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I've actually come up with the solution: http://michaelochurch.wordpress.com/2013/05/07/fixing-employment-with-consulting-call-options/ http://michaelochurch.wo

I've actually come up with the solution: http://michaelochurch.wordpress.com/2013/05/07/fixing-employment-with-consulting-call-options/ http://michaelochurch.wordpress.com/2013/05/07/fixing-employ... Talented people sell call options on their time, on a freelance basis. The strike is the minimum value they'd accept to take a job over the next N years, and the option price (set by market, but with seller's right to set a floor) is the value of that call. There has got to be some risk-neutral/wealthy person out there who'd buy the right to deploy a great programmer's time (possibly worth $500+/hour) for $150 per hour, any time in the next 5 years, up to K hours (the lot size). This is, for a number of moral, emotional, and financial reasons, a lot better than the "N% of future income" gimmick that some people do to raise money for college. It could actually scale, which income-sharing won't (for a variety of reasons, related mostly to fungibility). It also gives consultants a way to raise money (for living expenses) immediately while the allocation of their talent is outsourced to third-parties who buy these options and then deploy their time.

blueprint 14y ago
In terms of scaling, how do you deal with prioritizing two different buyers claiming the same time period of a single seller?
- michaelochurch 14y ago
  That's not easy. I'll be honest about that. It's hard. I think that the solution is transparency. The option isn't like a regular stock option. There are a lot of things that must be included: 1. Minimum and maximum hours per week that can be called-in. A person who intends on working full-time might set 0-12. (People can work over the maximum; there just isn't an expectation of top priority.) A person who intends on being a full-time consultant might set 20-50. 2. Industries for which a person refuses to work. 3. Willingness and ability to travel. 4. How many of these contracts are outstanding. If someone wrote 5000 hours of options over the next year, that's patently ridiculous. There's no good definition of "too much", but buyers have the right to know. 5. Whether the person is working full time, and intends to continue doing so. 6. Priority resolution, as you mentioned.
oinksoft 14y ago
Five years in advance? That's nuts. My time in five years will likely be twice as valuable as it is now. I also find "set by the market, with the seller's right to set a floor" dubious .. what market dictates this? Prices vary wildly from location to location, even for the same individual should they decide to move in the interval between the original order and its eventual fulfillment. Further, how responsive does the freelancer have to be to their client? Do they have to drop everything at a moment's notice or risk liability for the investment? You have a novel idea, but it is checkered with question marks.
- michaelochurch 14y ago
  Five years in advance? That's nuts. My time in five years will likely be twice as valuable as it is now. Right. So if your time is worth $75/hour now (you douched it up a couple days ago with that "narcissistic shit" comment, so I'm pricing you conservatively) then your 5-year $75-struck option is worth at least $75 (higher, actually, due to volatility) and you'd get to collect that now. You take the option premium, invest it in yourself now, and if you're called in, you get additional pay (the strike price of the option) for the work. I also find "set by the market, with the seller's right to set a floor" extremely dubious. What market dictates this? Well, that's the hard part. The reason we find "X-percent-of-future-income" deals to be tasteless and gimmicky is that there's still a stigma against publicly looking for work. It either means, to a lot of people, that you're either desperate, or sociopathic and looking for the highest bidder. That's why work and consulting especially often comes down to these medieval-era reputation economies. Building the market would be a non-trivial undertaking, but it would improve the freelancer's life (income stability) substantially. Further, how responsive does the freelancer have to be to their client? Do they have to drop everything at a moment's notice or risk liability for the investment? I would say that the contract should specify a minimum and maximum hours per week, and that the initial price is repaid if the person can't meet that commitment. This means that 5-year-window options might not be practical, because you're right that there's the priority problem. What if someone sells 2500 hours of time with a 5-year window and it's all called in in the last 4 months? I won't claim that these things are easy to structure, because they're not, but it can be done.
cperciva 14y ago
Alas, it is not legal in most countries to sell yourself into indentured servitude, no matter how reasonable your aims in doing so...
- michaelochurch 14y ago
  This wouldn't be that, because: 1. There would still have to be some right to back out (with payment of the original option premium, for sure, and penalties for people who do that often, like being blocked from the market, and being sued for breach if they did it in bad faith.) 2. People would be expected to disclose what kind of work they would and would not do. Obviously, nothing illegal can go down; but normal tech work (building websites) is, I think, fine for most people. 3. Indentured servitude is different because a servant's obligations are 24/7. This is a contract over a certain, limited amount of time. The only difference between it and a regular consulting contract is the transferability among buyers (or future buyers who'd exercise the option). Regarding the moral hazard / ethics problem, I believe that if the market were well-structured, people would comply (i.e. work at the strike price, even if their market rates improved far beyond it) just to have continuing access to the market, and also for social networking purposes. You may have underpriced yourself 5 years ago at $100/hour when you're now worth $300, but you only obligated yourself for 200 hours and it might just be worth it to work at that rate. for a short amount of time and, possibly, get a client you can charge a higher rate in the future.
  - cperciva 14y ago
    There would still have to be some right to back out Ok, that changes things. I'm not quite sure why anyone would pay for the opportunity to offer someone a job, though. I believe that if the market were well-structured, people would comply (i.e. work at the strike price, even if their market rates improved far beyond it) just to have continuing access to the market, and also for social networking purposes. You're clearly far more optimistic than I am. :-)
    - michaelochurch 14y ago
      There'd be a serious back-out penalty. You'd either have to buy the options back at a fair price, and you'd lose access to the site if you were acting in bad faith. Yes, people would have the right to refuse work, but if they abused it, they'd lose access to that market. As with any other contract, people who backed out would face penalties as agreed-upon (at the very minimum, repayment of what they earned in the original sale).
lifeisstillgood 14y ago
This already exists in most consultancies - its called "maintenance". Pay me 500 bucks a month and I will keep one day aside just for you / scramble to find a day on the month you do actually call in the marker. michaelochurch's approach is interesting - and reminiscent of a TED talk about auctioning piecemeal factory worker time which I cannot find right now, but both of these suffer one big, possibly insurmountable drawback - they are chicken and egg - when 30% of the workforce finds work this way, hooray! Everyone will trust it. Till then ... no-one
ebiester 14y ago
I'm having a bit of an issue with the buy and sell provision of the option. So, I provide these, and the people who buy these options are people who are doing unethical (in my eyes or others) things. Let's say hiring a gay person to do a webpage for Stormfront, or a feminist's time being sold to a pornography site. I care deeply who I work for, at least at the edges. My two worst experiences that nearly broke me were for business which I felt I was making a negative impact on society. That's not saying I won't work for a Fortune 500 -- I've done my fair share -- but I can't imagine giving up that kind of control.

