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It’s the bottom of the first inning, the Rockies trail five to zero, and John Paller can’t stop talking about game theory. Not the product on the field—from his private table along Coors Field’s first baseline, even he can see there’s no saving the Blake Street Bombers, theoretically or otherwise, this season—but rather in the context of its intended discipline of economics.
“So if a CEO lays off 3,000 people or moves them to contract labor, the company’s ratio of profit per employee looks better, and the CEO gets a $20 million bonus for basically upending a bunch of people’s lives,” says the Denver transplant, who moved to the city in 2000 from Boise, Idaho. “That seems kind of shitty…but why demonize the CEO? He’s just doing what he’s incentivized to do. Remember, he has a fiduciary responsibility to maximize value for the shareholders. The game was designed that way as a feature, so why are we mad? We created this monster.”
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Paller, the former owner and CEO of Lakeshore Talent, a Denver-based staffing, recruiting, and payroll services company, wants to change the rules of that game by reinventing how we work. His mission was partly inspired by a 2014 chance encounter at a conference in Torrey Pines, California. The meeting involved Dmitry Buterin, a tech entrepreneur and the father of Vitalik Buterin, the co-creator of the Ethereum blockchain, a highly successful form of the digital accounting and cryptographic technology that makes cryptocurrency possible.
Paller and Dmitry became fast friends, and Paller started hearing more and more about Ethereum. “I was intrigued by the concept of smart contracts and blockchains, but I didn’t really understand,” says the energetic fortysomething. “It took almost two years, but when I had my moment…I was like, ‘Oh, my God, we could use these tools to create, like, a new system.’” He sold Lakeshore Talent to his employees and set out to reshape employment. Thanks to a new form of cooperative law, Colorado was the perfect place to start his revolution.
“I’m not an anti-capitalist. I think I’m an evolutionist,” Paller says. “Capitalism is still going to exist, but it’s going to be played by different rules. It’s going to be seen differently by future generations, and it’s going to save itself.”
“Choice and freedom are the disdain of the Corporatii and their paternalistic overlord, Extractur!” reads the deep-voiced narrator of Opolis’ new digital marketing campaign, an animated Star Wars rip-off. Set in Megalopolis, a massive space station home to the Workforce, a not-so-subtle stand-in for American workers (or, you know, the Rebel Alliance), the cartoon is silly, and that’s the point. “Dealing with car insurance was complicated and intimidating as hell,” Paller says. “Then Geico came out with a talking gecko with a British accent.”
Only, in this particular marketing shtick, Opolis, the Denver-based employment services platform Paller founded in 2017, is trying to sell something a lot scarier for most people than insurance. It’s trying to convince workers that they can leave the safety of a full-time job—the health insurance and retirement benefits, the steady paychecks, the (relatively) easy tax filings—for the freedom of self-employment. “There are absolutely huge incentives to maintain your place in the matrix, in the corporate world,” Paller says. “So taking a step out of the boat, it’s like jumping in a lake with cement shoes on and being told to swim.”
To help people shed their full-time status, Opolis is removing the concrete by reinventing an old institution: the co-op. Once individuals leave the 9-to-5 grind, newborn freelancers, gig and contract workers, cryptocurrency day traders, and other self-employed individuals pay their earnings into Opolis as members, and in return, they get access to cheaper group coverage health insurance, retirement plans, and all the other services that used to be the exclusive domain of corporate human resources departments. Members get a paycheck every two weeks based on how much they pay into Opolis and how much they choose to pay themselves, and by leaving a little extra in their accounts, members can still receive pay and benefits when they’re in between gigs or haven’t had as many freelance assignments as they’d hoped that month.
For those who’ve been longtime gig workers, becoming an Opolis member can provide a certain measure of credibility that self-employment doesn’t offer. Case in point: Valeria Kholostenko, a Ukrainian immigrant based in Denver who’s worked in the cryptocurrency and blockchain space for much of her career, could finally buy a house after joining Opolis. As a frequent contractor who was often paid in cryptocurrency, she never thought she’d be able to navigate the paperwork associated with buying a home. “I didn’t really feel like there was a future for me in terms of homeownership and things like that,” she says. She’d known Paller through Denver’s crypto community for years, however, and when she joined Opolis in 2021, she was able to provide the kind of employment and income verification, in the form of pay stubs, that banks require. She now owns two homes in Colorado.
In addition to benefiting workers, Opolis could help employers, too, Paller says. Business owners could have smaller human resources departments—or even get rid of them entirely if there’s widespread adoption of services like Opolis. This would not only make life easier for independent workers and entrepreneurs, Paller says, but it would also fundamentally change the employer-employee relationship from what he calls “exploitive and paternalistic” to “mutualistic.”
