Wednesday, September 24, 2008

FairSoftware.net

FairSoftware.net
I am fascinated by this company.

Handling money is one of the biggest problems with small businesses of any kind. As an angel investor getting some of that money to flow back to you is like making water run uphill.

People have this notion that legal contracts behave like code since they look like code with lots of conditional statements and obscure jargon. Unfortunately they don't execute like code. Its actually very difficult to get them on the control path at all. It takes going to court and hiring lawyers who sorta execute the code in front of a judge who gives some binary outcome.

But that binary outcome doesn't really hit the control flow either. You have to take that to someone else, likely more lawyers and more judges who will munge on the data and give you more bits. This can go on for a long time to everyone's detriment but the lawyers.

The overhead involved with mangaging collections and distributions of revenue is one of the reasons why there's a certain minimum size for many business endeavors.

FairSoftware.net seems to move in the right direction. Its a web service where the founders, investors and any other stakeholders fill out forms agreeing on revenue distribution percentages. They generate all the legal documents, but more importantly, they set up a payment processing gateway (thru paypal) which automatically distributes all incoming payments made to the group to each of the stakeholders according to the percentages defined.

This could enable a whole ecosystem of micro tech investments. Some additional features that would make it even more useful for tech angels :
- escrow service that could hold ip assets of the collective
- equity mangagement that could handle the concept of an acquisition
- more complex algorithms for defining payout schemes that could account for things like vesting, cliffs, and bonuses tied to revenue objectives

3 comments:

Parag said...

This is a wonderful concept. It not only ensures fairness in financial dealings, it also ensures that stakeholders can focus on getting the work done without having to worry/quibble over money matters.

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Parag

Toby Morning said...

Freeman,

This site is a great idea, and has huge potential. I have recently been looking for somehting like this to even manage the equity relationships, and this rocks!

Hope all is well!

Toby-

PeopleSoft said...

To check it out, I created an account and also created a project.

The funny part is that I was looking for some "People" to team up the project. I could not find anyone there. May be I was the first one to register in the site?!!

If I have to find my team partners outside of the site, why I should use this site and expose your details