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Wow, great points from everybody. Really high-quality challenges which might lead to material refinements. FYI, I consider this an "open source" concept because of how many voices have already contributed to aspects of this. If anybody can benefit, feel free to explore on your own or reach out to collaborate. I'm happy to share more details of the experimental model than would be reasonable here (too long).
@ Jessica: Nice point! Ok, so balance between "grabbing" all the equity you can vs making sure the founder has enough to be motivated is critical - that rings true, and I agree. FYI, Mike @ Science told me he sometimes he "resets" a cap table before spinning the company out on its own at A round time if what you are describing has happened. That's amazingly generous (ok not totally altruistic, he does it to make a project fundable), but to me, it is evidence of a model weakness. For such a model to really be viable we can't count on people like Mike that will reset a cap table to restore more share to the founder.
@ John: Well said, I agree strongly that focus on validating the problem and a solution customers are willing to pay for are critical and should precede any real product dev or hiring. I think it's possible to figure out a model that makes 3-8x "base hits" more common, and de-emphasizes "crap shooting" for unicorns. However, I like the idea of a crack dev team coding to disprove portfolio models early as part of the market fit challenge. Some people have an instinct for teasing assumptions out of a product hypothesis, and then designing tests to try and disprove them.
@ Lane: Great point on team. What if interests are truly aligned and the startup is allowed to take the staff developer(s) that worked on their product? The goal here would not be hold the startup back, it would be to defray hiring costs until a bit later than normal. Think about the stair-step way hiring bodies ramps up. Now imagine a startup in the very early stages being able to ramp up between 0 - 3 developers in 0.10 increments of a body, while still getting top notch work. I can say from experience that most first-time technical co-founders write spaghetti code when there is weak oversight. As a coder and former product manager I'm confident the average project started by a mature onshore dev group will be better than "random 1-2x startup coder". Normally a dev house has a profit motive to cut costs (time spent on your work). There won't be the same motive to cut corners in a dev team that works across the startups in a shared portfolio. If anything, I can imagine a strong argument going the other direction that extra care needs to be taken to ensure they aren't too "comfortable" and producing at less than maximum velocity. So performance/velocity must be monitored in a transparent way and even incentivized. Motivation might be addressed by the entire team earning equity in a blended employee compensation pool across the portfolio.
@ Eoin: Yeah, that's the kind of broadside I was hoping for! I'll post a few thoughts after I digest implications.
I learned a lot in the enterprise SaaS model about aligning interests and keeping customers by honestly meeting their needs. Not by locking them in with contract terms. My ideal scenario is where a founder is offered a basket of services and chooses which ones they will consume, based on the holes in her/his own team, and how fast they want to get milestones done... and they can fire us at any time and any vesting would stop at the same time as service delivery.<<All that said - I'd love to see something like this as a service model, where the incubator/studio is working for the founders, rather than founders reporting to an incubator or a co-CEO. I want to run my own company and build my own team, but like all founders, we often need extra hands but have little to no cash to rent them.>>