Meeting Notes/20120114

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Finances

Cash tallied from previous year, being used to pay 2012 expenses:

  • Lease Payments : $1900
  • Laser Cutter Rent : $1200
  • Joe S : $94
  • SawStop : $850 on hand
  • Air Assist : $300
  • Corel Draw : $140

Martin will defer pay-back for the Air Assist project until the project is complete.

We will be paying Laser and Lease payments via auto-pay and reimbursing using the cash saved in 2012 for the payments back into our checking account.

We're spending the 2012 buffer, and saving

Total expenses to date for January are $563, and we have made $2900, and people owe $445. Freshbooks has a slightly different count, because some people owe multiple months. Some will be dropped this month. We should, in theory be bringing in $3300/month.

Net income for January is ~$2300. We will end up with about $4000 in the bank in January when we're done. We will have two running months like this since we're paying the major expenses out of cash.

Martin is training Mert as a backup, and other board members should do the same!

VOTE

"All in favor of repaying Martin for Corel Draw purchase" - Unanimous YES

Membership Gains/Losses

Jon : How many people did we lose this month? Martin : We have never had a negative month. MattMcCabe : How many leave before the net calculation? Martin : between 2-4 members per month, high is 6, but we always make up for it.

Top reasons people leave:

  • Moved away
  • Not enough time
  • Can't afford

Martin : Means we have a natural attrition rate... 2-4 people per month.

}} Discussion, some jokes {{

Membership Confirmed/Provisional

We have 97 members, after we cut the books at the end of the month, 94 members.

36 have gone on hiatus, there were 39 but 3 came back!

We have 78 confirmed members, but the spreadsheet is out of date.

The average time people have been members of the hackerspace is 6 months! People stick around, few leave.

The spreadsheet is out of date, quorum is 23 on the sheet, likely really 28. We need to update the confirmed/provisional list.

Late Dues Payments

9 people still owe their dues the time of the Board Meeting.  %10!!!

  • 5 in December
  • 4 in November
  • ...

It's a bad number..

Tim : How can we incentivise Auto-Pay?

Martin : We can start charging fines for late dues?

Tim : We can't fine them because they are paying for a future month.

Martin : They are paying for the current month service.

MattMancuso : We can charge a $5 for paying late the previous month

Tim : We can start locking carfds

Martin : Locking cards doesn't seem to have much of an effect

MattMancuso : We can give a "$10 discount" for people who pay on time.

MattMancuso : We say there is a $10 discount for people who pay on the first week. Auto-pay gives you the $10 discount...

Martin : New FreshBooks invoicing will allow people to pay online directly, it charges a bit more but we'll be going through Authorize.net. It also means our store needs to be re-coded, but that's going to be easy because they use Authorize.net directly. We will have to shut down payment.atxhackerspace.org as well.

Future of the Space Committee

Martin read the findings of the FotSC into the record:

This committee finds that Cooperative Principles are more in line with the future goals of the hackerspace than its existing corporate structure.
The committee recommends that the board pursue re-incorporation of the LLC and its assets into the cooperative model per research here and below
The committee further finds that Charitable 501(c)3 status is a desirable possibility pending member support
Finally, this committee finds that a Faux-op or expanded LLC may be viable if prior recommendations fail, but open conversation is imperative.

The findings of the FotSC are FOTSC/findings

Martin : There interesting thing is how would we organize, how to do budget, going forward into a Coop from an LLC? Martin, Matt, Mike (all the members of the LLC) are present at this meeting. Before we move on with the budget we have to figure out how to deal with this.

Jon : We need to figure out how the LLC's investment will be dealt with before a conversion to a new system. We need to know the value of shares, and how investment is moved into a new organization

MattMcCabe : Is this being recorded?

Tim : Yes.

MattMcCabe : I think the answer is simple, we're doing a simple dollar amount. Shares go away. Martin : We know how much we put in because of our taxes. MattMcCabe : We need to present that information to the membership. Martin : That's something I need to do.

Tim : How do contributions to the hackerspace from people get counted? Are they investments? Martin : If they are gifts, they are gifts and belong to the space. If they are hosted, they belong to the member that owns them. They belong to the inventory, but not part of the personal assets of the LLC members. Can we agree that they are corporate assets, and part of the value of the company? They then get transferred to the co-op.

}}discussion, giving examples of business assets vs/ personal assets{{

MattMcCabe : As long as some legal or accounting authority signs off on that.