By contracting your services instead of treating you as a full-time employee, the theory goes, your boss would become more like your peer. You could set your own hours and work wherever and whenever you’d like. And if you still don’t like your current gig, making the transition among projects, jobs, and even entire industries would be easier because there’d be no fear of losing your health insurance or other benefits. This could keep people more excited about their vocations. “What’s the probability that if you’re disengaged, that you’re gonna be a highly productive worker?” Paller says. “Now what would [economic] growth and abundance be like if people actually liked what they were doing?”
Indeed, in May U.S. worker productivity was declining faster than at any time in the past 75 years, according to management consulting company EY-Parthenon. In a Yahoo Finance interview, however, the firm’s chief economist, Gregory Daco, attributed that decrease to surging remote work and job churn. “Because people were job-hopping so regularly, there wasn’t really a chance to bring them up to the speed, or productivity, that a former worker would’ve had,” he says.
According to that reasoning, productivity could decrease further if more workers leave traditional employment. But there may be no stopping it. McKinsey, another management consulting firm, estimates that independent workers already make up 36 percent of the American workforce, up from 27 percent in 2016. The pandemic surely played a role in that jump, but Paller believes changing values are a major factor, too. “[Gen Zers] look at their parents and are like, ‘Let me get this straight. You worked at this company for 20 years…and then they laid you off, and you have no health care now? That’s not living. That’s zombie land. I don’t want that.’ ”
So far, Opolis manages some $50 million in annual member payroll and takes a one percent fee. That’s not enough to cover its costs, but in July, Opolis secured a $6.6 million investment from multiple venture capital groups that could help the service grow and become profitable soon.
If you know anything about traditional cooperatives, there are a couple of words there—such as “investors” and “funding round”—that sound more like tech bro jargon from Silicon Valley than the crunchy world of co-ops. And until 2007, you’d have been right. That was the year the Uniform Law Commission, a national nonprofit that drafts model laws states can adopt, approved the Uniform Limited Cooperative Association Act (ULCAA), which, when ratified by a state, allows for the creation of Limited Cooperative Associations (LCAs). LCAs aim to solve two problems endemic to traditional co-ops: their inflexibility and their lack of access to funding, both of which have long kept co-ops from competing with for-profit companies.
“Traditionally, cooperative law has been like a straitjacket,” says Nathan Schneider, an assistant professor of media studies at the University of Colorado Boulder who researches democratic ownership models (and is a member of Opolis to better understand how it works). For decades, state statutes across the country have helped limit co-ops to specific industries to solve specific problems, he says, such as how electric co-ops brought power to underserved rural communities in Colorado in the 1930s. Those statutes also limited voting rights—which are fundamental to the co-op model—to members who use the co-op’s services, which made it difficult to attract investors who’d want a say in how things are run. But with an LCA, it doesn’t matter what business a co-op conducts or who its stakeholders are. This is what has allowed Opolis to have members from a variety of industries, and it’s what will allow it to bring in outside backers.
Only nine states and Washington, D.C., have adopted some form of the ULCAA, but Colorado, which approved its version of the law in 2011, has emerged as a leader, says Jason Wiener, founding partner of Jason Wiener P.C., a Boulder-based law firm specializing in co-op law, alternative ownership, and alternative financing. The state made some small, beneficial tweaks to the ULCAA, but perhaps the biggest reason Colorado’s the front-runner is simply because it has embraced LCAs. “In almost every other state in which we’ve filed for an LCA,” Wiener says, “not only is there no form [to fill out], but the secretary of state has little to no idea what these things are.” In Colorado, you can create an LCA online on the secretary of state website in minutes for a $50 filing fee.
That ease of use is enticing idealistic entrepreneurs to organize in the Centennial State even if they do business elsewhere, in the same way Delaware’s favorable laws have attracted limited liability corporations, another legal entity that came out of the Uniform Law Commission. There’s LoCo Las Vegas, a Nevada food delivery co-op; Boulder’s Collab. Land, a user-management tool for decentralized autonomous organizations (more on these later); and Savvy Cooperative, a national patient-owned platform based in New York City where members sell their input to medical companies designing new products.
Savvy is the first LCA known to receive venture capital investment, and Wiener’s firm assisted the deal. He believes that while investments in LCAs may not generate the kinds of returns you’d see by investing in a successful startup, they can be more sustainable because the returns must come from income created by the co-op, not by selling stock, whose value is driven as much by Wall Street speculation as it is by performance.
