Imagine there is a web based start up
at its early stage which is open for
anyone who wants to contribute. You
can contribute into:
- business plan
- marketing research
- advertising and promoting
- infrastructure, etc.
...I'm with you so far. As Susan Jones said, this is pretty much how Startup Weekend works...
Afterwards when the company is up and
running all participants will get
shares based on how much time, energy
and resources they invested.
...and this is where I think you run off the rails. How do you determine the value of everyone's time, energy, and resources? What happens when three guys who did nothing but whine a lot (but generated LOTS of email chatter), and commented 10 lines of code point out the huge amount of "work" they put in and demand 40% equity? What happens when the person who wrote that one component you couldn't live without decides to take it and walk because he/she doesn't like his/her cut? What happens when someone decides to walk and their work is so intertwined with the rest of the project that it is impossible to separate, even with liberal use of "git blame" and a tweezer? And who will be willing to be the outlier putting in ridiculous levels of work and expertise, with the possibility that he/she will get 4% down the road after having made the whole thing possible?
Also, who wants the extra tax liability that comes with getting their shares after they are valuable rather than before?
I can definitely see the possibility of having an "open season" early in a project, sort of like we have at Startup Weekend. However, before people have too much invested, and long before the company is worth much, you need to incorporate, come up with a shareholder agreement, and divvy up shares for founders (probably with some sort of vesting deal).