Draft:Loconomics

Loconomics Cooperative offered web and mobile applications for booking local services, e.g. housecleaning, adult/child care, pet care, massage therapy, tutoring, and many more. Local service professionals who connected and offered their services on the platform were all member-owners, a novel business model at the time that sparked a movement called Platform Cooperativism. Founded by Joshua Danielson in 2014 as the progeny of Danielson’s prior startup, the concept uniquely enabled the local providers to not only offer their services while having direct oversight into the management, development and operations of the platform, but also as member-owners were entitled to profits. Loconomics Cooperative operated from June 2014 through December 2019.

Concept
Danielson, a graduate from IESE Business School in Barcelona, conceived of the platform while in school, as a socio-economic means to distribute wealth directly into the community. He wanted to remove the middle merchant service and commission fees that many platforms, such as TaskRabbit and Handy charged at the time. Rather than create a platform solely geared for asset accumulation for the creators and investors, the cooperative platform’s egalitarian model would put ownership and control in the hands of the local providers.

The first iteration of the platform was Loconomics, established in 2011 with co-founder Fernando Gago and converted to a Benefit Corporation in 2012, which was then honed and established into Loconomics Cooperative in 2014. In an interview with the San Francisco Chronicle published in May 2014, Danielson was quoted as saying "A platform helping with self-employment shouldn't be owned by the 1 percent, We're at a crossroads where technology exists to help the common worker break free from traditional employment models. I felt it was important it be owned by the workers."

Business model
The member-owner cooperative business model for local services was first initiated by Danielson with the help of Janelle Orsi of the Sustainable Economies Law Center and filed restated articles of incorporation on June 20, 2014 [citation] as the first platform cooperative in the United States, and later helped spark the movement called Platform Cooperativism as one of the first examples with Danielson speaking at conferences in 2015 and 2016. Loconomics Cooperative was intended to give service professionals the tools, community, and customers for economic empowerment, redistributing wealth to the actual service providers thereby enriching lives and communities directly without increasing wealth inequality.

Successes
Loconomics Cooperative received generous grants from Rainbow Grocery Cooperative in San Francisco both in 2016 and 2018 as part of their Cooperative Grant Program

Loconomics Cooperative founder Joshua Danielson, along with volunteers Matt Schaefer and Denise Cheng, took part in the Institute for the Future’s Positive Platforms Fellowship Program in 2017. The fellowship, along with an introduction from Nathan Schneider, helped Loconomics to secure a contract to have the platform be used by students as part of the California Community Colleges’ “Self-Employment Pathways in the Gig Economy” program. The program was designed to introduce cooperative platform ownership as an alternative to traditional gig economy platforms. The pilot project helped students at 24 community college campuses learn how to find work opportunities, track earnings and eventually become independent small business owners.

Both Loconomics Cooperative’s bylaws, written by Joshua Danielson and Janelle Orsi, and source code , written largely by Iago Lorenzo Salguiero with contributions by dozens of other volunteer developers, are open source under the Creative Commons license and Mozilla Public License respectively. They serve as a blueprint for governance and technology for future platform cooperatives.

Challenges and closure
Danielson was quoted in 2021 discussing the challenges of organizing local service professionals saying “there were tons of fans who saw the need for Loconomics as a solution to the perils of the gig economy — but it was not the workers, the service professionals. I think the platform co-op movement wouldn’t have started without an example like Loconomics, and I got so many interviews and so much fanfare from it, but it needed to be the people who were actually going to use the platform. I think on paper it’s the perfect solution, but it’s a little bit more complicated for the workers who actually power the platform to understand how they benefit, which is what really matters, and it was harder to reach those people as they weren’t going to the conferences or reading whatever publications we were in.”

On funding he stated “I think the other big challenge is that the vast majority of available funding went to research. I can’t count how many things I applied to, or went to apply to grants and found that it was only for 501(c)(3)s, even though their aim was to promote co-operatives. That was really frustrating. So many researchers got funding, but there was no bucket we fit into. I did receive $30,000 from Rainbow Grocery, which was incredibly generous, $9,000 from the Institute for the Future, and a contract with California Community Colleges which brought in some great revenue. I spoke to a socially-responsible VC who told me, ‘We could help you if you had more traction’ — which is exactly why I needed the money. The Workers Lab was close to providing Loconomics a loan, but then Trump was elected, everything just turned, and when I went to apply to a grant contest they put out, some other organization was trying to do the same thing, a nonprofit that told them that they were further along than they were, was a finalist and we weren’t.”

After many years of self-funding and labor, Danielson closed Loconomics in 2019.