The LCA model is not without its critics; some say allowing investors voting rights amounts to a power grab. But Wiener says there are guardrails in place, including that investors can never have a majority of the voting power of an LCA and that the majority of profit distributions must go to members. In fact, in the handful of venture capital investments that his firm has worked on for LCAs, the investors weren’t granted any voting rights at all, despite being able to receive them based on the law. But LCAs are about so much more than competing against startups for funding, Paller says. They’re about innovating in ways startups can’t.
Enter the other major component of Opolis’ quest to change how we work: decentralized autonomous organizations (DAOs). Where LCAs are a new legal structure for co-ops, think of DAOs as a system of governance. Instead of paper contracts, board meetings, membership rolls, accounting departments, and other bureaucratic systems of management, DAOs use a blockchain—the technology behind cryptocurrencies—to automate most, if not all, of the management and decision-making of an organization. That could mean the operation has no executive board and instead operates by majority vote, a logistical impossibility without blockchain’s ability to simply, securely, and, perhaps most importantly, publicly track the status and votes of thousands, or even tens of thousands, of members. Or it could mean members don’t have to decide at all and instead code the smart contracts that govern their DAO to execute certain actions automatically. So if a DAO buys and sells cryptocurrencies, for example, it could automatically purchase new crypto coins when prices are low, sell them when the market is high, and distribute any profits to its members.
The catch is that DAOs are not recognized by Colorado law, meaning they default to being general partnerships where each member is responsible for all of the partnership’s debts, liabilities, and assets. That means that if your DAO goes bankrupt through no fault of your own, you’re still on the hook for everything. Because the ULCAA doesn’t stipulate what kind of management an LCA must use, however, DAOs can organize (the cooperative equivalent of incorporating) as LCAs to gain limited liability protection for their members while still being able to experiment with novel forms of digital governance and profit sharing.
This is why it took Paller years to fully understand the potential of DAOs, smart contracts, and blockchains. Sure, the technologies and the legalese surrounding them are complicated, but the implications are even more so. Not only does the level of automation that DAOs provide mean you can potentially scale a business rapidly because there is less need for oversight and overhead, but it also means you can create new ways to align people’s self-interests with the good of the collective.
For instance, DAOs use tokens, basically proprietary crypto coins, to give members voting rights and to allocate assets. Where a traditional cooperative typically distributes profits based on how much each member uses its services (for example, the more gear you buy from REI, the bigger your yearly dividend), if it becomes profitable, Opolis will distribute its returns based on how many of its $Work tokens its members own. And they don’t just get tokens for using its services: Tokens are given to investors and members who contribute to the success of Opolis in various ways, from referring new members to working directly for the LCA as coders or membership managers. So just like stock options encourage employees to bust their butts to make their startups succeed, $Work tokens will give bigger rewards to members who work hard to ensure Opolis succeeds.
There are, however, concerns about what tokens mean for democratic governance, a core tenant of co-ops. Cooperatives usually operate on a one-member, one-vote model. Not only is that not the case for the majority of DAOs, where voting power is based on token ownership, but a survey of 10 major DAOs by ChainAnalysis, a blockchain data platform, also found that less than one percent of token owners held 90 percent of the voting power at the time. The automation allowed by DAOs is another double-edged sword: Without a central decision-making body, DAOs can be paralyzed by indecision during a crisis like a hack or when a member with a large voting share misbehaves.
Opolis isn’t nearly that automated. “We have a core team making decisions [because] we’re talking about highly sensitive data, compliance standards, and risk management, which has to be rather central,” says Paller, Opolis’ chief steward (a title equivalent to a corporation’s CEO). “There isn’t a proven template that people are using [to merge LCAs and DAOs],” he says, but he thinks Opolis could be it.
While Kholostenko is no longer an Opolis member after taking a full-time position in the blockchain-focused investment arm of a San Francisco–based bank in December, she’s still thankful for what the membership provided her. “I am a realization of the crypto dream,” Kholostenko says, but she wasn’t truly part of the American financial system until Opolis. “There are all these things that you are basically excluded from…like workers’ compensation. I never dreamed I would be eligible for something like that.”
That’s exactly why Paller wants to help change that system. While it might take some persuading today, if he’s right about the shifting values of young workers, Opolis won’t have to persuade them to jump out of the boat in the future. They’ll do it on their own. All Opolis has to do is be there to help them swim. “It’s not just some service that you sign up for. It’s more than that. It’s a community of communities,” he says. “Why not band together to protect this future, this life that we’ve chosen, because it’s too bloody hard to do it on your own.”