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Replying to my own comment because I just can't get over how ingenious this is. On HN we're used to FOSS devs acting quickly when, say, a proposed or implement

Replying to my own comment because I just can't get over how ingenious this is. On HN we're used to FOSS devs acting quickly when, say, a proposed or implemented license change turns project X into project X'. Upon reading the diff, they'll fork from X and continue on with a new org, and X' dies on the vine. We've seen it recently on HN. Employees of a mom and pops have specialized skills either in the frontend or backend of the business but typically only a basic idea of the fundamental business model. If they were to become owners in X it would take them at least a year and probably longer to learn the ins and out. E.g., how a change to even a few vendors can have a large effect on the bottom line. If they think they are getting X but instead get X', they won't know for awhile. In fact, if were talking about succession then the owner may be gone and they'll never know. Perhaps I'm being cynical and fintech really is here to help the little guy. But something tells me that's unlikely.

3np 3y ago
Them setting terms for insurance and likely de-facto cotrolling all the firms' financial capabilities through their mandated fintech services surely helps hedging the risk, too.
busterarm 3y ago
Being an owner in a business is a typical way to route around labor laws completely. If you're a restaurant or retailer that needs your staff to work 14 hour days 7 days a week, giving ownership is a fairly common scheme to CYA against future lawsuits. The ownership shares are usually miserly and forced-transferrable upon leaving. Not saying that's what's happening here, but it could be.
- lotsofpulp 3y ago
  Labor laws are for employer-employee relationships. You cannot simply “give” some of your employees shares and then disregard labor laws. If someone wants to work 14 hour days 7 days a week so that their shares are worth more, that is their choice.
  - busterarm 3y ago
    They never get classified as employees. They start as owners to begin with. This is what cults like Twelve Tribes do with the Yellow Deli in Boulder, CO. The whole place operates on unpaid labor because they're all "owners".
    - deleted 3y ago
      [deleted]
    - deleted 3y ago
      [deleted]
lr4444lr 3y ago
I still can't tell whether you're being cynical or not. These businesses are mostly going to just shutter if PE doesn't take over. The ones left to a family member aren't necessarily going to do well for that succession either: that bequest can be an act of love more than business smarts. Furthermore, just because there may be important subtleties about which vendors to use, branding, and service processes that are vital to how things work, it does not mean that the prior owners were at all savvy about the nuts and bolts of modern financial products, and could have really been held back by traditional banks preying on that ignorance and ensnaring them in less than ideal solutions. The important cog in this wheel is the one you haven't touched on, namely, that president Teamshares installs - wish they'd explain more about that. Teamshares' investors aren't stupid. They know very well the risk on their money if the company comes in like a bull in a china shop, quickly destroying the businesses it buys. There aren't going to be consolidation options and economies of scale like you see with medical practices - each of these mom 'n pop shops are somewhat special snowflakes.
Spooky23 3y ago
The brilliance depends on whether it’s a scaled version of a Berkshire Hathaway like business, or some sort of reverse franchise. It sounds to me like the latter - a scheme to create captive customers for preferred source vendors who are close to the beneficial owners. This also sounds like medical consolidators like Schweiger dermatology who soak up independent dermatology practices. Similar models exist for dentists and attorneys as well. I’m cynical because Buffet’s goal was very clear - he needs to generate cash flow forever to make more money. A venture capital entity has a different vision of success, which I can’t see being aligned with the “owners” of these companies.

3np 3y ago

Them setting terms for insurance and likely de-facto cotrolling all the firms' financial capabilities through their mandated fintech services surely helps hedging the risk, too.

busterarm 3y ago

Being an owner in a business is a typical way to route around labor laws completely. If you're a restaurant or retailer that needs your staff to work 14 hour days 7 days a week, giving ownership is a fairly common scheme to CYA against future lawsuits. The ownership shares are usually miserly and forced-transferrable upon leaving. Not saying that's what's happening here, but it could be.

lotsofpulp 3y ago
Labor laws are for employer-employee relationships. You cannot simply “give” some of your employees shares and then disregard labor laws. If someone wants to work 14 hour days 7 days a week so that their shares are worth more, that is their choice.
- busterarm 3y ago
  They never get classified as employees. They start as owners to begin with. This is what cults like Twelve Tribes do with the Yellow Deli in Boulder, CO. The whole place operates on unpaid labor because they're all "owners".
  - deleted 3y ago
    [deleted]
  - deleted 3y ago
    [deleted]

lr4444lr 3y ago

I still can't tell whether you're being cynical or not. These businesses are mostly going to just shutter if PE doesn't take over. The ones left to a family member aren't necessarily going to do well for that succession either: that bequest can be an act of love more than business smarts. Furthermore, just because there may be important subtleties about which vendors to use, branding, and service processes that are vital to how things work, it does not mean that the prior owners were at all savvy about the nuts and bolts of modern financial products, and could have really been held back by traditional banks preying on that ignorance and ensnaring them in less than ideal solutions. The important cog in this wheel is the one you haven't touched on, namely, that president Teamshares installs - wish they'd explain more about that. Teamshares' investors aren't stupid. They know very well the risk on their money if the company comes in like a bull in a china shop, quickly destroying the businesses it buys. There aren't going to be consolidation options and economies of scale like you see with medical practices - each of these mom 'n pop shops are somewhat special snowflakes.

Spooky23 3y ago

The brilliance depends on whether it’s a scaled version of a Berkshire Hathaway like business, or some sort of reverse franchise. It sounds to me like the latter - a scheme to create captive customers for preferred source vendors who are close to the beneficial owners. This also sounds like medical consolidators like Schweiger dermatology who soak up independent dermatology practices. Similar models exist for dentists and attorneys as well. I’m cynical because Buffet’s goal was very clear - he needs to generate cash flow forever to make more money. A venture capital entity has a different vision of success, which I can’t see being aligned with the “owners” of these companies.