Maybe I'm naive here, but I think most software engineers (especially good ones) are careerist enough to want to produce something useful. That doesn't mean that there won't be some good-faith failures, but I think most engineers are already naturally aligned toward wanting to add value.

Top engineers aren't that way when a company takes 100% of the proceeds and a boss takes all the credit; but this is still allowing engineers to get a 62.5% cut.

I think with proper vetting you would be able to find engineers who would put in an honest effort in those circumstances. I just don't think it will be easy to convince investors of that.

Ah yes, Theory X and Theory Y. I would like to believe that defection rates will be low. Are people going to abuse the system? Occasionally, yes. My feeling is that the defection rate will be low enough not to compromise the project. If someone uses the fund to build his career, then goes off to the Valley, good for him. "Alumnus Bob is now VP/Eng at Facebook" is part of our pitch.

The trust issue is why local governments might be the best place to start:

(a) they know they're not technologists and can't evaluate 10x programmers. I can. I think I can either (i) establish that I can, or (ii) bring someone more established and better than I am to do the vetting.

(b) even if they fail, much of the money goes back into the city, which means it's not totally spilled on the floor. Fail case: those tech bozos made fools of themselves, but they ate at local restaurants for a couple years.

It wouldn't only be local investors. I don't want short-term investors in this, though. I'd take a Buffett-esque approach of having the share price around $50,000. Value investors only, because talent takes time to ripen.