Regarding point 1:
There is no reason why the developer can't be one of the
investors. Lets
say the developer bids a 20,000 project and the investors agree to this
price. Three investors invest 5,000 each. The developer discounts
his/her
contribution 5,000. Everyone has 5,000 invested and they all own 1/4
interest.
I don't see how that would work. A developer can't just arbitrarily
invest in his/her own work without actually putting money down, or all
of the other investors become unfairly diluted.
I suppose if all of the investors were forced to agree to the
developer's contribution it might work, but how is that different from
just offering him/her a percentage of profits?
As I see it, you're just saying that part of the agreement would be the
developer's cut of the profits. Which is fine, but I think it would
work better if there was a standard process rather than a lot of
individual negotiations.
Right now the developer is generally fronting all of the
development
costs and retaining total ownership. That is alright but some bigger
projects
(brighter ideas) require more financing and this model accommodates
it. Better
sometimes to own a smaller piece of a bigger pie.
Not disagreeing with that at all.
With this idea the developer has the option of surrendering as
much (and
only as much) interest in the project as he/she wants or can afford.
That's fine- but it just amounts to reserving a portion of the profits
for the developer, which of course could be part of any agreement.
There is no need to draw it up as cash investment in one's self.
Regarding point 2:
Most of the most famous corporations in the world (General Motors,
Pfizer, Microsoft, Ford, Boeing, Nestle, etc.) use this model. Most
large companies
are "owned" by many stockholders - and it seems to be working.
Arguably, gov
ernments are "owned" by many taxpayers.
I see your point, but developing an add-on for Revolution doesn't even
remotely resemble raising capital for a billion dollar corporation.
Most very small companies are NOT owned by many stockholders, and we're
talking about something even smaller than a small company- a single
project.
An option might be to limit the buyin price, say minimum
investment of
1,000 or 10,000 or ? This would be variable by project. Another option
is to
limit the number of investors - again, variable by project.
Sounds complicated to me. If we're cooking up new investor agreements
for every project, we're pretty much back where we started. We can
already do that all we want. What I was proposing was a standardized
process that goes through a single buyer group.
Regarding point 3
If the product fills a need at a reasonable price, why would the
users
care how the profits are split?
Users don't care how the profits are split- the people splitting the
profits do. I wasn't clear enough I guess- I meant "everyone" to be
everyone investing in the project.
This idea, if implemented properly, would make it easier to
create new
products that are too big for individual developers and too small (or
unimportant) for the Mother Ship
Agreed here! I'm not married to my scenario either. I would be cool to
see happen.
- Brian
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