Hell is other people – Jean-Paul Sartre. This is usually the first thing that comes to mind when a bunch of friends, who have been working for a year or two to turn their idea developed over a few beers down the pub into a billion dollar business, need to divide up the profits from their first sales. This is the point where many startups implode. Most startups avoid this problem by never making any profits, finally, quietly, dying in the corner. But what if you do actually want to create a profitable business? How to avoid this tragedy? Kentron solves this problem by establishing a clear set of rules that defines a level playing field for the game right from the start. These rules are codified in the Kentron Shareholder Agreement and Company Constitution which every participants must agree to and sign.
The ‘reward tone’ for a project is set by the Project Leader who, on initiation of the project, specifies a value for the initial idea which defines their initial allocation of Type 1 Conversion Notes. Set that value too high and you may have nobody willing to work on your project in return for Conversion Notes as it will take them far too long to achieve any meaningful share of the potential profits generated by the project. Set that value too low and you may end up being a minor shareholder in the spinoff company that commercialises your original idea. Inflate the value of your Conversion Notes too quickly and you may discourage external investors. Inflate the value too slowly and you may have your equity share quickly diluted by a late investor.
These, and other ‘levers’, are available to fine-tune rewards for contributions of ideas, time and funds to progressing a project.