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A more direct return on investment
Dec. 5th, 2009 09:18 amAs part of my struggle with 'how can anyone's time be worth so much?!' I've come the conclusion that taking a transparent per/unit payment on top of a modest base salary is a better option. Especially once you start automating production - effectively the return on your original product starts to scale. Potentially you can even sell up the business side of things and retain the royalty.
I've also thought that would be a good way to get my money back over time as an investor in a business, without having to worry about annual interest rates and %s of profit (or loss). It also simplifies things for the investee, as the return on investment becomes a fixed cost of the product.
Turns out the esteemed Seth Godin has had similar thoughts
I can see that a portfolio of this sort of investment could add up to quite a tidy income stream after a couple of decades.
I can see one problem - IRD would rip large chunks of it since it's probably not eligible for the 'tax already paid' in the same way the way as a more traditional dividend.
(This is also how I'd like Intellectual Property to work - but people always seem to get greedy. Topic for another post.)
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As an aside, no matter what my feed reader is set to Seth's feed only seems to burp out an update about every fortnight (containing every post in the interval). It's weird.
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Edit some hours later - finally noticed the link was broken. Fixed.
I've also thought that would be a good way to get my money back over time as an investor in a business, without having to worry about annual interest rates and %s of profit (or loss). It also simplifies things for the investee, as the return on investment becomes a fixed cost of the product.
Turns out the esteemed Seth Godin has had similar thoughts
It works like this: you have an idea, a fledgling business or a new market to enter. You find an amateur investor (a wealthy dentist, a retired executive) and raise the money to bring it to market. And in return? The investor gets $xx for every unit you sell. From the first one until forever.
No fancy bookkeeping, no board meetings, no worrying about the accounting. Instead, you pay a royalty on income. The rest is up to you.
Of course, this is exactly how the math of book publishing works. The publisher puts up money and keeps 80 or 90 percent of the income. You get the rest.
It could even run on a sliding scale, with early royalties to the investor being lower, or with a buyout once a certain amount was earned back...
I can see that a portfolio of this sort of investment could add up to quite a tidy income stream after a couple of decades.
I can see one problem - IRD would rip large chunks of it since it's probably not eligible for the 'tax already paid' in the same way the way as a more traditional dividend.
(This is also how I'd like Intellectual Property to work - but people always seem to get greedy. Topic for another post.)
~~~
As an aside, no matter what my feed reader is set to Seth's feed only seems to burp out an update about every fortnight (containing every post in the interval). It's weird.
~~~
Edit some hours later - finally noticed the link was broken. Fixed.
