The Communist Startup

Is there life outside of (Venture) Capitalism?

In Western media through the decades, Communism has been consistently been portrayed negatively. Usually, extremely negatively, as a great source of evil and suffering. Nevertheless, anyone who has read anything on the topic cannot help but come away… curious. There are so many interesting and powerful ideas in Das Kapital and The Communist Manifesto alone.

“The fundamental ideas of Communism are by no means impracticable, and would, if realized, add immeasurably to the well-being of mankind.” — Conditions For The Success of Communism, Bertrand Russell

So let’s indulge ourselves and imagine ourselves running a Communist Startup, because why not!

What is Communism, really?

To really find the motivation for inventing a new type of social order, you have to read Das Kapital, the extremely detailed and academic textbook by Karl Marx. I’ll spare you the 2,000 pages. It’s basically a review of the existing Capitalist system in place in 19th century Europe, particularly focusing on the reality for the working class in England in the toil of the Industrial Revolution.

Library of Congress, Washington, D.C. (LC-DIG-nclc-01581)

It’s absolutely miserable. Most people would have no idea what conditions were like just over a hundred years ago in England. Everything we would associate with third world poverty and suffering, except maybe worse. Unimaginable inequality and social injustice.

“In handicrafts and manufacture, the workman makes use of a tool, in the factory, the machine makes use of him.” — Das Kapital, Karl Marx

“Of the witnesses that Commissioner White examined in 1863, 270 were under 18, 50 under 10, 10 only 8, and 5 only 6 years old. A range of the working-day from 12 to 14 or 15 hours, night-labour, irregular meal-times, meals for the most part taken in the very workrooms that are pestilent with phosphorus.” — Das Kapital, Karl Marx

“Undoubtedly , farm-horses in England, being a valuable property, are better fed than English peasants.” — Das Kapital, Karl Marx

Basic principles of Communism

After the complete damning of the Industrial Revolution and Capitalism, Karl Marx and Friedrich Engels set out to define the solution. The Communist Manifesto was born in 1848.

It’s pretty dramatic. Less science than Das Kapital, more vitriol than The Old Testament. They didn’t settle for better benefits and a free snack bar. They kind of jumped the shark on this one. There are many flavors that emerged from the original form named Marxism, mostly because Marx was so vague and academic in his definitions, leaving a lot to the imagination. Guys like Stalin and Mao had plenty of imagination, unfortunately.

By Иван Васильевич Симаков / Ivan Vasilyevich Simakov (1877–1925)— Российская государственная библиотека, Public Domain, https://commons.wikimedia.org/w/index.php?curid=4771259

Revolution of the workers

So rather than settling for arguing over legislation, the plan is to kick things off with a whole-hog revolution. Pitchforks and torches on the streets, that kind of thing. It would start in Germany then spread across the world. German socialism didn’t work out, as we know, perhaps tragically so. In many Western countries such as England, the socialists were in some regards too successful early on, gaining a legitimate role in parliament and government, and therefore settled the matter, putting down their pitchforks. This is the birth of socialism and the “left” side of politics, still prevalent across the world.

“Let the ruling classes tremble at a Communistic revolution.
The proletarians have nothing to lose but their chains.
They have a world to win.” — The Communist Manifesto, Karl Marx

Technological disruption

The 1800s had introduced electricity and railroads, which made it possible to communicate in real-time across large countries. It was believed this would change everything about how the government and the economy worked, eliminating the need for regional sovereignty, uniting entire nations under the control of the Communist Party.

“The Bolsheviks are industrialists in all their aims; they love everything in modern industry except the excessive rewards of the capitalists.” — Communism and The Soviet Consitution, Bertrand Russell

Centralized planning

The political upheaval and industrial revolution really got smart people thinking about new economic paradigms. One school was that of central planning, directly opposite to free-market capitalism. The idea was that surely if you put the smartest numbers guys in a room, they could calculate how much wool, steel, bread, and houses were needed by the country. China still has its 10-year plan, although now it’s less bread and more A.I. and global infrastructure.

