Mobility Factory

Case Study

Morshed Mannan:

"The Mobility Factory SCE is a European Cooperative Society that operates in the electric car sharing sector, with its primary objective being to develop an electric car sharing platform for exclusive use by its cooperative members. It is a cooperative composed of other cooperatives and an association.

Understanding the origins and legal and governance structure of TMF requires an initial focus on one of its member-cooperatives, Partago cvba. Partago is an electric car sharing enterprise that was founded in Ghent, Belgium in 2015 and now operates across Belgium.21 The current CEO, Joachim Jacob, made a beta version of the app out of frustration about the lack of parking space in his own street in Ghent and the underuse of most cars (Schuurman and Herregodts, 2017, p. 8). Evers adds that Jacob was also irritated that the car sharing market incumbent in Belgium, Optimobil Vlaanderen NV d.b.a ‘Cambio’, was not investing in client relations, innovation or digitalization. Jacob met Evers at a living lab22 to test the app with potential citizen-users like Evers and while the user-led technological innovation was modest—adding a car reservation feature— the major pivot was to become a users’ cooperative (Schuurman and Herregodts, 2017, pp. 8–9). Evers played an important role in this decision as she was a user who both believed in the merits of the idea and had previous experience as a cooperative entrepreneur. While there was initially some hesitation, the cooperative with limited liability (Coöperatieve vennootschap met beperkte aansprakelijkheid) was founded by five persons, Joachim Jacob, Rik Bellens, Lucie Evers, Patrick Claerhout and Davy De Clerq, with an authorized capital of €19,500.00, represented by 50 Class A shares and 28 Class B shares, with the nominal value of each share being €250.00. Evers, as a self-confessed, “governance hobbyist”, was central to the governance structure of the cooperative as set out in its bylaws (statuten). The Class A shares are for user-members and a user is limited to a maximum of 20 shares, while Class B shares are for supporter-members and they are required to subscribe to a minimum of 21 shares (§6, Partago bylaws). Article 6 also prohibits a person from holding both classes of share simultaneously. These shares were fully paid-up by the five founders, with Jacob holding all of the Class B shares while the other founder-members subscribed to the 50 Class A shares amongst themselves.

As per its statutes, the purpose of Partago is to contribute to a sustainable society by providing mobility solutions. To this end, it inter alia collects financial resources, stimulates the shared use of cars, develops technology and manages an electric car fleet—access to which is limited to its partner-users. A non-exhaustive list of its services include: the general maintenance, repair, rental and lease of passenger cars and light vans (<3.5 tons), the development of web portals, the management of computer facilities and computer consultancy activities, the offer and implementation of IT services, data processing, web hosting as well as the organization of conventions and trade shows (§3, Partago bylaws). This article of the statute also establishes the legal basis for Partago cvba to be a director of other companies or associations, so as to fulfill its cooperative purpose.

A relatively unique feature of Partago’s business model is that users become members (‘partners’) as a requirement to access an electric car. §9 of its bylaws requires that future members of Partago are required to abide by the same share subscription requirements mentioned in §6 of the bylaws and in the case of user-members (i.e. Class A members) in particular, they must subscribe to a minimum number of shares, as per the ‘fair use’ policy of Partago. Under this policy, new users are required to subscribe to a minimum of two Class A shares (i.e. €500), with the nominal share value being withdrawable in full or in part upon the user-partner’s exit from the cooperative after at least two years, depending on the financial circumstances of the cooperative (§13, Partago bylaws).23 The Class A members have the right to nominate at least 3 of the directors of Partago’s board and the candidate can be a member of Partago or an external person (§20, Partago bylaws). The board’s size is capped at 9 members and board members are unpaid for their services. Board decisions are made by consensus, failing which, they are made by simple majority (§21, Partago bylaws). The General Assembly, composed of both Class A and Class B members, as the most powerful organ in the cooperative determines the general policy of the cooperative and can order an audit of the cooperative (§27- 28, Partago bylaws). The bylaws of the cooperative allow members to participate in the General Assembly remotely, as electronic participation in meetings is permitted under Belgian law.24 Assembly decisions are also arrived at by consensus, failing which a simple majority is required of both Class A and Class B votes.25 Evers became the Chairman of Partago’s board but the day-to-day management of the cooperative is carried out by the CEO, with the support of 5 staff members (3.7 FTE)—including the main developer of the app, Rik Bellens (CTO).

