creating a company without employees

8/12/2019 Creating a Company Without Employees

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Creating a Company Without

Employees: Philip Rosedale on Coffee

and Power and the Future ofEntrepreneurship

Posted: 03/08/2013 12:42 pm

In this blog, I'm continuing my conversation with Philip Rosedale, founder of Second

Life -- and his newest company Coffee and Power. Here, Philip explores his belief in the

new way of employment, the new virtual company and what he learned in the process of

creating new ways of doing business and finding work.

In my next interview with Philip, he gave me a glimpse of his newest startup, calledCoffee and Power, as well as his vision of the future of companies. A future whereworkers were far more independent and far more efficient. I asked him to talk about theorigin of Coffee and Power, the origin of its name and where he thought this latestventure would take him.

"When my co-founder Ryan Downe and I started this new company, we wanted toexplore some of these ideas around how people worked together and how to make thatmore efficient. We hung out for a year or so in coffee shops. We told ourselves that wewere not going to get an office, that we were going to operate completely virtually,through a series of face-to-face interactions in transient locations like coffee shops, nowco-working locations," Rosedale said. "One day, Ryan turned to me and said, 'All weneed to do this is coffee and power,' and the power meant a place to plug in your laptop.We were so struck by that name that it ultimately became the name of the whole thing,"he said.

"The vision of Coffee and Power really is to build a set of tools that allows people towork together more effectively using the same sort of techniques that we pioneeredinside Second Life. Those are things like getting people to be granular and transparentabout what their work achievements are -- even if they're telling them to people whoaren't their peers in their organization but are people whom they may someday work

with," he said.

Rosedale had been inspired by work done in the 1930s by Nobel laureate Ronald Coase(now 102 years old), author of an influential book, The Nature of the Firm, thatcontends that market forces regulate everything. "Coase asked and answered a

provocative question back in the 1930s: 'If markets are the most effective way of doingthings, why are there companies at all?' And what he got the Nobel Prize for was hislargely correct answer, which postulates: The reason is because there's cost innegotiating with someone, in other words, transactional costs," Rosedale said. If youremove the overhead associated with those costs, and allow people themselves to pricethe work they do, and to create a system where everyone evaluates you in an open and

transparent manner, then everything changes.


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In outlining his thinking process behind Coffee and Power, and during its realization,Rosedale came up with seven essential assumptions or predictions about the future ofcompanies and the future of employment. These ideas are key to the future of what Icall an "exponential organization":

1. Work will consist of projects broken down into pieces bid on by individuals:"Ifyou have to argue about salary or if you have to argue about the price of building amarketing program, it becomes inefficient because we're wasting time arguing and notworking together," Rosedale said. "What Ronald Coase said was that, economically andmathematically, the reason companies exist is because there are a lot of negotiatingcosts associated with working together. If the technology changes to make it easier fornegotiating and knowing what the work product is, and knowing how people are

performing, and it becomes easier to do things in smaller and smaller chunks and withmore granularity and with less hassle, the nature of firms and the structure of firms will

probably change," he said. "Obviously, they will go down in size and the relationshipswill become much more transactional. So," Rosedale said, "my belief became that the

future of work will be some sort of a situation in which many more people willcontribute to projects in much smaller chunks," he said.

2. People will no longer be tied to one company."People won't necessarily think ofthemselves as being employed by a single company," Rosedale said. "They won'tnecessarily work at one company for 10 years; they might work at it for 10 months oreven 10 days. They will be profoundly transparent with everybody else about whatthey're doing. The feedback gained from everyone will be a primary way of measuringthem or even paying them for what they do. The companies of the future will be theseaggregations of people who work together not necessarily because they're working forone person or on one project, but because they're somehow useful to each other at a highlevel."

3. Workers will set the price for the work they do."The first thing we did when westarted Coffee and Power was, rather than hiring anybody, we made a big Googlespreadsheet and we set it public," Rosedale said. "We said on each line of thespreadsheet what we needed to get done -- find a lawyer or make a logo or write the firstlittle chunk of code -- if anybody out there could help us with this they could put theirname next to it, get it done and keep us updated. Then when something got done, wesent them money via PayPal. What matters most isn't that you can set the price. No, it'sthe fact that you're setting the price in an environment in which that spreadsheet is

public. I'm giving you the pen. You put whatever you want on the wall, we'll pay you,"he said.

