Bitcoin Forum

Anybody who help fund the purchase of a thing-o-matic will get a share of 50% in the profit-sharing scheme based on how much they funded. People can call for an assembly and vote on business decisions. Otherwise, I will be responsible for the day-to-day business decisions and such. Note this is only tentative.

http://store.makerbot.com/makerbot-thing-o-matic.html

The business proposal: A thing-o-matic hooked up to a bitcoin based interface. Basically, I will be the first business to manufacture items on a mass production scale for bitcoins.


Why trust me?

1. I been an escrow for the EFF and now the CCC and help organized the letter writing campaign to the EFF and the CCC.
2. A highly active and interested poster in this forum.
3. A 500 dollars bet/stake into the success of the bitcoin economy.

PENDING TRUST(Not fulfilled yet)

1. Run a web app that accept bitcoin.
2. Run bitpredict.


The fundraising effort will target 612.5 dollars worth of bitcoins. You invest at your own risk.

All bitcoins will go to this address:

[redacted for the time being]

Also notes, I will need to exchange bitcoins for dollars. That will take time.

You're going a bit fast, imo.

What about writing a clear and exhaustive company status document ?


If you want to raise say 2,000$, you must sell say 100 shares at 20$ each.  I.e about 200 BTC / share.

I'd be ok to buy one share, but you have to formalize all this much better.

Alright. It would be helpful if a lawyer can give his opinion on it, too.

We don't need a lawyer, but a few precautions.

First, you should publish your GnuPG key.  Your reputation worths nothing if it is not associated to a secure way to identify yourself.

Second, if I send some bitcoins to your address, you have to send me a signed document proving that I actually contributed to your fundraising.

Also, you have to publish somewhere about how much exactly has been raised so far.  Such publicaction should be as regular as possible.

Moreover, if I buy shares of your microcompany, I expect a bit more than a right to receive a share of your future profits.  There should be the possibility to attend to an assembly and to vote for decisions.  You can't claim "all business decisions" once you're not the only one who brought the capital.

Suggestions noted. I'll change so that people can call assembly and vote for decisions, but it will be noted that the document is not finalized yet.

I am also unfamiliar with signing document with my key and such...so there will be some time.

Also, I will be responsible for most the daily decisions making.

Good.  I'm glad you are willing to do things in the proper way.

I very much think your project is possible.  1,225$ is not that much money, anyway :)

Could you explain a bit better what the business idea is? Sorry but I am not the expert in thing-o-matic stuff.

What will it produce?
How should things be sold?
etc

Thing-o-matic is a 3D printer. Basically, it will produce a 3D object out of ABS plastic. People will be charged primary on the size of the object and than how many objects that will be produced.

The bigger the order the bigger the cost but they will also benefit from bulk discount.

I'd like to add that such a service is not new (I think it's called "rapid prototyping"), but this one would be the first one to charge in bitcoins.

It is not just "rapid prototyping" but "mass produciton rapid prototyping".

I might be interested.

If you are going to need dollars then I think you need to make the offer as x% of profits for $y.

Of course you can accept payment in btc at whatever rate you expect to be able to get. Well, actually at a worse rate for exchange rate risk because you have to get $1225 at least.

Also, you are presumably going to be adding labor for a long time, but we will get a permanent share of unlimited profit? Perhaps it makes sense to cap investors return at 5-10 times initial investment? This helps us get your incentives right too, if you put a lot of god effort in then you can get to the point of keeping all your labor.

A rough timeline would be nice too. For example, if you only have $400 in a month are you going to keep trying or return investments?

And what about ongoing costs? What is the price of the plastic? Is electricity an issue?

Just some thoughts, I'm interested to hear what people think. It seems like an appropriately sized project to me.

Investment are entirely in bitcoin, and profit sharing are entirely in bitcoin.


The labor is in assembling in the kit, the coding of the website, customer support, and then the delivery of boxes. However, I expect the operation to mostly scale.

Then, there's also the maintenance and upgrade cost for the bots too. My reputation is also at risk. Not just if I screwed you guys out but if I make money for you guys too.

Keep in mind, I get 50% of the profit. You guys get maybe only 1% of the 50% leftover and you get to stay anonymous.

That's a good question. I don't know what to decide yet.

A pound of plastic is included with the kit. But to buy more plastic, it cost 15 bucks for a pound of plastic, 65 dollars for 5 pound of plastic. I assume electricity isn't a problem.