For a user to gain access to an electric car, in addition to acquiring two Class A shares in the cooperative, they must prepay or subscribe for the use of the car, the tariff being determined by the amount of time the car is used, the battery power consumed and a fixed reservation fee (Bonne et al., 2019, p. 87). User-members are required to download the Partago application to their smartphone, which enables them to find available, fully-charged cars on a map, make reservations and unlock car doors. While Partago began operations in Ghent, it has now spread to other municipalities in Belgium, namely Beersel, Boechout, Brasschaat, Breendonk, Leuven, Lint, Mortsel and Wetteren, following the expression of interest and subscription of shares by small groups of citizens in these locations. Ghent has the vast majority of electric cars26 (41 out of 54, as of December 2019), with several municipalities only having one car till date. Partago has attempted to expand its user base by offering both companies and municipalities the opportunity to join as members, on the basis that it could help them avoid having idle company cars, while also using a more eco-friendly, communitarian option. Another important source of income has been Partago’s multi-year collaboration with WiseGRID, a project funded by the EU’s Horizon 2020 program, which among other things requires Partago to test tools (i.e., WiseEVP) for planning and controlling the charging/discharging schedule of a fleet of electric vehicles as well as sharing (non-private) data with other components of the WiseGRID system (Komninos et al., 2017, pp. 108, 116; Nofuentes et al., 2018, pp. 25–26, 28–29).27 One of the possibilities this opens up is the reversal of the usual flow of energy—from the car to local renewable energy grids and homes instead of just vice versa—as it moves around and offloads its excess electricity (Hu et al., 2016). In the long term, this creates an opportunity for an additional revenue stream for electric car sharing businesses that have their own set of ‘batteries on wheels’ (Zambrano et al., 2017, pp. 19–21, 58).

There are now some 600 members of Partago, approximately 70% of whom are usermembers. According to Evers, the majority of these user-members only subscribe to the cooperative shares as they see it as a kind of car insurance contribution and (collective) investment in the ownership of an electric car as well as a form of personal saving. In other words, membership in a cooperative is less of a priority for them than access to the vehicle. This explains why, for instance, the bylaws do not require Assemblies to have a minimum quorum, except for decisions concerning the amendment of the bylaws itself and a change in cooperative purpose (§31-33). It prevents situations where decisionmaking reaches a standstill or meetings being disbanded due to lack of quorum, while at the same time preserving the mission of the cooperative in the event of a major control transaction such as a merger. Given that each member has one vote, irrespective of the amount that they have invested in the cooperative, they can have a meaningful role in shaping the policy and direction of the cooperative, including in the removal and election of directors. As there is a risk that user-members may prioritize obtaining the lowest price for the service over the financial health of the cooperative, Evers argues that her decision to include Class B shares is imperative for maintaining “equilibrium in extreme cases” (Interview, 04.10.2019, at 38:00). This “juggling” of the interests of the “consumer” and “capital”, as Evers puts it (Lucie Evers [LE] Interview, 04.10.2019, at [43:30-44:00]), is also apparent in The Mobility Factory, a cooperative that was Evers’ brainchild.

The creation of TMF was animated by four factors that became apparent as Partago grew: (1) the revenue stream of Partago was not able to sustain the costs of developing the software,30 (2) the capacity to write code in Partago internally was limited, (3) the isolated development of software leads to wasteful duplication, which could be avoided by pooling efforts and (4) there was an opportunity to scale the business in a cooperative way and reach a larger base of European users by partnering with cooperatives in other Member States. The first factor was motivated by the fact that an electric car sharing platform does not only require a digital map that allows users to find available cars, it requires a diversity of functions from enabling users to digitally unlock doors to management tools for the cooperative to invoicing APIs toavailability in multiple languages. This contributed to the second factor, which prompted them in 2016 to collaborate with Som Mobilitat SCCL,31 a cooperative (Societat Cooperativa Catalana Limitada) that has its registered office in Mataró (Lukas Reichel [LR] Interview, 06.08.2020, at [11:00-11:30]). At the time, Som Mobilitat was primarily a community of software developers interested in sustainable but not specifically a car sharing business mobility (LR Interview, 06.08.2020, at [00:45-02:00]). Evers explains that it was a condition of their co-development (and co-ownership) of the software that Som Mobilitat focus on electric car sharing as it would only be through that practical business experience that their developers would be able to understand their work and write code (LE Interview, 04.10.2019, at [48:15-48:30]). Som Mobilitat became an electric car32 sharing cooperative, with 35 cars and some 1939 members as of August 2020 (LR Interview, 06.08.2020, at [26:30-27:15]), offering broadly similar services as Partago, but with certain distinct financing strategies.

