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Ask HN: Distributed Bootstrapping?

4 points by lambdatronics ↗ HN
Maybe this won't work and you can tell me why, but...

Would it be possible to launch a bootstrapped start-up using a crowdfunding model where the first N employees sign on to contributed $X in exchange for Y% equity, such that sum_N(XY/100) is the needed capitalization? $X might be at least $S/mo M months, where M is the amount of runway needed, and $S/mo is an employee's salary.

The logistics might be challenging (the more employees you need, the longer it will take to sign everyone on). Also, finding folks who are in need of a job but also willing to invest upfront might narrow the pool significantly.

The reason for proposing this was that the initial N employees have the same incentives as cofounders.

2 comments

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throwawaybutwhy
Isn't it a variation of MLM [0]/Ponzi schemes [1]?

> finding folks who are in need of a job but also willing to invest upfront might narrow the pool significantly.

Agreed. This looks like an understatement.

[0] https://en.wikipedia.org/wiki/Multi-level_marketing

[1] https://en.wikipedia.org/wiki/Ponzi_scheme

lambdatronics
Hmm, I wasn't considering for N to be large/unlimited (ie, rolling recruitment). The idea was basically to have N fixed from the outset; the project would start once the team was assembled.

Basically, I keep hearing that VC, founders, and early employees have divergent incentives, leading to conflicts of interest. The thought was to find a way to align them. This may not be the way, but I was hoping to at least get some discussion. Maybe I should have started with that question instead of a proposed solution....