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“Manifest LLC” Ownership Proposals

Sketch 3 is my leading proposal

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Sketch 1

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Sketch 2

Sketch 3

  • 10% to Manifold for incubating and backing 2023, 2024
  • 10% to Manifund for backing (not investing) 2025 with $100k, plus incubating
  • 40%: 10% each year to individual organizers, for 4 years
    • 2023: 5% Austin, 3% Saul, 2% David
    • 2024: 4% Saul, 4% Rachel, 2% Austin
    • 2025
    • 2026
  • 40% unassigned
    • 20%: for some other future fulltime team, vesting over 4 more years?
    • 20%: future events?

Thoughts:

  • Equal-ish splits of 10% each Manifold, Manifund, and each year’s organizers seems pretty okay
    • (though this is sus, on priors you should expect contributions from different parties to be pretty unequal?)
  • Also means that ~10% equity translates to about 6mo of FTE work (3FTE x 2mo)
    • vs Manifold, for one founder: ~3.3% equity for 6mo (1 FTE x 6mo)
    • Would also mean a fulltime CEO of Manifest might get eg 30% vesting over 3 years, starting from now?
      • On one hand, fulltime work & comm more valuable than part time
      • On the other, Manifest is starting with a lot more brand value
  • Also puts valuation of “Manifest” at $1m, which seems a bit low maybe. But maybe Manifund gets a better deal for being early and contributing a bunch of its opportunity cost too
    • Actually, “Manifest” at $1m for the ~50% vested piece seems maybe reasonable? Earlier Austin thought $200k-$2m was a reasonable guess for The Curve
      • (though, The Curve is also only like 25% vested, under some considerations)
  • At a $1m valuation, 1% = $10k in “equity”. which is… fine?

Misc notes

  • A lot of this is about relative weights:
    • What is the relative contribution of “organizer (time) vs funder (money) vs brand (connections)”?
    • Between organizers, what is the relative contribution?
      • I think this is much easier to think about, maybe because one rough heuristic is “how much time is each person contributing”, and then you adjust for seniority
  • How to structure this as a proper “impact cert”, not just a standard for-profit?
    • Could accept philanthropic funding
    • Could write into corporate charter, or make it similar to a public benefit corporation
  • What does it mean for someone to own 10% of “Manifest LLC”?
    • Has 10% of ownership interest, typically characterized as “financial interest”?
      • Makes most sense if this thing is ever sold
    • Holds 10% of “impact”?
      • in some kind of retroactive credit sense?? What does this mean?
  • What is the literature on equity splits eg for startup founders?
  • Also, what’s literature on bootstrapped events businesses? Might be a better reference class than tech startups
    • (though: the opportunity cost of folks does come more from tech startup backgrounds)
    • Also weirder since this isn’t FTE work
  • How does future “dilution” work?
    • Like, assume that a startup has hit its 4 years. How are founders compensated now?
  • Is it bad that this only outlines like a 4 year roadmap for “Manifest”, of which 2 years have already elapsed?
  • Are we double-counting assignments?
    • ie in 2023, Austin/Saul/David were all working for Manifold, and got Manifold equity for their work there already.
      • Maybe this is fine though
  • Does it make sense to think through Shapely values here?
  • Austin argues valuations should not include unvested equity
    • I think Claude agrees fwiw
  • Taxes seem like they’d be a headache to manage? Weird setups for founder equity in c-corps anyways, to avoid taxable events
  • Maybe instead of LLC, this should be c-corp, idk

Ownership vs decisionmaking

  • So far this is more set up for economic interests
  • But there’s a broader question of governance, how “Manifest LLC” actually makes decisions
    • Shareholder vote?
    • Early startup or charity: “CEO makes calls, board can fire the CEO?”

Alternative structure: “Manifest Umbrella”

  • “Manifest LLC” is a wholly owned subsidiary of “Manifest Umbrella”, which has the for-profit plus “good for the Manifold community/good for the world” structure
    • “Manifest Umbrella” doesn’t even need to be incorporated?
    • Manifest Umbrella
      • Manifest LLC
      • Manifest Charity (501c3)?
        • (or also unincorporated; c3 is mostly good for receiving grants)
  • Represents something interesting about positive externalities
    • Manifest LLC tries hard to make money
    • Manifest for Charity wins grants for positive externalities (eg takes an OpenPhil grant, or a large supporter donation)
  • But: more complicated, so probably bad.