This is just not acceptable.  You should receive in porportion to the part of the capital that you own.

If your machine costs 1250$, you'll get 50% of the profit if and only if you bring 625$.

If you get 1 share out of 100, you get only 1%.

Indeed.  But that's not possible if you already get 50% of the profit without owning 50% of the shares.

It seems that what you really want to do is to open only half of the capital.  In that case, the amount you want to raise is not 1250$, but 625$.  You will provide the second half of it.

I am sorry? You mean I have to purchase it myself? I am the guy who will put in the code and the labor and direct the operation.

That is not how things work.  What you are talking about is a labour.  It requires a salary.  This can be negociated.  A director can perfectly be a simple employee.  Same for any technician.

But this is different from the way profits are distributed.

This is basic capitalism.

Than you'll have to wait until I make enough money from other business venture before I'll consider raising capitals for thing-o-matic. This is as far as I goes.

I understand.  It's perfectly normal from you to want to make money with your idea, without giving half of it to investors.

To do so, you need to raise half of the price of the device.

But you can also accept the idea that investors will gain more money than you, at least at the beginning.  Then, with the money you'll earn, you will buy their shares back, until you eventually own more than 50% of the company.

I lowered the fundraising target to 612.5. Until I can front the other half, it will remain no go.

Capitalism is free people making whatever agreement they want about capital and funding. If some people want to pay for his labor with half the profits from their capital, then so what?

grondilu felt this is an especially unfair arrangement. I want his money but I also want an amicable relationship with my shareholders.

Ok, but investors will be more interested in bringing the second half if you can show them that you already own the first.


To put it simply,  your project exists already :  right now you own 100% of the shares.  But those shares worth nothing, until you convince people to buy some.

If you convince investors that you own 625$, and tell them that you intend to buy a 1250$ worh machine, then you might convince them to buy 50% of your shares at 12.5$ a share.

Your company will then have the necessary amount, and you will have a the right to keep 50% of the profits.

Not exactly.  Capitalism is the ownership of means of production.  What you are talking about is liberalism.

Of course if someone wants to pay labour with a share of profits, he can.  But practical experience shows that it is not interesting.  Profits are the fruits of ownership, not labour.  I know I would not buy a share of a company which distributes a proportion of profit to workers.  Or at least I would diminish my price in accordance.

It will be hard to prove that I have 625 bucks, especially when I don't like showing my paypal account to outsiders.

That's an other reason why reputation is so important.  You have to make people believe in you when you tell them something.

Of course it will be easier if you abandon the idea of owning 50% of the company, and let investors share say about 90%.  You would receive 10% of the profits, plus a salary.

Edit.  By the way,  proving that you own some money is easy with bitcoins.  You just have to use keys which are known in the bitcoin network to worth a certain amount.  Since those keys support signing, it is easy.

In the mean time, I'll guess I'll prepare a "prospectus" about the business idea. It will also include details of how to do assembly and voting, all the possible costs, business model and much more.

It'll be available for viewing and feedback.

Good.  Looking forward to that.

Nice idea Kiba. I will buy some shares when you issue them.

That definition is fine, I don't see how it precludes a group of investors from prepaying for Kiba's labor with $650 and letting him pay for his half with that from being called capitalism.

You can call it a bad deal if you want, and I don't necessarily think it's optimal that he put in no money upfront, but it's still capitalism.

Basically if you give part of profits to a non-owner, it's kind of a gift.  In capitalism, you can give things to people for no reason.  You can say it's capitalism if you want, but to me it is just as absurd as saying charity is part of capitalism.

More precisely, if Kiba insists on keeping 50% on the profits, then I consider that he owns 50% of the company.  Therefore, the shares that he will sell will represent 50% of the company, and nothing more.  That's why if the machine he wants to buy costs 1250$, and if he wants to sell 100 shares of his company, then I will price these shares at :

1250 / 2  / 100 = 6.25$

Anyone who would pay more would be fooled by Kiba, imo.

Have you seen kickstarter? It helps fund inventors and creative people by "crowdfunding".
 Kiba is trying to follow that model. He could put his idea on such a site and keep 100% of the company and pledgers get a defined benefit or special deal in future. The special deal in this case is a share in future profits.

Instead of using a crowdfunding site he has brought it here. There is nothing wrong with that model.

I don't say it's "wrong".  I say that what he's looking for is not investment, but rather "patronage" or "charity".  Or some kind of a mix.