Consumer co-ownership of businesses in the renewable energy sector is severely under-financed in Spain, with there being no dedicated state programs and subsidies for this purpose. The sums available through alternative sources—such as competition for subsidies from other cooperatives—yield sums that are unsustainable for the longterm growth of a business. For instance, Som Mobilitat received a grant of €4500 in 2017 (Diaz-Foncea and Bretos, 2019, p. 436). At the same time, to make Som Mobilitat widely accessible, the cooperative decided to keep the cost of membership low (LR Interview, 06.08.2020, at [06:30-06:45]—at €10, which is also withdrawable upon exit from the cooperative—and the tariffs to use the vehicles are significantly lower than with Partago. Aside from these sources, the cooperative also relies on obtaining financing for cars from donations, loans, reward crowdfunding campaigns, participatory securities that members can subscribe to (up to €40,000, variable interest rate of 3%) and sponsorship/ prepayment for new vehicles. As of August 2020, Som Mobilitat has raised 400,000 EUR from their members alone (LR Interview, 06.08.2020, at [12:45-13:00]). In addition, in rural areas in particular, some municipalities contribute fixed sums for the installment of cars for use of the vehicles during the day, with individual users sharing in their use during the evenings and the weekends (LR Interview, 06.08.2020, at [13:30-14:00]). As with Partago, Som Mobilitat also experienced operational losses in 2016 and 201733 and it is with these financial constraints that Partago and Som Mobilitat began codeveloping the software initially developed by Partago for their respective businesses (LR Interview, 06.08.2020, at [16:00-16:30]). While the wages of the developers appeared on their respective balance sheets, the ownership of the software was determined by ‘time banking’. This refers to the system in which persons give and receive services in exchange for units that are denominated in time (e.g. 1 unit = 1 hour) (Seyfang, 2004, p. 62) rather than fiat currency. In this particular instance, as Evers explains, the units were used to indicate “symbolic shares in ownership” (Interview, 04.10.2019 at [50:15]) of the code base, reflecting each cooperative’s respective contribution to its development. However, while the cooperatives were able to mutually benefit from the use of the software, this process generated tension about the fair value of—and payment for—this intellectual property. Initially, there was discussion about making the software open source or using a license that would only allow cooperatives to use the software. However, Partago insisted that all of the work done to develop the software should be properly remunerated, even if it was sometime in the future (LR Interview, 06.08.2020, at [20:00-21:00]). Establishing a secondary cooperative and having this cooperative become the legal owner of the software would ensure that any cooperative interested in using the platform was adequately committed to its success, while their membership fees would go some way towards remunerating the accumulated hours of work in the timebank.

Thus, setting up TMF would not only enable operational scale and the sharing of costs, it also provides a governance structure to ameliorate tensions between collaborating cooperatives, who each have their own interests. As it became clear that electric car sharing cooperatives are not only actors within the mobility sector, but also have the potential to become important players in the renewable energy sector, Partago and Som Mobilitat were able to convince six citizens’ energy cooperatives and REScoop.eu (the European federation of renewable energy cooperatives) to form TMF (LE Interview, 04.10, 2019 at [56:45-57:30]). These founder cooperatives were Courant d’Air cvba (from Belgium), Coöperatie LochemEnergie U.A., Coöperatie Cooperatieauto B.A., HET: coöperatie Hilversumse Energie Transitie U.A. (from the Netherlands), Energiegewinner eG and UrStrom—Burgerenergiegenossenschaft Mainz eG (from Germany).

With the support of a Belgian organization that supports the formation of cooperatives and a lawyer familiar with cooperative law (LE Interview, 04.10.2019 at [1:25:30-1:26:00]), they formed a European Cooperative Society—a supranational limited liability legal entity form recognized across the EU/EEA34—which has its registered office in Brussels. The Mobility Factory SCE’s main purpose is to design and develop software programs, provide computer consultancy, offer computer facility management, as well as design and maintain web-portals for its members, so that they can in turn offer sustainable mobility services in their local operations (§2, TMF Bylaws). It was registered on 28 December 2018 and according to Evers, it was not difficult to gather the fixed subscribed capital of €30,000 (§3(2), SCE Regulation, ‘R’). The pricing of the shares was determined by how feasible the cost would be for each prospective member, without requiring them to fundraise. Each of the founding cooperatives had to acquire shares in TMF that were nominally valued at €1000 per share and at the time of formation, the nine entities subscribed to 60 shares.

