I’ve recently started re-reading an old book that seems appropriate to the ideals of Upstarta.

It is ‘Small Is Beautiful’ by E.F.Schumacher. Subtitled ‘A study of economics as if people mattered’, this book was written in 1973 and seems even more appropriate given the recent financial state of the world. If Schumacher was alive he’d be pointing to this book and saying ‘I told you so!’

Schumacher covers many topics from conservation, macro, micro and Buddhist economics through to forms of ownership and government, but of most interest to startups would be the final chapters. In the last chapter he takes an in depth look at a business started in 1951 called the Scott Bader Commonwealth. The rules for this business were as follows (edited for brevity):

First: The firm shall remain of limited size. No greater than 350 people or so. When it grew beyond this due to demand, new independent businesses were to be created.

Second: There was to be no more than a 1:7 ratio between the lowest and highest salaries in the organisation.

Third: All members of the organisation are to be co-partners. They cannot be dismissed other than for gross personal misconduct.

Fourth: The board of directors is full accountable to the Commonwealth. i.e. The employees have say in how the business is run.

Fifth: 40% of profit goes to the commonwealth, 60% to running the business and taxation. Of the Commonwealth’s profits, half goes to the workers and half to a designated charity outside the organisation.

It was predicted that this arrangement could not work. It did very well, at least until the time of the book’s publication.

I don’t suggest that one should take on this model in a startup but it is worth thinking about what unconventional structures may have to benefit the business, it’s workers and the world.

If you happen to be in a secondhand bookstore this old tome is worth picking up.