Tim : Since you all [LLC] are organizing it, it's your call.

Martin : We can effectlvely say they have zero value, and transfer them to the coop (or new entity)

MattMcCabe : I don't see a problem with it, with items given to the space as assets of the company. That's fine. Then we consider our investment as investment shares.

Martin : Right, our investment would potential become investment shares in the coop, but that's up to the organizers of the coop to say what that investment looks like.

Martin : There's the membership, but in a coop you have to decide what a member is. That still have to be decided, are they people who have bought a voting share? If it is, it's those people who make the decisions.

Tim : A member has to have their voting share paid back if/when they leave.

Martin : Does a person who wants to be a member of the hackerspace must they buy a voting share, and how much is it? If not, they would pay dues, come in and use the tools and take lesson, but they are not people who are interested in managing the company. It has to be remembered that the FotSC was a minority, a small minority of the whole. Twelve people out of 95 people, which is an unbalanced voice vs/ everybody else in the space. Most people weren't involved in that process and didn't get involved. Only 12 people who were involved in the process.

MattMcCabe : I'd argue that's the leadership of the place.

Tim : Yes and no. When you say Leadership, do you mean the people who take charge? Or are here more often?

Martin : Owners are both types. There are people who put money in and don't want to hear it again, and people who participate daily.

MattMcCabe : We are jumping the gun a bit, we still have members that still need to vote on what the structure of the coop would be like.

Martin : Lets say we have a "Grand Conclave", not every member is interested in owning it. A minority has an interest in that, in directing the space in what to do next. Another minority has interest in ownership, and many people want to just be able to use the space...

MattMcCabe : You're making a lot of assumptions though...

Jon : What we need to do is have an idea of the structure so we can present it to the other members. Martin is asking "Does everyone need to buy a voting share" For people who don't want leasership roles, there should be something more accessible, if they just want to come in and use the tools and things. That aside we need to do is have a structure to present to them. Do we want to do this thing, do we want to do the other, how do we want to value the voting shares. A lot of that is going to be dependent on the payback system, and how the LLC..

Martin : The LLC dissapears..

Jon : The LLC's value would transfer into the coop model somehow. How is that going to be translated?

MattMcCabe : As far as the investment share goes, I mean it's going to become a dollar investment and that's it. It has nothing to do with membership or voting.

Martin : It's not being paid back. The dollar value is translating from the LLC (converting) to the coop. If you put $100 in the LLC, if the voting share is $10, and the investment share is $10, then the LLC member will end up with one voting share and nine investment shares.

Jon : Looking at it that way, when we structure a coop is how we 'pay out' (move) the value. I think that ultimately...

Martin : The LLC has to volunteer to convert. None of the LLC members are going to walk away.

MattMcCabe : "Cough" Not that I know of.

Martin : It's very _unlikely_ that the LLC members are going to walk away. Those investment shares will have the same rules as any member. They get the same deal.. They will end up with X investment shares, and get dividends or whatever is decided.

Jon : I think for the transition or the representation of the LLC in the coop will be {benefit} of the members. We need to know where the money went to so that there is an appreciation of the value. We need to come up with a rough model that the membership can expand on {mumble}

Martin : So that's the next thing. The board has to choose ...

MattMancuso : How do the membership dues end up working in this process? So the membership dues do not buy you shares. They are your patronage.

Martin : Every member of the space pays dues, but members who are also coop owners, they dont' JUST pay their dues, but they have also bought shares. You get buy a share but also pay your dues.

Tim : What happens when you decide to cash out on your shares?

Martin : There have to be rules about how to payout.

Tim : So if someone says "I donated $20k and I want to leave.."

Martin : ... At Quilted (another coop) they have rules. They pay $5k to get into the coop, and have a profit sharing plan then they get a bonus at the end of the year and a salary. They are a worker coop. When they want to leave the coop, they get paid back on a schedule that they agreed to when they signed up. The contract states you will be paid back on a schedule, over two years and such for example. We would have to do the same thing here.

Tim : I can see how that could bite us in the ass.

Martin : That's part of normal coop operation. I can see how that could bite us in the ass.

Jon : You add stop-loss clauses into the contract, and put a restriction if there is a mass exodus or reason..

Tim : That would be a problem.

MattMcCabe/Martin/Jon : Then the company goes broke, that's what happens.

MattMancuso : Then the remaining assets would be distributed by whatever procedures/rules/bylaws of the coop.

Tim : If someone leaves, we lose their membership dues .. but if they have a voting share/insurance we lose a lot.

