sweat equity

  • December 13, 2011
  • In a world increasingly in need of frictionless approaches to business a new company has offered a way for startups to get going with the barest minimum effort.  It’s called Wahooly.com and it is a startup too.  You have to admire the cleverness of this approach.

    Wahooly is building a network of people interested in the emerging areas of technology.  It will then collect a small fraction of a new company’s stock to be distributed among the first few thousand people who become involved with the company.  Suppose you start a social network (not that I would given the glut already out there, but let’s play along).  To get some new users for this new venture, it gives Wahooly.com 5% of its stock which is at the moment worthless.  Wahooly then recruits members for the new venture from its database and let’s say that’s 5,000 people.  People interested go to said new venture and sign up or do whatever then need to do to become active.  That class of sweat equity investors shares the 5% equity so that on the chance that new venture actually goes somewhere the first users share in the rewards.

    Now, this is where we say, whoa horsey.  If this was the real world there could be all kinds of conflicts of interest as the new investors promote their new favorite company.  There are numerous legal and business issues to get straight and the Wahooly.com website is not exactly forthcoming with detail, but what did you expect for nothing?  This will be a curiosity for a few months but then we’re going to need some numbers for those of us still rooted in reality.  Check it out.

    Published: 12 years ago