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Thanks for the note - and I would be very interested in your thoughts on how problems would arise (I don't doubt they would!). FWIW, the structures I describe

Thanks for the note - and I would be very interested in your thoughts on how problems would arise (I don't doubt they would!). FWIW, the structures I describe could certainly be implemented as Delaware C corps, which is part of where the predictability would come from. Also, I'm not at all suggesting not following the law: I'm just trying to pick which law (contract law) would govern the operation of the business, to the degree that one can avoid employment law. I realize the common path is to acquiesce to needing a VP of HR, but I'm wondering to what degree one can avoid that overhead while still operating completely within the bounds of our current legal system. From what I know of partnerships, they would probably not be well suited to what I'm imagining. In a partnership as I understand it, each partner can legally commit all the other partners to a course of action, which is contrary to how this structure would try to operate by compartmentalizing. To your point about everyone else managing to succeed with the current system: it's well-known that the overwhelming majority of startups fail. While many of those failures are self-inflicted, the weight of regulations and laws with unpredictable consequences doesn't help and sometimes certainly contributes to the failures.

wmf 3y ago
It's kind of a "known unknown"; I don't know what problems this would cause but I'm sure there would be something that no one anticipated. I realize this is a vague criticism. My comment was inspired by recent discussion of OpenAI's custom structure (a capped-profit subsidiary owned by a non-profit) where the board seemingly had no incentive to generate profit but investors didn't realize this. I've also heard bad stories from a startup that stayed under 50 employees forever to avoid the owner having to learn about various labor regulations; it sounds like it hurt everyone involved long-term.
- coderatlarge 3y ago
  Understood - and I appreciate the discussion. Examples like the 50 employee bar you bring up are exactly the kind of unintended consequences of the current employment system I'm thinking of. (my understanding is that it happens in many places) It costs so much in dollars and in opportunity cost to make a small step (one more employee) that companies make sub-optimal decisions to avoid these costs, thus hurting everyone. If those firms were setup more flexibly (perhaps as I describe, but maybe also in other ways), then they could grow more organically and benefit more people. I suspect we each view that example differently :) The OpenAI structure that you touch on is also very interesting. When the full story of what happened and why comes out, it should shed some light on the incentives that structure created. In what I'm trying to sketch, the incentives of participants would be aligned by a common profit motive.

wmf 3y ago

It's kind of a "known unknown"; I don't know what problems this would cause but I'm sure there would be something that no one anticipated. I realize this is a vague criticism. My comment was inspired by recent discussion of OpenAI's custom structure (a capped-profit subsidiary owned by a non-profit) where the board seemingly had no incentive to generate profit but investors didn't realize this. I've also heard bad stories from a startup that stayed under 50 employees forever to avoid the owner having to learn about various labor regulations; it sounds like it hurt everyone involved long-term.

coderatlarge 3y ago
Understood - and I appreciate the discussion. Examples like the 50 employee bar you bring up are exactly the kind of unintended consequences of the current employment system I'm thinking of. (my understanding is that it happens in many places) It costs so much in dollars and in opportunity cost to make a small step (one more employee) that companies make sub-optimal decisions to avoid these costs, thus hurting everyone. If those firms were setup more flexibly (perhaps as I describe, but maybe also in other ways), then they could grow more organically and benefit more people. I suspect we each view that example differently :) The OpenAI structure that you touch on is also very interesting. When the full story of what happened and why comes out, it should shed some light on the incentives that structure created. In what I'm trying to sketch, the incentives of participants would be aligned by a common profit motive.