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> There will be an optional founder equity exchange with other companies in the program, which will somewhat reduce the risk for founders and hopefully encourag

> There will be an optional founder equity exchange with other companies in the program, which will somewhat reduce the risk for founders and hopefully encourage a lot of collaboration. This is super cool. I wonder where this idea came from.

jonny_eh 6y ago
https://www.npr.org/sections/money/2016/03/18/470866146/episode-690-all-in https://www.npr.org/sections/money/2016/03/18/470866146/epis...
- three_seagrass 6y ago
  That's the poker tournament insurance pool episode, isn't it?
  - jonny_eh 6y ago
    Yup
  - bhl 6y ago
    There's also the baseball income pooling episode, which is relevant: https://www.npr.org/2019/10/25/773493342/episode-947-some-of-the-money-ball https://www.npr.org/2019/10/25/773493342/episode-947-some-of....
bkohlmann 6y ago
Sounds similar to what Pando is doing via future earnings pools: https://medium.com/@pearvc/making-things-possible-pandos-path-to-an-8m-series-a-c82c30422b3 https://medium.com/@pearvc/making-things-possible-pandos-pat...
chegra 6y ago
I had a similar idea back in 2010. See here :https://web.archive.org/web/20101218084431/http://chestergrant.posterous.com/startup-insurance https://web.archive.org/web/20101218084431/http://chestergra... " October 12, 2010 Startup Insurance This post is another theoretical post. Humans by nature are very risk averse. Start-up in itself is very risky with a high probability of failure. Failure in the start up world means lost time, lost opportunity, lost capital, lost confidence and so much more. For some of us we handle these risk pretty well and can perform excellent under these conditions, but for most of us, we would rather have these risk mitigated if we could . One of the questions I have often pondered was how to succeed at this start up game in one go? How do I mitigate my risk to the point that failure is almost impossible? Consider VC or even Y-combinator, the way they mitigate their risk is to acquire small equity in a lot of companies. The companies that make a killing pay for those that didn’t make one. Let suppose you had 10million to invest and you are investing 20k into each business for 10% equity and the probability of making 100million is 10%[These numbers were chosen for ease of calculation and only here to illustrate a point] . The probability that you don’t make back your 10million is 1 x 10^-23 reflecting a very minute risk. In the case above, only the VCs are actually reducing their risk; the startup themselves are still faced with 90% chance of failure. I think startups should basically use the same strategies as VCs to mitigate their risk. Each startup donates 5% equity to what would be the equivalence of an insurance scheme, if somehow your start goes bust, no need to worry cause at the end of period you would be given profits from all the rest companies that participated which should be enough to get you back on your feet."
- reitzensteinm 6y ago
  This isn't a new idea. There was such a founder equity swap program that Google was nearly a part of, but the other founders thought the valuation Sergey and Larry were demanding was too high. This is from memory, and I tried to search for a source, but the keywords are practically ungoogleable. Maybe someone else knows more.
wtvanhest 6y ago
Beneficial to founder, but this would be much more meaningful for employees who have much less control over the success or failure of their own company.
renewiltord 6y ago
Baseball players do this because of how their sports work: some guys can get outsize contracts and it isn't obvious early on who those guys will be.
rkagerer 6y ago
It's the one twist that surprised me. Is there any concern the more it "reduces the risk", the less of a direct financial stake the founder has in their own company?
- tedmiston 6y ago
  I read it between the lines as some sort of fallback in the case that your particular startup fails, as most moonshots do. If every founder in the batch works out something small like 1-5% split amongst the founders of the other cos, then everyone in the batch has the potential to benefit if one does company well, and then they also have more incentive to help their other batch companies out.

jonny_eh 6y ago

https://www.npr.org/sections/money/2016/03/18/470866146/episode-690-all-in https://www.npr.org/sections/money/2016/03/18/470866146/epis...

three_seagrass 6y ago
That's the poker tournament insurance pool episode, isn't it?
- jonny_eh 6y ago
  Yup
- bhl 6y ago
  There's also the baseball income pooling episode, which is relevant: https://www.npr.org/2019/10/25/773493342/episode-947-some-of-the-money-ball https://www.npr.org/2019/10/25/773493342/episode-947-some-of....

bkohlmann 6y ago

Sounds similar to what Pando is doing via future earnings pools: https://medium.com/@pearvc/making-things-possible-pandos-path-to-an-8m-series-a-c82c30422b3 https://medium.com/@pearvc/making-things-possible-pandos-pat...

chegra 6y ago

I had a similar idea back in 2010. See here :https://web.archive.org/web/20101218084431/http://chestergrant.posterous.com/startup-insurance https://web.archive.org/web/20101218084431/http://chestergra... " October 12, 2010 Startup Insurance This post is another theoretical post. Humans by nature are very risk averse. Start-up in itself is very risky with a high probability of failure. Failure in the start up world means lost time, lost opportunity, lost capital, lost confidence and so much more. For some of us we handle these risk pretty well and can perform excellent under these conditions, but for most of us, we would rather have these risk mitigated if we could . One of the questions I have often pondered was how to succeed at this start up game in one go? How do I mitigate my risk to the point that failure is almost impossible? Consider VC or even Y-combinator, the way they mitigate their risk is to acquire small equity in a lot of companies. The companies that make a killing pay for those that didn’t make one. Let suppose you had 10million to invest and you are investing 20k into each business for 10% equity and the probability of making 100million is 10%[These numbers were chosen for ease of calculation and only here to illustrate a point] . The probability that you don’t make back your 10million is 1 x 10^-23 reflecting a very minute risk. In the case above, only the VCs are actually reducing their risk; the startup themselves are still faced with 90% chance of failure. I think startups should basically use the same strategies as VCs to mitigate their risk. Each startup donates 5% equity to what would be the equivalence of an insurance scheme, if somehow your start goes bust, no need to worry cause at the end of period you would be given profits from all the rest companies that participated which should be enough to get you back on your feet."

reitzensteinm 6y ago
This isn't a new idea. There was such a founder equity swap program that Google was nearly a part of, but the other founders thought the valuation Sergey and Larry were demanding was too high. This is from memory, and I tried to search for a source, but the keywords are practically ungoogleable. Maybe someone else knows more.

wtvanhest 6y ago

Beneficial to founder, but this would be much more meaningful for employees who have much less control over the success or failure of their own company.

renewiltord 6y ago

Baseball players do this because of how their sports work: some guys can get outsize contracts and it isn't obvious early on who those guys will be.

rkagerer 6y ago

It's the one twist that surprised me. Is there any concern the more it "reduces the risk", the less of a direct financial stake the founder has in their own company?

tedmiston 6y ago
I read it between the lines as some sort of fallback in the case that your particular startup fails, as most moonshots do. If every founder in the batch works out something small like 1-5% split amongst the founders of the other cos, then everyone in the batch has the potential to benefit if one does company well, and then they also have more incentive to help their other batch companies out.