The influence of Partago is evident in TMF’s bylaws, as the latter has an identical Class A and Class B system: Class A shares are reserved for cooperative members who wish to use the services and products of TMF and Class B shares are reserved for supporting investor members who can receive a dividend at the discretion of the board (i.e. ‘the administrative organ’) (§5, TMF Bylaws). Partago, Som Mobilitat and Courant d’Air subscribed to 14, 12 and 10 Class A shares respectively while the other cooperatives subscribed to four Class A shares each. Rescoop.eu was the sole subscriber to four Class B shares. Nowadays, for every car that a member installs in an area, a portion of that fee goes towards purchasing shares in TMF (Jan de Kock [JdK] Interview, 08.07.2020, at [34:30-35:00]).

The board is permitted to have between 4 and 9 unremunerated directors (it initially had 6 directors)35 with a 6 year tenure. Up to one-fourth of the board can be nominated by members with Class B shares and the remainder are nominated by members with Class A shares (§16, TMF Bylaws). The Chairman of the board is elected from among the Class A-nominated directors and, in their absence, meetings are chaired by the most senior Class A-nominated director. Meetings can take place physically or electronically, in person or by proxy, but quorum is set at two-third of the board (except in the case of emergencies). Board decisions are taken by simple majority (§17, TMF Bylaws). As the body responsible for the day-to-day decision-making of TMF, the board faces a stiff challenge in making strategic decisions on a regular basis while also being mindful of the financial, cultural and ideological differences between the member-cooperatives. Reichel notes that their membership already includes cooperatives ranging from large renewable energy cooperatives to small, three-person cooperatives—and their views may differ on questions such as the inclusion of non-electric cars on the platform (LR Interview, 06.08.2020, at [33:30-35:15]). Ensuring meaningful, democratic participation from all the time-pressed member-cooperatives requires careful preparation prior to any votes, setting aside adequate time for discussion and the elaboration of proposals. The smooth, but representative, functioning of the board of TMF is critical as the board represents almost all of the members and as its strategic decisions are integral to the business of individual cooperatives (JdK Interview, 08.07.2020, at [24:45-25:15]). Given that the board members are distributed across the EU and that the COVID-19 pandemic has disrupted operations throughout 2020, these board meetings have increasingly been on Loomio (a group decision-making built by a worker cooperative in New Zealand). However, multiple interviewees were of the view that physical meetings are essential to complement online meetings to build rapport and a strong connection among this international group of cooperators (JdK Interview, 08.07.2020, at [29:45-30:45]; LR Interview, 06.08.2020, at [40:45-41:00]).

Typically, the General Assembly, composed of both Class A and Class B members, meets at least once a year and any other time as needed, to decide on inter alia the financial statements of the past financial year, the discharge of directors, issues relating to the audit of the cooperative and other issues on the Assembly’s agenda (§23, 26, 23 TMF Bylaws). Each member has one vote, irrespective of the amount or class of shares they hold. To counteract the prioritization of investor interest at the expense of usermembers, no more than 25% of the members present at the Assembly can hold class B shares (§25, TMF Bylaws). Decisions are arrived at by consensus, failing which by simple majority (§26, TMF Bylaws). One such decision that requires a simple majority vote is voluntary liquidation (§33, TMF Bylaws). For major decisions, such as a change of purpose or other amendments of the bylaws, the voting requirements are different. At least half of all the members must be present and, in the case of the former, the present members must also represent at least half of the capital of the cooperative and the decision to change purpose must receive at least four-fifth of the total votes, with the holders of Class B shares not comprising more than 25% of the voters present (§28, TMF Bylaws). In the case of the latter, the amendment must be passed by a two-third majority and the same rule about Class B shares applies (§27, TMF Bylaws). Along with the one-member, one-vote rule, another distinctive feature of TMF compared to capitalist businesses is that the amount of returns to holders of Class A shares is not determined by the number of Class A shares each member holds but their proportion of transactions with TMF (§31, TMF Bylaws).

