Asset sharing & upside swapping // Five-year experiment in business marriage // Results & numbers, profit & IP

January 26, 2022 · living

In an attempt to make ourselves twice as likely to become at least half as successful, Devin and I created a collaboration structure that was closer to marriage contract than cofounder agreement.

This deal — a blending of our upside and assets — has been running for four or five years now. 

The original structure was simple:

• We would each work individually on whatever we wanted, whenever we wanted, unburdened by any sort of approval, oversight, or process
• Anything of value would be evenly split between us, even if only one of us had worked on it
• This allowed us to be weird in our exploration and efficient in our execution, shifting our collective attention between promising ideas without worrying about how many hours went into “mine” vs. “yours” 
• The agreement was forward-looking and excluded anything that already existed (property, savings, etc.); we also made some exclusions for the occasional bit of consulting or investment income

Our intention was to allow for frictionless, exploratory collaboration while avoiding both the legal overhead of early incorporation and the operational rigidity of skunkworks. (Although this structure obviously requires strong trust and would collapse with an adversarial participant.)

The partnership’s half-decade results:

• ~$400k in taken profits (split between Devin and myself)
• ~$12k/month in hands-off profit via long-lasting, shared assets (mostly books, plus some other minor IP)
• A new, hands-on business that’s currently doing ~$10k/month (revenue) and growing well enough for a bootstrapped thing (this is what we’re doing around Useful Books)
• Loads of latent IP that may yet take root and grow into something

We’ve now decided call it a success, to wrap the exploratory stage, to formalize what we’ve got, and to draw a new line about what’s in-vs-out.

We remain cofounders in the new biz and will continue sharing the profits from everything created during these last five years of exploratory collaboration. 

The only real change is in excluding future personal projects from the automatic split. 

This is partly because the original agreement has done its job, partly because our lives are getting more constrained and complex, and partly because the edge cases are getting edgier. 

Regardless, I suspect that we’ll still end up roping each other into anything that begins to develop an interesting set of legs.

As a model for collaboration, this sort of asset/IP share is extremely powerful (but also extremely situational and trust-reliant).

Anyway, just wanted to share the experience, since this model is maybe less common than it ought to be, at least for a certain type of creator.

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