PS:

Let me correct you :
the special deal in this case is a share ''of 50% of'' future profits.

That's a big difference.

Nice idea, I'm bookmarking this topic and hopefully something good comes out of it, looks promising and if shares are sold I'm interested in them.

this is really rather incorrect. he's the principal in this venture, and he chooses to sell X% equity stake for Y amount in funds. there's nothing wrong with that. sweat equity is quite important.

you are of course welcome to decline his offer, or try to bargain for more stake per dollar, but it is not unreasonable for him to claim some percent of equity without necessarily putting in that same percentage of monetary capital. that's how public financing works.

e.g., when google sold its ipo for $ungodlyamountofbillions, while page and brin kept >50% of equity stake, do you think they magically came up with billions of their own money to put in? no, they didn't have it to put in. essentially, they said "we're selling X percent of the firm, being represented by some number of shares. investors, feel free to bid on the right to own a share".

Well, this is all quite true.  But to me it is not clear that Kiba was aware that he was selling 50% of his company, and not 100%.

Kiba oviously can't sell his reputation at a huge price as Google did.  The only thing he could sell beyond the price of the machine, is his idea and his motivation to make it real.  And it is not particularly original.   Thus to me, his company worhs very few more than the price of the machine.

It is nice anyway to see such a young person (I think he said he's a teen) interested in venture capitalism.  I might indeed be interested.  But he has to come up with a proper initial offering.

I am a college student, not a teen. ;)

indeed - now that we're all on the same page, the bargaining can commence. :)

Commence what?

Also, I'm not very keen on buying a share of a company, knowing that the initial founder will own 50% of it.

Because this gives him a bit too much power, imo.

Say, for instance, that too a small amount is raised, and that the machine cannot be bought.

Then we make an assembly and we decide what to do.  Several proposals are submitted :

1.  We launch an other raise of capital, increasing the number of shares, thus diluting the capital ;
2.  We let the general director (Kiba) negociate a loan with a bank ;
3.  We foreclose the company, and distribute the treasorery to stock owners ;
4.  We foreclose the company, and give all the treasorery to the general director ;

Of course, most stock holders will vote for 1., 2. or 3.

But Kiba might very well vote for 4.  He will then have taken all the money from investors, without having broken any rule of capitalism.

Sounds so outrageous that I'm not sure I'm right, but I see no reason why it could not happen.

PS. Even if you buy 49.9% of the company, you can get screwed like this.
There is a funny saying in french that describes that :


Hilarous, but difficult to translate.

If there is too small amount is raised, I'll simply buy the rest of the shares and own majority of the company and the business will start much later.

After all, my previous ventures will be bootstrapping this venture and the profit will continue to pour in until I purchase all the unbrought shares.

You can't buy something unless one agrees to sell.

If what you're suggesting is the only solution, then you are the only buyer.  In that case, you can buy these shares at almost zero, since those shares don't worth anything unless you buy them.  This puts you in a huge dominant position (many sellers, only one buyer).

This would be exactly similar to the option 4 previously described.

It doesn't accomplish the purpose of raising enough money to buy the machinery.

These kind of things happen.  It's not even rare.  I don't know the english expression, but basically it should be something like  "IPO failure" ("échec de l'introduction au capital", in french).

Guys, it's only a small business, don't try to make it so complicated that it can never get started.

Kiba, just set out clearly how the business is going to work, then people can decide whether or not to invest. Some kind of plan like this:

1. I "sell" 50 shares in the profits of the business. Each share is BTC 300 and entitles the purchaser to 1% of the profits.
2. If I don't sell 50 shares within 90 days, I return everyone's BTC and the project ends.
3. If I sell 50 shares within 90 days, I stop selling shares.
4. I use the BTC to buy the Thing-o-matic and other expenses needed to start production, plus the initial stock of raw materials.
5. I set up a website so that people can upload their shape-files and pay with BTC to receive the produced "things".
6. The shareholders and I will have a weekly meeting, but I will make the final decisions about how the business is run.
7. If the shareholders don't think the business is working out satisfactorily, they can vote to close it down.
8. If I don't think the business is working out satisfactorily, I can close it down.
9. If the business is closed, all of the equipment will be sold and the funds distributed to the shareholders according to their shareholding.

Looks fine.  I'm interested in buying, now.

I'll take that as a first draft.

Fair enough.