Have you ever heard a healthcare company say this?
“We always put the patient first”
However, under UK law, the primary duty of a company’s Director is to put their shareholders first.
The duty states a director must act in a way that they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members (shareholders) as a whole.
Saying things like, “Putting the patient first”, is a business strategy to achieve the maximum return for the shareholders.
Plantz is different
Our community will be our shareholders.
So, let me explain how Plantz works.
- First, what is the traditional structure for a company?
- Next, why is the traditional structure not suitable for communities?
- Finally, how the Plantz solution is different
What is the traditional structure for a company?
The current structure for a company in the UK is a Limited Company, so called because it provides Directors with Limited Liability. It is set up by registering on Companies House. This requires a list of Directors, together with their shareholding, to be disclosed. Being listed as a company Director also comes with several important responsibilities.
Over time, any change in shareholdings must be filed in an annual return. This is based on the assumption there are relatively few shareholders and their shares don’t change very often.
As a company grows it can list on a stock exchange, which enables it to have potentially thousands of shareholders. However, there is a catch. You need money to buy shares in a publicly traded company. Patients, who are often debilitated by their medical condition, are unlikely to be in a position to buy shares in major healthcare companies such as Pfizer or GSK. Buying and selling shares on an exchange is costly too – members of the public must pay a commission on every transaction.
Why are limited companies not ideally suited for communities?
All of us are part of multiple communities. If you’re a member of a club, such as a sports team, a local volunteer group or even a trade union, you’re familiar with the way a community works. People who share a common interest form communities of like-minded people to discuss and support each other.
As the community grows it may have thousands of members. Over time, they organise themselves to enable the community to survive and grow. They may vote for a committee to oversee the governance.. They will likely write a constitution that explains the aims and ‘rules’ of the community.
To manage their finances the community may setup a bank account, register a limited company and appoint a Company Secretary. The community might charge a subscription fee, which generates an income stream for the benefit of the community.
So far, so good. But let’s look at two reasons why a limited company may not be the best organisational structure for a community.
- Community members differ in the amount of time they’re able to invest
- Community companies are vulnerable to take over by entities who want to exploit the passion of its members
On the first point, typically, the main investment into a community isn’t money. Members bring something far more precious – their time and passion.
However, the level of commitment is likely to be different for each person. Some throw all their time and energy into the community. Others dip in and out when it suits them. This isn’t a problem when everyone volunteers their time and there is nothing substantial at risk. The problems arise if the community starts to make money from the ideas generated by the community. Now there needs to be a way to work out what value each member of the community brings.
The second point is that if a community is successful at generating money from their ideas, members are vulnerable to corporate interests taking over.
Think of football clubs. They were originally set up by groups of amateur players who wanted to compete against each other. They formed clubs and set up companies to formally manage themselves, organise the club, buy a pitch, etc. They were financed through ticket sales. Passionate fans worked for the club, devoting their time. Well, to cut a long story short, we all know what happened when corporations realised they could exploit the passion of the fans……
And here’s the rub. Communities can be made up of thousands of members who devote their time and passion. If this energy and enthusiasm can be harnessed then incredible things could be achieved. But in a limited company it’s a) difficult to register members as shareholders based on the time & ideas they invest and b) if the community generates money it’s vulnerable to takeover by corporate interests who will exploit the assets generated within the community.
How will Plantz build a company around its “Community”?
Given the above, the challenge facing Plantz is:
- How to allocate shares to members for their time rather than their money?
- How to provide full, legal governance to members in a way that rewards, but also protects, the community?
- How to protect the community from corporate takeover but reward them if the tradeable value of the company increases?
- How to build a company that genuinely, and legally, has to put patients first?
The solution: a Decentralised Autonomous Organisation
The ambition behind Plantz is to become a Decentralised Autonomous Organisation, or DAO (pronounced “DOW”). This will eventually hand full control of Plantz over to patients. This includes both the governance and treasury.
A DAO is a new form of organisation. Instead of shares being listed on Companies House or a stock exchange, they’re recorded on a blockchain.
A blockchain is technically complicated to fully explain in this article, but there are hundreds of articles explaining it on Google 🙂. However, in short, think of a blockchain like a ledger that shows the amount of Tokens (similar to shares) each person has in Plantz. Furthermore, a blockchain is very hard to change without everyone knowing about it, so it can be trusted by the whole community.
A DAO is different in another key way.
The current stock market requires capital, or money, to buy shares. People with spare money can afford to buy shares. The problem is many patients can’t afford to buy shares, primarily because many suffer from a disease that may be preventing them from achieving their full potential.
However, people have something more precious than money.
Their time.
Plantz will reward members who devote their time to help others in the community.
We do this by allocating Tokens in return for contribution towards the community. These tokens are logged on a blockchain to ensure transparency.
In time we will hand over control of the governance & treasury in Plantz to the community using Smart Contracts.
Our intention is to launch on a Decentralised Exchange (DEX) to enable our community to trade their tokens or for investors to fund further projects.