“Bolsheviks: they are neither angels to be worshipped nor devils to be exterminated, but merely bold and able men attempting with great skill an almost impossible task.” — International Policy, Bertran Russell

No private ownership

Rather than argue over pay scales and taxes with capitalists, you just eliminate private ownership. Harsh. The state owns all and provides for all. Jobs are assigned to people based on skills. Yay, no more awkward interviews, amirite?

“You are horrified at our intending to do away with private property. But in your existing society, private property is already done away with for nine-tenths of the population; its existence for the few is solely due to its non-existence in the hands of those nine-tenths.” — The Communist Manifesto, Karl Marx

No profits

Since there is no ownership besides the state, industry no longer needs to generate profit. Surplus is considered a waste. This is at the heart of the Capitalist crisis, as there the aim for the owner is always to generate “surplus value”, i.e. pay people as little as possible while using their labor to generate maximum revenue, and then pocket that difference. This kills supply and demand as market drivers, too. Bakers just make bread for the state, that distributes it to the people, no money need be exchanged.

“From each according to his ability, to each according to his needs.” — Karl Marx

No religion

Yeah, it starts getting a bit wild here. Perhaps the link with church and state was too close, so the church went out with all other major institutions. According to Bertrand Russell, in many ways Communism is a religion, it is certainly not practiced as a science. It is largely based on dogmatic beliefs, perpetuated in schools from birth, which have led to much of the misery in Communist nations.

“Christian Socialism is but the holy, water with which the priest consecrates the heart-burnings of the aristocrat.” — The Communist Manifesto, Karl Marx

Leadership by committee

On paper, there wasn’t supposed to be a dictator like Lenin, Stalin, or Mao. It was supposed to be a reluctant committee of humble civil servants that served as admin to the people. I guess when the state owned all, humans being humans, they started dipping into the honey pot.

“The man who works on a railway ought to have a voice in the government of the railway, just as much as the man who works in a state has a right to a voice in the management of his state. The concentration of business initiative in the hands of the employers is a great evil, and robs the employees of their legitimate share of interest in the larger problems of their trade.” — Pitfalls in Socialism, Bertrand Russell

The Communist Startup

So again, how might we run a startup with such principles? Is there anything we can use here in today’s Capitalist world?

By Boris Kustodiev — Tretyakov Gallery, Public Domain, https://commons.wikimedia.org/w/index.php?curid=3219877

Start a Revolution

Most companies don’t really start with torches and bloodshed. Yet there is a tangible sense of us vs. them. The little guy vs. the big dog. The new school vs. the establishment. The startup vs. the institutions.

The founder sets the tone for how much of the revolution mentality stays with the company beyond the romance of the coffee shop phase. Usually, it is embodied in the purpose of the company, if there is any purpose. Most don’t. Most startups just create tech they can sell and make lots of money because money is considered an inherent good in Capitalism.

“WORKING MEN OF ALL COUNTRIES, UNITE!” — Karl Marx

Epic. Revolutionary!

Ownership for All

No private ownership is kind of the same as ownership for all. If the state exists for the workers, and the state owns all, then in some ways the workers own the state. In reality, not at all. The party owns all and is run by an elite lead by the chairman. Their life is ironically very close to that of the capitalist they threw out in the revolution!

Startups can be like that, too. The party (startup) is started by the chairman (founder). He recruits early party members (founding team) to establish the culture. The Employee Stock Options Plan is created and importantly extended to ALL employees. Yes, all.

This instills a tangible and authentic sense of ownership for every single employee. In your brain, it switches from creating value for “the board” or “investors” who you’ve never met, to you and the people around you. When the company grows and valuations are established through fundraising, that little slices keep growing. It’s no longer just a job. The rising tide floats all ships.

Flat Self-Organisation

The dualistic nature of Communist parties presents two cases to examine. On paper, the faceless committees don’t really make sense for startups. In reality, most parties are dominated by the chairman. The founder.