blueprint 14y ago

In terms of scaling, how do you deal with prioritizing two different buyers claiming the same time period of a single seller?

michaelochurch 14y ago
That's not easy. I'll be honest about that. It's hard. I think that the solution is transparency. The option isn't like a regular stock option. There are a lot of things that must be included: 1. Minimum and maximum hours per week that can be called-in. A person who intends on working full-time might set 0-12. (People can work over the maximum; there just isn't an expectation of top priority.) A person who intends on being a full-time consultant might set 20-50. 2. Industries for which a person refuses to work. 3. Willingness and ability to travel. 4. How many of these contracts are outstanding. If someone wrote 5000 hours of options over the next year, that's patently ridiculous. There's no good definition of "too much", but buyers have the right to know. 5. Whether the person is working full time, and intends to continue doing so. 6. Priority resolution, as you mentioned.

oinksoft 14y ago

Five years in advance? That's nuts. My time in five years will likely be twice as valuable as it is now. I also find "set by the market, with the seller's right to set a floor" dubious .. what market dictates this? Prices vary wildly from location to location, even for the same individual should they decide to move in the interval between the original order and its eventual fulfillment. Further, how responsive does the freelancer have to be to their client? Do they have to drop everything at a moment's notice or risk liability for the investment? You have a novel idea, but it is checkered with question marks.