Jon : You can write in stop-loss clauses. So if, for example, Martin dropped trou and decided to take his money there are certain things you can put into to say that there is a maximum amount you can withdraw per year and such.

Tim : So that said, how to you calculate the value of the investment share when you turn it back into cash?

Martin : It's the value of in the investment share. It's dollars.

Tim : For example if Ebo gave us that lathe over there?

MattMcCabe : Fair market value

Martin : That lathe is $1k, plus whatever we've added to it. We don't have a contract with Ebo right now. It has to be formalized.

Tim : Any large expensive piece of something.

Jon : If people use items to buy into the coop, it has to be reduced to dollar value.

Martin : But you don't barter into the coop.

Jon : That's what's being suggested. The value of an item that's donated.

Martin : He's talking about the transition. That lathe doesn't belong to us now, still it won't belong to us as a coop. If Ebo wants to give us the lathe, it's either a gift or nothing.

Tim : What happens when people want to have big tools here, What _IF_ someone wanted to barter to get shares?

Martin : Then that's up to the board of the coop, at the time the coop is formed. It's not our problem.

Tim : The number of shares doesn't have to be locked to the neccesary value of the thing.

Martin : No, you don't get it. You're confusing two things. The investment share is a fixed amount of money. We can set it to be $1.

Tim : People can't use a machine as an investment value.

Tim : The question though is, if someone donates a piece of equipment, can they get value in investment shares.

MattMcCabe : I don't see why you can't. But it will be up to the Board.

MattMancuso : The board could say we will buy your equipment using X shares (say 10).

Martin : So if someone wanted to give us something of value X (say $100,000) it's up to the board to say we will give you "XXX" investment shares, a part of our company, to get that thing. But for me it's important that you can't get your VOTING share that way.

Tim : Agreed. Separate from the voting share. So, but but .. assuming that in the hypothetical world of make-believe, and they get half that as a $50k credit in investment shares.. and they leave, then we aren't giving them the machine back .. we are giving the cash/company.

Martin : There will be a set of rules that come into play in that case. They get money back.

Jon : There has to be a stop-loss, also you need to put a rule that there is a term of realization for value.

Martin : Right, a vestment period. We wil give you so many shares, but with a 5 year vestment period. So you get 20 percent this year, etc...

Tim : So if you leave before then, you would lose your investment?

<all> : Right

Martin : And in that emergency condition, that theoretical Board of the coop could sell the machine or whatever is needed to cover the loss for example as well.

Tim : Contingency thinking.

MattMcCabe : For each deal you can set different terms for investment too, of course.

Martin : In a coop, the board deterimine the dividend. The share has a dividend, and if you have them you get it.

MattMcCabe : I didn't realize that the dividends pay out according to the investment. I thought it was just voting shares.

Martin : No, you get both.

MattMancuso : If there is money left over, members _may_ get a dividend from money left over from the year in accordance to the patronage.

Derek : Voting and Member shares are different, what's the difference?

Martin : To become a voting member of the coop, you have to have a "Voting Share", something that says I am a member of the coop, a managing member. Dues aren't part of that. Well, it's up the coop what rules that has. The thing is that the lifeblood of this place is monthly membership dues, if we don't have our income stream .. if we set the voting share low (like $120, cheap) and we give people the option to split it over 12 months .. or you pay it all at once. That's not enough to pay the bills. Your dues don't confer you any rights.

Tim : You can't really even consider the voting share a life blood, because when eventually it has to be paid back.

Matt : What the life blood _is_, is the dues.

Martin : Think of the voting share as the inconvenience you pay to become a part of the company. The thing that lets you become a managing member.

}} Angie blinds everyone with the sun {{

Martin : So the FotSC definitely overwhelmingly came up with a Coop as the primary option. Charity was a distant second, and nobody liked the idea of the Faux-OP or restructuring the LLC. That being said what are our next steps? So what do we need to do next? What do we want to pick, and what do we want to present?

Jon : I think we need to go forward with the coop presentation. I think we need to do is what we talked about earlier. Get a rough structure or outline for people to follow up on. Ultimately we need something as an example to move forward.

MattMcCabe : The guy from blackstar "Donald", so, gave us a list of things we need to change in our existing bylaws and things we need to start a coop. We can use that as a template.

Martin : I think he may have added some of his personal opinions into the bylaws revisions. I think he put more than the technical requirement.

MattMcCabe : We can still use it and present it to the membership, and if they are good with that run it by a lawyer.