An important distinction between the shares of TMF and Partago, however, is that the shares are not transferable to third parties. This is based on the idea that the members are expected to commit to TMF for the long-term, as indicated by the default requirement that members subscribe to TMF shares for at least five years unless the board decides otherwise (§11, TMF Bylaws). Even after that period has elapsed, voluntary withdrawal of all (or some) of the shares is dependent on the board determining that doing so will not jeopardize the financial position or existence of TMF. The repurchase of these shares are to be at nominal value for Class A shares and at current book value for Class B shares, but this payment can be made over the course of two years (§14, TMF Bylaws).

As previously mentioned, Partago and Som Mobilitat took the lead with programming but since the summer of 2020, the software developers who were formerly employed by Partago and Som Mobilitat are now directly employed by TMF. TMF has been developing a suite of products and services for its members, including a multilingual software application that allows users to find, access and unlock cars, a car-sharing management system that presents an overview of user and fleet data as well as other interfaces as needed (LR Interview, 06.08.2020, at [17:30-18:15]).36 The software has now been sold by Partago and Som Mobilitat to TMF and the latter now owes a debt to the former two cooperatives according to the hours they spent on developing the software prior to the establishment of TMF. This will be paid back by the new shares that are issued by TMF, with one-third of the value of each share being used to pay down the debt (LR Interview, 06.08.2020, at [23:00-23:45]).

From the outset, it was intended that members have a say in the features that are included in this collectively-owned software. This was the key distinguishing feature for some of the member-cooperatives as they previously worked with corporate providers who gave them less of an influence over the features of the software (JdK Interview, 08.07.2020, at [02:45-03:45]; LR Interview, 06.08.2020, at [48:30-49:15]). As Reichel explains, at first, everyone could propose a feature but this did not work well as everyone did not understand the costs and utility of including a new feature (LR Interview, 06.08.2020, at [35:30-36:00]). Instead, now, “everybody proposes needs, not features” (LR Interview, 06.08.2020, at [36:00-36:30]). This process involves identifying the problems that need to be solved, elaborating on the features that can address these problems and subsequently determining which features need to be prioritized. This software not only benefits the members themselves, but can also be licensed as a software-as-a-service to third parties (Partago cvba, 2019, p. 4) In this respect, as shown in Figure 2, TMF has the qualities of a supply or shared-services cooperative (USDA, 1998), in that it can generate cost-savings for a product (e.g. software) for its members owing to its ability to aggregate member contributions of labor and capital and can refund much of its net income back to its members based on their patronage (when such income is generated). It also creates a different psychological attitude towards the software, as members are not simply licensing a service but are paying towards something that is their own (LR Interview, 06.08.2020, at [49:00-49:30]). For member-cooperatives like CoöperatieAuto, the cooperative ownership of the application ensures that only the data of cooperatives is used in its development (JdK Interview, 08.07.2020, at [26:15-26:30]). This is strikingly different than if TMF, or indeed Partago or Som Mobilitat, were worker cooperatives as the financial returns (if any) of the cooperative do not go directly to workers like Lukas Reichel or TMF’s software developers. They are still employees, who can be dismissed by their employing cooperative board. While this requires a great degree of generosity on the part of these workers, in terms of their time and resources, according to Reichel, “people really like to cooperate with you because they see it is something that you do not personally benefit from” (LR Interview, 06.08.2020, at [01:01:30-01:01:45]).

In the months since being registered, two other cooperatives, Alternacoop and Conecta Movel (Spain) have joined TMF. However, TMF is confronted with the challenge of deciding how quickly they wish to grow—if they agree to the ambition of having 20,000 cars running on their platform in 5 years (LE Interview, 04.10.2019 at [52:30-52:45])— and attracting the resources to finance this growth, given that it is beyond what they are able to currently earn internally. It also remains to be seen whether the governance structure of TMF remains as it currently is or whether another tier of cooperatives—such as national ‘umbrella’ cooperatives—are added to represent local primary (electric) carsharing cooperatives in TMF (JdK Interview, 08.07.2020, at [38:15-38:30])."

(https://ia801707.us.archive.org/9/items/morshed-mannan-single-web/Morshed%20Mannan_single_web.pdf)

Source

• Report: Everything Old is New Again: Evaluating the Legal and Governance Structures of Shared-Services Platform Cooperatives. Morshed Mannan. Institute for the Digital Cooperative Economy, Platform Cooperativism Consortium,

URL = https://ia801707.us.archive.org/9/items/morshed-mannan-single-web/Morshed%20Mannan_single_web.pdf