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I love this! The numbers are wrong though. Over time the developer will get resentful. Imagine that the developer created a SaaS site that brings in 50k a year
by jv22222 14y ago
I love this! The numbers are wrong though. Over time the developer will get resentful. Imagine that the developer created a SaaS site that brings in 50k a year, after a few years of dev (which I have). Anyone would feel resentful about paying an ongoing 50% "tax" to an initial investor.
In the 50k/year scenario the investor get's a 5x on investment for years to come. That would be an awful feeling for the developer who's putting in the ongoing maintenance effort.
A better idea would be for the investor to claim 50% until capital investment was recouped, then gradually scale back.
- So, 50% until the $8k was paid back.
- Then 25% until a 2x return.
- Then move to a 10% ongoing royalty fee.
This excites and incentives the developer to keep building things out knowing that one day they will get the the 90% lions share of profits. It also works for the investor who can rinse and repeat the process with multiple developers.