"It worked great. Having people set their own prices on things actually works fine,provided it's done transparently."

4. The savings in costs and time can be extraordinary by opening it to the crowd. "We created Coffee and Power in about nine months," Rosedale said, "at a cost below$200,000. Five years ago if you had built a typical Web tool type of thing, you wouldhave spent $3 million doing that. So this was a lot cheaper -- and a lot better. Most ofthe work was done by about 100 people. If you graph their contributions, it was the

classic Internet long tail where there were like five people who were more or lessmaking full salaries from us, from all over the world," he said.


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5. The team evaluates the team. Old-style management is irrelevant.A huge amountof energy and effort go into human resources overhead, which is inefficient, as well as

politicizing (especially when it comes to evaluations and bonuses). "Think howunbelievably amazing your company is culturally if you don't have to evaluate peopleusing the management team," Rosedale said. "Instead, you get people to share

information about what they're doing, and then to recognize each other for theirachievements in a way that creates a kind of a modern version of the rsum," he said."It's a kind of a feedback loop around progress that encourages people to keep going,that better values their contributions to each other and then causes them -- and this is themagic of Coffee and Power -- to more effectively engage serendipitously with peoplewho may give them their next job."

6. Collective management will build companies -- not top-down decision-making."That idea of using the crowd or using collective judgment or wisdom was a matter ofnecessity," Rosedale said. "My fascination with the area of collective management andmy desire to help people work together better and faster, originated from my feeling as

an engineer that Second Life was going to be complicated to manage in a really top-down, centralized fashion," he said. "I was struck by the thought that we're reaching a

point where the scale and complexity of the things we're building exceeds our capabilityas individuals to do planning around them," he said.

"Even I, with all my passion and reasonable intelligence around this subject, I don'tthink I'm smart enough to just tell everybody what to do," Rosedale said. "From thevery beginning, I said I wanted to do something a little different. I wanted to be a lotmore loosely joined in how I manage this as a company, or as a technical leader," hesaid. "I want to try having a lot more transparency, a higher degree of trust -- as opposedto just upfront planning. I wanted to figure out how to get us all to work together, tocollectively manage each other," he said.

7. Future companies will be smaller and more nimble."The reason that we builtthings as big top-down companies in the past was because the difficulty of negotiatingwith people around their contributions was actually very high," Rosedale said. "Astechnology changes, and the cost of those interactions grows, it follows naturally thatcompanies are going to become smaller, faster and work together in ways that frankly, Ithink, won't look much like the companies we have today," he said. "I don't think thecompanies we will have in 10 years will be structured in a way that will even allow youreye to draw analogies with the companies we have today. When we talk about the

Google of the future, I just don't even think the words we're using today will fit verywell because the mechanism will be so different."

In my next blog, I'm going to continue my talk with Philip Rosedale of Second Lifeand Coffee & Power, who explains the "secret sauce" of Silicon Valley - and why it'ssuch a hotbed of entrepreneurship.

NOTE:Over the next year, I'm embarking on a BOLD mission -- to speak to top CEOs

and entrepreneurs to find out their secrets to success. My last book Abundance, which

hit No. 1 on Amazon, No. 2 on the New York Times and was at the top of Bill Gates'

personal reading list, shows us the technologies that empower us to create a world of

Abundance over the next 20 to 30 years. BOLD, my next book, will provide you withtools you can use to make your dreams come true and help you solve the world's grand


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challenges to create a world of Abundance. I'm going to write this book and share it

with you every week through a series of blog posts. Each step of the way, I'll ask for

yourinput and feedback.Top contributors will be credited within the book as a special

"thank you," and all contributors will be recognized on the forthcoming BOLD book

website.To ensure you never miss a message, sign up for my newsletter here.

7 Predictions For The Future Of WorkWe might not have holographic conference calls or teleporting commutes (yet), but corporate anthropology can give us a realist ic glimpse ofour futures in the workplace.

