Is equity the only way to incentivise contributors in the absence of salary?

3 points by ybalkind 3 years ago | 11 comments

Firstly, I'm not from the startup world, have never been in one, and dont know all the standard models, so forgive me if this sounds naive.

But I'm working on a startup idea. I'm looking to bring on some contributors to help with content and business development and I can't pay unless I get funded which I'm hoping to avoid for now. Offering equity feels like overkill for the type of work. I'm basically looking to get some freelance contributors to work on a risk basis, but with an overly generous upside if the business works.

I'm envisioning something like a revenue share type agreement.

Needless to say the contributors would have to strongly believe in the idea in order to take this risk. But if we could put that aside for a moment, I'm asking if there are existing models in the ballpark of what I am describing so that I don't have to try and reinvent the wheel.

IAmEveryone 3 years ago |

You could try adding an elaborate backstory and run it as a cult.

Traditionally, violence was also useful to get people to work for free. If you’re really good, the first round of violence makes the mere threat of it effective for subsequent rounds / business projects.

Maybe say you’re hiring and make the work an “example project”. If it’s too much for a single applicant (more than a week), have a “operations management” applicant divide it into suitable sub-packages.

Child labor is illegal almost everywhere, so the only way they can be made to work is without pay.

Interns are great not just in the Oval Office.

carlbarrdahl 3 years ago |

A crypto approach could look like:

1. Create a token and mint 1% (10k) of them to you

2. Create a pair with let's say 1 ETH (or USDC) + 10k on Uniswap - this is your initial funding for your project. You now have a market for your token.

3. Reward your contributors with tokens - they can choose to swap these into ETH or USDC if they wish to

b20000 3 years ago | |

aren't you creating and issuing a security when you do this, which could get you in trouble potentially?

formerkrogemp 3 years ago | | |

Have you seen the crypto market? There's very little enforcement going on.

uberman 3 years ago |

It is certainly possible to create a class that has rev sharing without voting. I believe the Chanzukerburgs has such and arrangement.

formerkrogemp 3 years ago |

Equity is just delayed salary. It's all money in the end. The voting power if any amounts to nothing.

hereforphone 3 years ago | |

Equity is delayed salary if the endeavor becomes profitable. So almost never.

formerkrogemp 3 years ago | | |

That's true. I should have included a proviso.