Jon : The initial idea needs to be presented as a conversation between the LLC and the membership, and a mutual terms of agreement we can live with, then pass it by a lawyer. Unless there is anything outlandish, we won't need a lawyer.

MattMcCabe : We can pass it by a lawyer before filing it.

}} discussion of the changes of the bylaws {{

VOTE

"All in favor of following the FotSC's top recommendation of moving to a coop and proposing it to the membership?" - unanimous YES

Budget for 2012

Break Even Costs

Estimate of min/max monthly cost going forward, based on the worst possible costs in 2011 is $2700/month

In the new space (G-2) worst case scenario using the highest rent they are asking for is $2200/mo, so the total would be $3900/month in year one

We need to make $2680/mo JUST to meet costs Jan-Aug

We currently should make $3250/mo, but some people didn't pay and we actually took in $2855. So we're not making enough money. We are currently waaaay underpriced. We barely make more than our costs. There's our problem.

How much are people paying?

Our minimum is $25/mo, and there are 21 people paying the minimum.

To meet ONLY our operating expenses, we would need $30/mo from everyone. That's just meeting expenses, no expansion or anything. ($2680/90 people) But we want to be able to do more!

Member Rate Adjustment

If the choice was only $50 or $25, and the same number paid the minimum (21), we would be taking in $3775/mo! We would clear $1k a month if people paid $50 and $25 was only left for starving hackers with need.

Financial Goals

We are always chronically short on money. Other hackerspaces charge a lot more. National average is $85. Other hackerspaces meter tools.

  • TX/RX is $80/mo, full time student rate is $50
  • HackerDojo $100

Money-wise, just to run, we need $4k/mo to break even in September. $4000 / 100 members worst case, is about $40/member just to meet our expenses, no spare money. No tools bought, etc.

If that is $50 with the 21/79 member split.. we're still in trouble. We'd be taking in $3775, and still in the hole.

We have to talk about what our goals for the next year are, and what our worst case scenario is.


What we'd like to be able to do

In Q3, we may need as much as $2200/mo in rent for the new space. Over twice as much as we pay now.

We know the minimum amount for the new space unti August is $3000/month.

We want to buy, and need to add to the monthly budget, the following:

  • A sawstop table saw We have $1650 put away, and it costs $3000. +$1350, target Q3 (July) +$270/mo ( $4250/mo )
  • A new laser cutter, $30,000 and they are going to want at least $10k down in 8 months. Monthly budget has to increase by +$1250 ( $4520/mo )
  • Yearly budget for non-tool office storage/furniture/signage/etc +$150/mo ( $4670/mo )
  • Tool budget, currently only $100/mo is too little. It needs to be much higher, $12k/yr. +$1000/mo ( $5670/mo )

We may be able to get to an average number of members in 125 people in 2012, with real advertising. That means that we could in theory operate with that many people at $45/mo! However, we know that not everyone pays the full amount, so we need $50 to cover the difference between the hacker-level membership.

Policy would change from "pay what you want" to "please show need".

Students would have to show a valid, current Student ID. The board would decide on an individual basis if other members qualify for the starving hacker rate, and the member seeking to have the lowered rate would have to fill out a form and it would be presented to the board and kept private.

Discount for auto-pay is a good idea. We could charge $55 a month, unless you're on Auto-pay, in which case you pay $50 as an incentive.

  • Offsite storage rental is about +$200/mo ( $5870/mo )
  • To rebuild the entire new space would cost about $30k, and can be financed. New rooms, mezzanine in the back area, etc. Financed over 5 years this is about +500/mo ( $6370/mo )

Divided amongst 125 members, that's $50.9 ($51) .. that gets us a construction loan, and the ability to reconstruct the entire space. The difference between $45 to $50 is 'meh' to 'holy OMGZOW!' If we get $60/investment share per member per YEAR over the base, then we can easily afford all kinds of amazing things. Just $5/mo, and it would be paid back over 5 years.

If we can't grow the business that much, it's would be our own fault. We should easily be able to meet 125 members by the end of Q2.

  • Advertising budget, for events, renting out venues (like Peace Park at SxSW) $250/mo ( $6620/mo )

So we're still talking $52.90!!!!! Call it $53. With contracts, rebuild, and everything. $50 still works if we beat 125 members/mo.

Summary

We need $50-55 per member to meet budget goals for 2012, and do Amazing Things(tm), w/ a membership drive AND advertising.