I wanted to present this here so we could have a documented discussion of it.
Contributors need to be compensated and more permanent members (like board members) should be paid on a more permanent basis.
Questions
How do we compensate appropriately and fairly for all contributions?
Remember, not all contributions happen in the GH repo either. (community management, legal, etc.)
How can we budget for / afford to have a strong board of directors?
There should be some solid incentive for talented executives to want to be a more prominent part of this team. Time is expensive.
Split Profit Model
Some traditional Coop models split the profits based on predetermined (voted on) percentages. For example, the Coop could have a set budget that is allocated to things like marketing, servers, developer time, etc. A percentage of that budget could be directed to contributors. Then, that % could be divvied up based on certain ratios. For example, many Coops choose to pay their board of directors on a scale relative to the rest of their contributors. This usually ranges from 3:1 to 9:1.
For a real-world example of how that would all work, picture the scenario below.
The Coop generates $1 million in revenue in a quarter, has 9 board members and 50 regular members.
After the budget has been applied and $ has been put towards different aspects of the business or saved for future use on those different aspects, there is $250,000 left over.
For the sake of this argument, each board member worked 60 hour weeks or 780 hours total in the quarter. Each regular member worked 20 hour weeks or 260 hours.
9 board members 780 hours = 7,020 hours
20 regular members 260 hours = 5,200 hours
Let's assume board members are paid on a 5:1 ratio.
Those 9 board members would now be worth the equivalent of 7,020 hours * 5 = 35,100 hours.
Now, we add 35,100 hours + 5,200 hours and we get 40,300 hours.
With a surplus of $250,000 divided by 40,300, we get $6.203... per equivalent "hour".
Each regular member worked 260 hours, so they would each receive ~$6.203 260 = $1,613.90... for the quarter.
Each board member worked 780 hours on a 5:1 ratio, so they would each receive (780 5) * ~$6.203 = $24,194.54... for the quarter.
Note: This calculation makes a lot of assumptions and should only be used as a guideline for how this could be calculated.
Also note: We will have to figure out a method for validating hours worked...
Another note: This doesn't have to be done on an hourly basis. It could use the same ratio, but assume all members get paid the same. However, that makes it easy for members to join, do nothing, and receive free money.
Revenue Distribution Ideas
I think budgets should be voted on quarterly as needs change.
I also think that budgets should be able to be ratified/changed through the AIP process at any time.
We should start this discussion by talking about revenue distribution both pre and post profits. By "post profit", I specifically mean after the exchange can afford its own costs (developers, servers, etc) from the revenue generated on the platform.
"Pre profit" would generally mean that the exchange is operating through either self-funding or investments.
Here is one proposed set of models for revenue distribution:
I wanted to present this here so we could have a documented discussion of it.
Contributors need to be compensated and more permanent members (like board members) should be paid on a more permanent basis.
Questions
How do we compensate appropriately and fairly for all contributions? Remember, not all contributions happen in the GH repo either. (community management, legal, etc.)
How can we budget for / afford to have a strong board of directors? There should be some solid incentive for talented executives to want to be a more prominent part of this team. Time is expensive.
Split Profit Model
Some traditional Coop models split the profits based on predetermined (voted on) percentages. For example, the Coop could have a set budget that is allocated to things like marketing, servers, developer time, etc. A percentage of that budget could be directed to contributors. Then, that % could be divvied up based on certain ratios. For example, many Coops choose to pay their board of directors on a scale relative to the rest of their contributors. This usually ranges from 3:1 to 9:1.
For a real-world example of how that would all work, picture the scenario below.
Note: This calculation makes a lot of assumptions and should only be used as a guideline for how this could be calculated.
Also note: We will have to figure out a method for validating hours worked...
Another note: This doesn't have to be done on an hourly basis. It could use the same ratio, but assume all members get paid the same. However, that makes it easy for members to join, do nothing, and receive free money.
Revenue Distribution Ideas
I think budgets should be voted on quarterly as needs change. I also think that budgets should be able to be ratified/changed through the AIP process at any time.
We should start this discussion by talking about revenue distribution both pre and post profits. By "post profit", I specifically mean after the exchange can afford its own costs (developers, servers, etc) from the revenue generated on the platform.
"Pre profit" would generally mean that the exchange is operating through either self-funding or investments.
Here is one proposed set of models for revenue distribution:
Revenue Distribution Breakdown (Pre Profits)
Operational Costs - 65%
Marketing & Customer Acquisition - 35%
Revenue Distribution Breakdown (Post Profits)
Operational Costs - 55%
Marketing & Customer Acquisition - 25%
Giveaways & Promotions - 10%
Charitable Contributions - 10%