> It wasn’t always this way; from 2015-2019, everyone at Gumroad was paid cash, no equity. No one wanted any.<p>Gumroad started in 2011 and raised $8 million. The reason "no one wanted" any equity in 2015 was because they laid most employees off, replaced them with contractors, and the investors wrote their equity down to $1 as a gift to the founder. The founder got to keep the IP, ditch the founding employees, and continue running the company.<p>The founder wrote a couple articles about the experience:<p><a href="https://www.businessinsider.com/startup-failure-gumroad-why-startup-failed-2019-2" rel="nofollow">https://www.businessinsider.com/startup-failure-gumroad-why-...</a><p><a href="https://sahillavingia.com/reflecting" rel="nofollow">https://sahillavingia.com/reflecting</a><p>What's not pictured in these articles is the employee perspective. The founder got to keep his company, got the company's IP handed to him, and I don't know what became of the employees' equity. Probably nothing, given that the company had to be written down to nearly $0 for this transfer.<p>I remember reading a very angry Twitter rant from an ex employee who was burned. I wish I could find it now, but that was nearly a decade ago. It was one of my cautionary tales about taking equity in startups at the time. It hadn't ever crossed my mind that someone could take VC money, pay employees (partially with equity) to build a company, then everyone gets laid off, equity declared worthless, but the founder gets to continue operating the company at a profit.<p>It's also interesting to note that the Tweets embedded in both of those articles above come from Austen Allred, the now-infamous founder of Lambda School. Lambda School was rebranded to BloomTech after their first wave of scandals, which was rebranded again to Bloom Institute of Technology after their recent scandal (which resulted in Austen being banned from all student-lending related activities for 10 years). The two of them are prolific social media users and have an incredible ability to rewrite their own stories through sheer volume of social media postings and articles.
I invested $1,000 in Gumroad back when they did the public fundraise, and I got back ~$70 so far. At this rate it'll take multiple years to break even, much less earn a multiplier. But oh well, I liked the Gumroad team so I wasn't looking for much of a profit anyway.<p>Related, I thought it was hilarious how so many creators on Twitter publicly stated they were leaving Gumroad when the 10% fee change was enacted, only to have the fee actually be a success. It's Netflix all over again, it just goes to show how the internet and the people on it create a vast but very vocal minority of opinions that are not worth listening to in the real world. Anyone worth listening to is not shitposting on Twitter and other social media.
> Today, Gumroad pays hourly freelancers around the world $125-$200/hr.<p>Compliance with local laws is VERY difficult. I would not take this equity even for free. It triggers all sort of accounting laws, exceptions and so on. How should I estimate the price on my tax returns? What if I am on some sort of sanction list?<p>Cash is the king when it comes to freelancers.
I think Flexile is a great concept, and there's tremendous value in simplifying things like equity & dividends. I'd like to see dividends become the norm for other companies!
I had a generalization of this idea once: not only giving freelancers equity, but giving EVERYONE equity who contributed to the success of the company. For a while, during my 2nd startup attempt, I carried a little paper notebook and documented anyone who helped me. (Alas, I did not raise funding the world was not ready for mobile search in 2004...)
I wish you addressed your original hypothesis with concrete examples (is this fair, does being early matter, is it clear)<p>Eg, you gave equity to early contributors, how much and what did that translate to? If those same people work as freelance now, are they paid the same relative equity? Same class?<p>How long would someone allocating to equity need to work before they see the equivalent in dividends? Calculator seems like 25 years. Or working as more or less full time for 12 years with a 50% split.<p>For me by the end I was left with more questions than answers, so I side with mom, but I like the general idea of <a href="https://flexile.com/" rel="nofollow">https://flexile.com/</a>
I love seeing into Gumroad so much. Very curious if it's worth 100 M at the moment based on dividends<p>In 2023: 20.7 M Revenue - 8.9 M net income - 5.34 M dividend<p>With no net income growth would take about 19 years for the dividends to pay out your original investment<p>Will be interesting to see the 2024 numbers.
You could potentially move into an interesting related business: that of allowing people to draw down their salary whenever they like, so they can take it weekly or monthly or daily (if they liked). That's a very gig-economy-friendly feature.
I'd never heard of gumroad, so I took a look into it.<p>The Wikipedia isn't much help, but does do a decent definition.<p>"Gumroad enables creators to sell digital products, such as e-books, music, videos, software, and physical goods."<p><a href="https://en.wikipedia.org/wiki/Gumroad" rel="nofollow">https://en.wikipedia.org/wiki/Gumroad</a><p>--<p>Then MakeUseOf has an article, which makes it sound good. They compare it to Etsy as another site for selling things on.<p>see:
<a href="https://www.makeuseof.com/what-is-gumroad-what-can-you-sell-on-it/" rel="nofollow">https://www.makeuseof.com/what-is-gumroad-what-can-you-sell-...</a><p>--<p>Checking on scamadvisor, the site rates it pretty highly, but user score is low. I'm guessing this has to do with creators getting burned by their history and/or price increases.<p>see:
<a href="https://www.scamadviser.com/check-website/gumroad.com" rel="nofollow">https://www.scamadviser.com/check-website/gumroad.com</a><p>--<p>Some reddit posts have positive things to say. With a common theme of BYOA (Bring Your Own Audience), as gumroad seems to do a minimal job of pushing content; Which matches up with my experience of never having heard of it before.<p>see:
<a href="https://www.reddit.com/r/selfpublishing/comments/h02pls/anyone_have_experience_with_gumroad/" rel="nofollow">https://www.reddit.com/r/selfpublishing/comments/h02pls/anyo...</a>
<a href="https://www.reddit.com/r/artbusiness/comments/17ij8nz/is_gumroad_worth_it/" rel="nofollow">https://www.reddit.com/r/artbusiness/comments/17ij8nz/is_gum...</a><p>--<p>Checking pitchbook and crunchbase shows it's a private company with pretty good financials. And so there's minimal risk of being "Actively Evil" that public companies can be; i.e., selling out the company for short term profits while grifting customers for all their worth.<p>see:
<a href="https://pitchbook.com/profiles/company/53830-99" rel="nofollow">https://pitchbook.com/profiles/company/53830-99</a>
<a href="https://www.crunchbase.com/organization/gumroad/" rel="nofollow">https://www.crunchbase.com/organization/gumroad/</a><p>--<p>One caveat is that they don't seem support commissions; That is, paying a fee to an artist or creator for a customized piece.<p>see:
<a href="https://www.reddit.com/r/selfpublishing/comments/h02pls/anyone_have_experience_with_gumroad/" rel="nofollow">https://www.reddit.com/r/selfpublishing/comments/h02pls/anyo...</a>