michaelochurch 14y ago
Five years in advance? That's nuts. My time in five years will likely be twice as valuable as it is now. Right. So if your time is worth $75/hour now (you douched it up a couple days ago with that "narcissistic shit" comment, so I'm pricing you conservatively) then your 5-year $75-struck option is worth at least $75 (higher, actually, due to volatility) and you'd get to collect that now. You take the option premium, invest it in yourself now, and if you're called in, you get additional pay (the strike price of the option) for the work. I also find "set by the market, with the seller's right to set a floor" extremely dubious. What market dictates this? Well, that's the hard part. The reason we find "X-percent-of-future-income" deals to be tasteless and gimmicky is that there's still a stigma against publicly looking for work. It either means, to a lot of people, that you're either desperate, or sociopathic and looking for the highest bidder. That's why work and consulting especially often comes down to these medieval-era reputation economies. Building the market would be a non-trivial undertaking, but it would improve the freelancer's life (income stability) substantially. Further, how responsive does the freelancer have to be to their client? Do they have to drop everything at a moment's notice or risk liability for the investment? I would say that the contract should specify a minimum and maximum hours per week, and that the initial price is repaid if the person can't meet that commitment. This means that 5-year-window options might not be practical, because you're right that there's the priority problem. What if someone sells 2500 hours of time with a 5-year window and it's all called in in the last 4 months? I won't claim that these things are easy to structure, because they're not, but it can be done.

cperciva 14y ago

Alas, it is not legal in most countries to sell yourself into indentured servitude, no matter how reasonable your aims in doing so...

michaelochurch 14y ago
This wouldn't be that, because: 1. There would still have to be some right to back out (with payment of the original option premium, for sure, and penalties for people who do that often, like being blocked from the market, and being sued for breach if they did it in bad faith.) 2. People would be expected to disclose what kind of work they would and would not do. Obviously, nothing illegal can go down; but normal tech work (building websites) is, I think, fine for most people. 3. Indentured servitude is different because a servant's obligations are 24/7. This is a contract over a certain, limited amount of time. The only difference between it and a regular consulting contract is the transferability among buyers (or future buyers who'd exercise the option). Regarding the moral hazard / ethics problem, I believe that if the market were well-structured, people would comply (i.e. work at the strike price, even if their market rates improved far beyond it) just to have continuing access to the market, and also for social networking purposes. You may have underpriced yourself 5 years ago at $100/hour when you're now worth $300, but you only obligated yourself for 200 hours and it might just be worth it to work at that rate. for a short amount of time and, possibly, get a client you can charge a higher rate in the future.
- cperciva 14y ago
  There would still have to be some right to back out Ok, that changes things. I'm not quite sure why anyone would pay for the opportunity to offer someone a job, though. I believe that if the market were well-structured, people would comply (i.e. work at the strike price, even if their market rates improved far beyond it) just to have continuing access to the market, and also for social networking purposes. You're clearly far more optimistic than I am. :-)
  - michaelochurch 14y ago
    There'd be a serious back-out penalty. You'd either have to buy the options back at a fair price, and you'd lose access to the site if you were acting in bad faith. Yes, people would have the right to refuse work, but if they abused it, they'd lose access to that market. As with any other contract, people who backed out would face penalties as agreed-upon (at the very minimum, repayment of what they earned in the original sale).

lifeisstillgood 14y ago

This already exists in most consultancies - its called "maintenance". Pay me 500 bucks a month and I will keep one day aside just for you / scramble to find a day on the month you do actually call in the marker. michaelochurch's approach is interesting - and reminiscent of a TED talk about auctioning piecemeal factory worker time which I cannot find right now, but both of these suffer one big, possibly insurmountable drawback - they are chicken and egg - when 30% of the workforce finds work this way, hooray! Everyone will trust it. Till then ... no-one

ebiester 14y ago

I'm having a bit of an issue with the buy and sell provision of the option. So, I provide these, and the people who buy these options are people who are doing unethical (in my eyes or others) things. Let's say hiring a gay person to do a webpage for Stormfront, or a feminist's time being sold to a pornography site. I care deeply who I work for, at least at the edges. My two worst experiences that nearly broke me were for business which I felt I was making a negative impact on society. That's not saying I won't work for a Fortune 500 -- I've done my fair share -- but I can't imagine giving up that kind of control.