SAN FRANCISCO (Reuters) - When dancers at San Francisco’s Lusty Lady turned the exotic club into an egalitarian co-op, they found it tough to reconcile their lofty ideals with the aesthetic realities of the sex trade.

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One of the first things the dancers did was to toss out rules about maintaining the same body type as the day they were hired, and ones regarding height-weight proportion. A list of acceptable hair colors was scrapped, along with a policy regulating the quantity and location of tattoos.

Now, larger dancers and those who might not be stereotypically “pretty” are welcome on the Lusty stage, but this emphasis on inclusion has brought difficulties for the 60 or so dancer-owners.

The performers -- many of whom take on stage names -- run from tall to short, and thick to thin.

Lilah Mayhem is pale with long dark hair and a thin frame, while Cinnamon Rose has shorter, red-streaked hair and a darker complexion. Wendy works the stage in striped pink knee socks and glasses, while another dancer wears old wedge sandals and a cheerfully curling brown wig. Many sport multiple piercings and tattoos.

After buying the club for $400,000 in 2003, the next step was to put themselves through guerilla business school.

The Lusties, as they call themselves, enlisted the help of other local co-ops such as Rainbow Grocery and Good Vibrations, a local female-run sex-toy shop.

They learned the ins and outs of running a collective business and hammered out articles of incorporation within days.

Seven committees were created to oversee mundane but necessary business items such as insurance and licensing, finance, incorporation, bylaws and media relations.

All new proposals, from bylaw modifications down to buying new carpets, would need approval from general co-op membership and the board of directors. Every worker, whether support staff or performer, had the right to submit a proposal, and decisions would be made by majority vote via paper ballot.

But the theater’s mission statement, which seeks to break down hierarchy, made the creation and enforcement of managerial policies difficult.

“It’s hard, because we’d elect people to enforce our performance standards, but we hadn’t yet decided on what those are,” said former dancer Lili Marlene, who was involved in the transition. “Hygiene rules are easier.”

Dancers learned how to take disciplinary action against each other via new policies such as peer-based performance reviews. Each week performers evaluate their onstage colleagues, considering general appearances, customer interaction, and levels of eye contact.

The first years of self-governance were the most difficult.

“On a good day, it’s like Peter Pan,” said Lili Marlene. “On a bad day, it was like Lord of the Flies. We can do whatever we want, and there’s nobody to tell us what to do.”