T-Corps and the Community IPO

Janelle Orsi has an article in Shareable that should be of interest for anyone following the “sharing economy” (or “peer economy”, or whatever you want to call it).

It tackles one of the most difficult and interesting problems facing sharing economy platforms: the relationship (technically speaking, i.e., the business relationship) between the companies operating the platform (e.g., Lyft or Airbnb), the “sellers” on the platform, and the buyers or users.

The nuances of this relationship are the source of many legal and regulatory head scratchers, most notably two recent suits against Lyft and Uber by their drivers, which allege that Lyft and Uber are really more like direct employers and less like information platforms or technology service providers.  This distinction is a really really really important one, both in terms of labor law and professional regulation (in transportation and all other sectors).

The solution that Orsi suggests is that sharing economy platforms should be organized as “T-Corps”.  She cleverly uses this term, which is the official IRS classification for co-ops.

She argues that this classification is not only more aligned with the community’s interests (i.e., the major stakeholders are equal owners), but it also avoids all of the messy legal and regulatory issues that are making things hard for many platforms in the space.

Finally, she suggests a path for doing a “Community IPO”, i.e., selling a sharing economy platform to its users (both on the buy and sell side):

Could or would each of the 2.1 million registered users of Airbnb come up with about $120 per year to complete the buy-out of a $2.5 billion dollar company in 10 years? Maybe. The number of users is growing rapidly, which would reduce the buy-in cost for each user. 

This is a really interesting conversation to be having, and fits right along side the discussion of the role of the B-Corp in the space.

It seems fair to say that the founders of collaborative / peer-driven companies like Airbnb, Sidecar, Meetup, Etsy and Kickstarter are idealistic, change-the-world types as much as they are businesspeople. And that there will continue to be an appetite for alternative investment arrangements which fit these new models well.

A natural question is whether this approach is actually / practically compatible with traditional venture investment, especially with regards to when & how such a community IPO would take place (such that it was affordable by the community and also delivered an appropriate return for that risk capital). That’s the billion dollar question (if you will).

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