If shareholders don't get a cut then where does the capital come from? If the worker co-op needs to buy some expensive equipment then someone has to pay for it. Outside investors will not put in significant capital unless they also have a level of control, and a reasonable expectation of turning a profit. Banks generally aren't willing to lend to such organizations unless they're structured as partnerships and the owning workers agree to personally co-sign on the loan.

Worker co-ops can be fine for businesses that take essentially no capital, like small consulting firms. But if you want to build real stuff or scale up beyond the level of a hobby/lifestyle business then you must address the capitalization issue.

I understand your concerns.

> Instead of retaining a flat 50% for "growth"

50% retained earnings are not just for growth but also managing through economic cycles and smoothing the operational expenses and compensate for occasional losses. There need to be some sort of reserve funds when things are not going as well as expected.

In your model, what will happen if in a quarter there was a loss, are you going to ask employees to contribute cash to make up for loss? Both profit and loss sharing and quarter to quarter swings might not work in the long term at organization level; cutting cost one quarter, adding cost next quarter; employees will leave as soon as they smell losses and need for cash outlay from their own personal pockets.

> For sure the 25% to shareholders is off the table anywhere I'm going to work. That's the one thing that makes or breaks the whole worker-owned thing.

My example is from private company perspective, where shareholders are just family members who started the company and work within the company. Somebody started a company, put his own capital and took the risk of failure. He needs to be compensated. In my example, both capital and labor are rewarded equally, unlike current capitalism where all the loots go to capital providers and labor is left fighting for nibbles.