By Dana Ardi, Ph.D.8 COMMENTSEMAIL

Print

Everything you thought you knew about the workplace is already outdated.

Gone are the days when decisions were made from the top down and when all anyone was expected to do was simply their job. As a

Corporate Anthropologist, I study the cultures of organizations--how they evolve and intersect with whats happening right now, and how thepeople in them influence and shape their communities.

The talent pool will grow

As the use of robotics and automation technology increase, humans will no longer be asked to perform rote tasks. That means the nature ofjobs will change. Greater connectivity means we will have greater access to talent literally all over the planet.

A new form of labor pool and market where individuals, project teams, or even entrepreneurial companies (that are really just teams ofteams) from all over the world will bid on high-value tasks and opportunities. This new dynamic will not only increase the efficiency oforganizations, it will also change the notion of what managing means. It will also create competitive pressures for organiz ations toembrace global languages and cultural awareness as a way to appeal to the most talented workers.

Collaboration will be the norm

The type of company--and people--that will thrive in this new environment will embrace collaboration and teamwork. I call them the Betas.

The old-fashioned Alpha way of doing business--top-down, command-and-control--will no longer be viable.

As Alpha methods die out, employers will be looking for innovators, technologists, and big thinkers. Data managers will remain in highdemand as will people with the skills to manage a diverse workforce.

A rise in limited contracts

As we move into a craftsman and service economy, people will work for organizations for two to four years with incentives built in tocompensate them for the level of impact they bring to the organization.

Specialization will be even more essential

The flatter and more networked the workplace becomes, the more essential it will be for people to continually build their skillset andmaintain a level of specialization that enables them to stand out in a crowd of talent.

Social networks become a way to partnerWorkers at all levels will need to market themselves through their social networks, forming partnerships and gaining influence by strikingdeals based on their deep skill specialization.

Everyone will become an entrepreneur

People will work for and with many clients and partners simultaneously. At the same time, individuals will have greater control over the kindof work they tackle and how they are compensated.

Individual contribution, not pay grade, will be rewarded

With a more peer-to-peer network in place, individuals stand to reap greater rewards than in the more inefficient hierarchical systems of thepast where those at the top of the pyramid paid themselves first. Rewards will be tied to the value of an individuals contribution and not toany artificial title.

The future of work will be different than it is today and, as the old adage says, fortune favors the prepared.
https://plus.google.com/u/0/102564912330648182355/posts/URFYsjeRUpZhttps://plus.google.com/u/0/102564912330648182355/posts/URFYsjeRUpZhttps://plus.google.com/u/0/102564912330648182355/posts/URFYsjeRUpZhttp://www.diamandis.com/http://www.diamandis.com/http://www.diamandis.com/http://www.fastcompany.com/3026345/leadership-now/7-predictions-for-the-future-of-work#commentshttp://www.fastcompany.com/3026345/leadership-now/7-predictions-for-the-future-of-work#commentshttp://www.fastcompany.com/3026345/leadership-now/7-predictions-for-the-future-of-workhttp://www.fastcompany.com/3026345/leadership-now/7-predictions-for-the-future-of-workhttp://www.fastcompany.com/3026345/leadership-now/7-predictions-for-the-future-of-workhttp://www.fastcompany.com/3026345/leadership-now/7-predictions-for-the-future-of-workhttp://www.fastcompany.com/3026345/leadership-now/7-predictions-for-the-future-of-workhttp://www.fastcompany.com/3026345/leadership-now/7-predictions-for-the-future-of-work#commentshttp://www.diamandis.com/https://plus.google.com/u/0/102564912330648182355/posts/URFYsjeRUpZ


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--Dana Ardi, Ph.D.is the founder of Corporate Anthropology Advisorsand the author of The Fall of the Alphas: The New Beta Way toConnect, Collaborate, Influence--And Lead.
http://www.corporateanthropologyadvisors.com/http://www.corporateanthropologyadvisors.com/http://www.corporateanthropologyadvisors.com/http://www.corporateanthropologyadvisors.com/

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