Re:Proposition HN: I will pay $8000 for you to build your si...
by brudgers on Thursday January 10, 2013 @03:31PM
(#5039549)
The analogy to the book publishing industry has some merit, but it only gets you so far.
If this were a book deal, the author would be assigning copyright to a company in exchange for an advance and a non-controlling share in that company. And that company's business plan is premised upon the dilution of the author's equity.
Once there's dilution, the author remains with the company at the pleasure of a guy he met on the internet and some other investors. They may be swell people, they not. Likewise with the the author.
Yes, the value is probably zero. But in this scenario, the possibility of an upside is not just dependent upon the product's success but also upon their being some lucky alignment between his financial interests and those of the other shareholders - and they are likely to have multiple intermingled financial arrangements.
If this were a book deal, the author would be assigning copyright to a company in exchange for an advance and a non-controlling share in that company. And that company's business plan is premised upon the dilution of the author's equity.
Once there's dilution, the author remains with the company at the pleasure of a guy he met on the internet and some other investors. They may be swell people, they not. Likewise with the the author.
Yes, the value is probably zero. But in this scenario, the possibility of an upside is not just dependent upon the product's success but also upon their being some lucky alignment between his financial interests and those of the other shareholders - and they are likely to have multiple intermingled financial arrangements.