphold the original mission that inspired starting the company.
User ownership can also help dismantle perhaps the most significant source of problems in the current landscape of the digital economy: the conflict of interest between users and owners. To illustrate how, let’s imagine that one of the large social media platforms would develop a new feature that would make it easier for users to organise live events. As a result, people would spend more time going to events at the expense of being on social media. The feature would harm shareholder profits as users would spend less time looking at ads, and it would therefore be removed even if users would find it beneficial. In other words, there is a conflict of interest between owners and users of the platform. If, on the other hand, the social media platform were a cooperative owned by its users, it could simply decide that the benefits of the feature to members would exceed the costs. A conflict of interest between users and owners can be dismantled by making users into owners. This would also broaden the type of innovation: digital platforms would no longer be limited to only inventing new ways of making money for shareholders but could develop new features that would benefit the users more creatively.
Providing users with ownership can also make them more loyal customers. For example, a study
from Columbia University looked into users of Bumped, an app for retail investors similar to Robinhood. It provides users with $5 to $10 stock grants from companies such as Taco Bell and McDonalds, and the study found that users who were granted a specific company’s stock increased their weekly spending at those brands by 100%.