18th Jun 2024 Gemini 1.5 Pro
Derek Razo's path to steward ownership began with his experiences in the Berkeley Student Co-ops, a democratically managed housing network. This experience provided him with a tangible understanding of alternative economic systems and sparked his interest in exploring the intersection of technology, capital, and alternative economic models.
This interest led him to Inspiral, a network of social entrepreneurs focused on creating tools for group collaboration and shared decision-making. Working on projects like Lumio and CoBudget, Derek gained firsthand experience with the challenges of aligning organizations with capital while maintaining social and environmental goals. Through these experiences, he recognized the limitations of existing economic structures and the need for new models that prioritize stewardship and shared ownership.
"What we actually need is to go back to the kind of fundament and reassess how we build institutions and start from the ground up and start building new institutions that actually have the DNA of the economy that we want to be a part of."
Derek argues that existing economic structures are fundamentally misaligned with ecological and social harmony. Traditional models of ownership, whether in the form of corporations, co-ops, or nonprofits, ultimately perpetuate a system that prioritizes profit maximization over the well-being of people and the planet.
He advocates for a shift from ownership to stewardship, where assets are managed in a way that benefits all stakeholders, including employees, communities, and the environment. This approach requires rethinking legal structures, financial incentives, and our understanding of what constitutes success.
"These are kind of three broad buckets. And we, over the last few years, have been doing both legal R&D to just, you know, the first question you always have to answer is, How? Like, if you believe everything is sort of fundamentally, if the fundament is rotten and you need to build a new one, well, how do you build a better system on top of a rotten framework? And so you have to go very deep to figure out, you know, answer questions about fiduciary duty and financial return and, like, culture of investment and all these other things."
Purpose Foundation, co-founded by Derek, aims to reprogram who benefits from and controls assets in the economy. They work with community leaders and businesses to transition assets into steward-owned models, primarily focusing on community ownership, employee ownership, and purpose-driven ownership.
Recognizing that traditional capital structures are ill-equipped to support these new models, Purpose Foundation assists organizations in developing innovative financing vehicles and legal frameworks that align with their values and goals.
"So, the process, basically a business owner comes to us and sees us online usually and says, hey, I want to exit. I've got this business. I've got these employees. I want to get a fair deal, but I don't want to screw them over by selling to a private equity fund. What's this employee ownership thing?"
Perpetual Purpose Trusts (PPTs) are emerging as a powerful tool for establishing long-term, purpose-driven ownership structures. While historically used for preserving family assets like art collections, PPTs are being adapted to facilitate community ownership, employee ownership, and mission-driven ownership in various sectors.
These trusts provide a flexible and customizable framework for defining an asset's purpose, outlining governance structures, and ensuring equitable benefit sharing among stakeholders. They offer legal and financial protections for both communities and investors, fostering greater trust and collaboration.
"So really simply, the way that I like to explain the purpose trust is the simplest version of it is it's an agreement. So it's an agreement between the different parties to a transaction about the terms of how an asset is going to be, what the reason an asset exists is, so its purpose, how decisions are going to be made into the future in accordance with that purpose, and how to make sure that everyone is legally and financially protected, both from a liability sense and also from getting a fair deal."
Derek acknowledges the potential of Web3 technologies, particularly blockchain and DAOs, to revolutionize governance and ownership models. He sees the crypto space as a catalyst for expanding our imagination about decentralized economic systems and enabling new forms of collaborative value creation.
However, he stresses the importance of moving beyond superficial tweaks to existing models and embracing truly innovative approaches to governance that prioritize equitable distribution of resources and decision-making power. He emphasizes the need for bolder experimentation and a deeper integration of ecological and social considerations within Web3 projects.
"And I think the thing that sits counter to Ethereum in my mind in terms of a scaled economic meta-coordination system is the stock market. The stock market, I don't think, does a good job of making its actors more resilient and more collaborative and more adaptive."
Airtable