Let’s be real, the founder(s) will have benefits above the workers, namely more equity, and the workers accept it. The founder was there on the barricades before it was cool. They believed the party into existence. They took the first bullets. Of course, you don’t want to go full Stalin…

Meanwhile, committees of experts can be preferable to traditional hierarchies. Allowing for subject-matter-experts to self-organize and direct their own work can be far more rewarding and functional. Nobody really enjoys quarterly KPI reviews with a boss who doesn’t seem to do anything. Do away with the boss, and allow for self-direction, with the invisible hand of the founder coming in when required.

“If you can’t feed a team with two pizzas, it’s too large” — Jeff Bezos

The 5-Week Plan

Centralized planning does have a place in startups, especially if we consider the rather flat reporting structure of real-life communist countries. The chairman lays down the agenda. If he doesn’t like it, it doesn’t fly. So goes it for the founder, too.

The real benefit of communist decision making is that it can be visionary, as opposed to the reactionary tools given to most capitalist nations. Markets are always efficient, but rarely optimal. Look at China. You can decide to do big things, and turn the ship quickly no matter how big and heavy. Startups do pivots.

Of course, it would be absurd to start with 5-year plans. Even 5-months seems much. Perhaps it’s the 5-week plan! Certainly so much happens in a week that #startuplife feels like some sort of accelerated form of reality. So you plan resourcing, product roadmap, budgets, and all for the next 5-weeks. That works!

Classless society

China had the Zhongshan suit and the Mao cap. Why? Well, largely for the same reason as some schools still enforce school uniforms. It’s a way to level the playing field. Rich and poor dress the same. No race, no religion.

In practice, there are two ways to implement this in any company. First: no offices. Physical separation of “management” or “ownership” is a daily reminder of the separation of the classes. Some are better than others. Conversely, a single plan with everyone together shows unity and equality, that breeds trust and a casual workplace atmosphere critical to culture building.

Lots of swag. Laptop stickers. Hoodies. Socks. T-shirts. It all reinforces the message: we are all the same. We identify as equals.

Culture as religion

Culture is everything in startups. The spirit of Communism as the worker’s party does make sense to me. A great startup should feel like a company by the team for the team. Almost cult-like, just stopping short of the robes and incest part.

Ironically, while you want to be data-driven, by definition startups are trying to do something novel. It might be more hunch, less correlation, until you can prove it. So a certain degree of dogmatic belief can go a long way, until the data proves your hunch, and the investors congratulate themselves for picking another winner.

Without being too controversial here, I think religion plays no part in startups. Muslims, Jews, and atheists should be able to work alongside each other. People can do what they want outside the office, but religion is a non-issue at work.

The Open Economy

Several principles of the communist economy have emerged in recent decades in the form of open-source software and hardware, where source code and thus the means of producing software is held in common, and freely accessible to everyone; and to the processes of peer production where collaborative work processes produce freely available software that does not rely on monetary valuation. Michel Bauwens juxtaposes open source and peer production with “market production”.

The Gig Economy has expanded the distribution of production within the reach of the knowledge worker: Open APIs, App Stores, Youtube, Social Media, and Gig Platforms. This completes the Marxist vision, allowing those with access to means and distribution to control their own lives fully without direct ownership. You can work online for a few hours from Bali, and spend the rest of the day in the leisure of your choosing. Ironically, the young influencers we scoff at for living in a millennial bubble may have actually figured it out and escaped the rat race we were born into.

Ray Kurzweil posits that the goals of Communism will be realized by advanced technological developments in the 21st century, where the intersection of low manufacturing costs, material abundance and open-source design philosophies will enable the realization of the Marxist maxim “from each according to his ability, to each according to his needs”.

To the barricades, comrades!

Aki Ranin is the founder of two startups, based in Singapore. Healthzilla is a health-tech company and creator of the Healthzilla health analytics app (iOS) (Android). Bambu is a Fintech company that provides digital wealth solutions for financial services companies.

Thinks about the future a lot. Founder of two startups. Lives in Singapore.

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