Design an open-source legal agreement that two people sign.
The contract states that each person agrees to give the other 1% of their annual earnings, each year for X years. (Ideally X = several decades; both duration & percentage could be customized)
Contract is legally binding; each year both parties pay out to each other.
Not exclusive: a person could be in multiple contracts simultaneously (e.g. 5 contracts with 5 friends, sharing in total 5% of their annual earnings).
Two motivations for signing a contract like this:
Diversify one’s career & earnings risk by “investing” in admired peers.
Deepen one’s relationship with the other signee (signing isn’t a thing to be taken lightly); signing signals intimacy & desire to build a longterm relationship with the other person.
Of course there are lots of ways something like this could go awry.
Has anyone heard of people doing something like this?
What are existing mechanisms that do something like this? Examples I’ve encountered already include marriage (50% profit-sharing indefinitely, at least in the US) and Kibbutzim (100% profit-sharing during one’s tour of duty).
Fun fact: Steven Spielberg and George Lucas entered into an arrangement like this in 1977, swapping 2.5% of their stakes in relation to Star Wars and Close Encounters of the Third Kind. It seems like Spielberg received north of $40 million from the deal. (Source)
Usually this comes up in the context of financing education, where they are sometimes called human capital contracts. This was previously discussed on LW. I left a comment there giving several of education (England, France, Yale) and another example more like this post: “360 deals” in the music industry, where instead of touring existing to promote the album or vice versa, the record label owns a proportion of everything musician does, so that their interests are more aligned. I think that the most famous example is Lady Gaga, who signed such a deal fairly early in her career. (The wikipedia article I link gives as examples even more famous musicians Madonna and Jay-Z, but those were late in their careers and, I guess, maybe in the opposite direction, where the tour promoter buys a chunk of the record.)
I’ve also thought about this, and would also be interested in seeing examples of this. I would also be interested in someone talking about the legal obstacles to doing this in the U.S. or Europe.
[Question] Individual profit-sharing?
Here’s a sketch of an idea:
Design an open-source legal agreement that two people sign.
The contract states that each person agrees to give the other 1% of their annual earnings, each year for X years. (Ideally X = several decades; both duration & percentage could be customized)
Contract is legally binding; each year both parties pay out to each other.
Not exclusive: a person could be in multiple contracts simultaneously (e.g. 5 contracts with 5 friends, sharing in total 5% of their annual earnings).
Two motivations for signing a contract like this:
Diversify one’s career & earnings risk by “investing” in admired peers.
Deepen one’s relationship with the other signee (signing isn’t a thing to be taken lightly); signing signals intimacy & desire to build a longterm relationship with the other person.
Of course there are lots of ways something like this could go awry.
Has anyone heard of people doing something like this?
What are existing mechanisms that do something like this? Examples I’ve encountered already include marriage (50% profit-sharing indefinitely, at least in the US) and Kibbutzim (100% profit-sharing during one’s tour of duty).
Fun fact: Steven Spielberg and George Lucas entered into an arrangement like this in 1977, swapping 2.5% of their stakes in relation to Star Wars and Close Encounters of the Third Kind. It seems like Spielberg received north of $40 million from the deal. (Source)
Universities have tried something like this for tuition. See these mentions from Alex Tabarrok. They have some trouble with people defaulting.
Interesting.
My intuition is that this would work better without a bureaucratic intermediary administering it.
Usually this comes up in the context of financing education, where they are sometimes called human capital contracts. This was previously discussed on LW. I left a comment there giving several of education (England, France, Yale) and another example more like this post: “360 deals” in the music industry, where instead of touring existing to promote the album or vice versa, the record label owns a proportion of everything musician does, so that their interests are more aligned. I think that the most famous example is Lady Gaga, who signed such a deal fairly early in her career. (The wikipedia article I link gives as examples even more famous musicians Madonna and Jay-Z, but those were late in their careers and, I guess, maybe in the opposite direction, where the tour promoter buys a chunk of the record.)
Poker players do this sometimes, see e.g. https://lasvegassun.com/news/2016/jun/26/buying-in-whats-in-it-for-pokers-big-money-backers/
Very interesting – professional poker didn’t occur to me!
I wonder if these agreements are enforced by legal contract? Sounds like it, from the tone of the article.
I’ve also thought about this, and would also be interested in seeing examples of this. I would also be interested in someone talking about the legal obstacles to doing this in the U.S. or Europe.
DM’d you