How to bring on a writer as co-owner?

[bernard]

Have any of you done this?

I want to bring on one of my writers as a co-owner and partner for one of my sites, mostly because I want to focus my attention elsewhere, so I'd want them to choose topics, write them, get them uploaded etc.

I was thinking about giving them 10-20% over 2 years, where they would write their way to percentages.

If the site had a value of $100.000, then you could do stuff like say one 1500 word article is worth $100, just as an example, which would mean they would need to write 100 articles for 10% of the site.

However, they'd likely not be up for writing 100 articles without getting paid, so it might be something like paying them a lower fee, while they write these articles, so you'd pay $50 for the $100 article and then it would be 200 articles instead of 100.

Does this make sense?

How would you approach this?

 

[secretagentdad]

Give them a per word value of cash or a base salary if you really trust them and want to signal your commitment to them. If they're good, locking them up so they're not out getting other work and finding new opportunities is a good idea. My biggest struggle with content sites was dealing with writer churn.

I'd offer a substantial profit interest based on performance targets with the option for you to pay them a flat multiple of the profit interest in the event you want to change directions or liquidate.

 

[Potatoe]

I think your premise is flawed.

You want your writer to take on more responsibility on this website so that you can focus more on other opportunities, right? This is a good plan, we're not at the flawed part yet.

So, you're asking for a way to setup an arrangement in which you're able to slowly and gradually transfer a portion of the ownership of your website to the writer, instead of paying them with money.

In other words, you're offloading risk from yourself, to the writer.

Your writer doesn't need to be a co-owner of this website in order to take on more responsibility, though, so that's where I see the flaw in the premise because you could just pay them more instead.

I think this is a bad arrangement because if we take the two outcomes:

1. The site does well moving forward.
2. The site does not do well moving forward.

Outcome 1: The Site Succeeds
With outcome 1, where the site does well, the writer is happy because their equity will have a greater value than it had when you traded it to them for their work instead of paying them money. You're probably happy too, because you own most of the site and it's doing well, but you're coming out further behind than you would have been if you had just paid the writer.

Outcome 2: The Site Fails
With this outcome, you're actually better off for having traded that equity to your writer. The equity is worth less now than it was when you sold it to your writer, and you saved all the money you would have paid to them otherwise. You're betting on your site failing, since the outcome where you come out ahead by giving the writer equity, is if the site fails.

---

When you launched this site, and every time you invested money into it, and every second you've spent working on it... you were betting that it will succeed. By offloading some of that risk to your writer, you're taking the other side of that bet, you're hedging.

It feels like by trading equity in your site to your writer, you're creating a situation where the only way it actually benefits you compared to having just paid them cash instead, is if the site fails, the second outcome.

You're limiting your upside and your downside, by giving some of that upside to your writer, and some of that downside to your writer, but in the process it makes things super complicated and adds in these weird incentives and administrative headaches and confusion.

How long can the writer afford to work on this site without an income? It's like this idea creates a world of warped incentives where by wanting your writer to focus more on your site, you're almost guaranteeing that they'll have to seek out side jobs to stay afloat, leading to them having less energy for your site. And at the same time, you're giving yourself a lower ceiling if the site does great, and indirectly betting on it failing.

So if we circle back to the start...

I just don't think the problem you have is "What's the best way to gradually transfer ownership to my writer", the question is "How can I incentivize my writer to take on more responsibility with this website, while maximizing the upside for myself because I want to bet on my site succeeding?"

And it's easy, just pay them more. Maaaaaybe a revshare is worth considering. But yeah, C.R.E.A.M, pay them more money to do more work. If the site pops off and you're really happy with their contributions and you want to keep them really happy, toss them a bonus or increase their rates every now and then.

Pay for your articles one time, instead of potentially paying for them over, and over, and over...

How would you approach this?

This is a mind gobblin, my friend, and I would approach it from behind, silently, with a sledge hammer in my hand. You gotta kill the mind gobblins, unless you don't mind gobblin deez nuts.

 

[bernard]

Great advice, thanks guys, my problem is that due my personal debt it makes it difficult for me to get (cheap) credit for my company, so I have to grow slow and organic or sell off assets to fund other developments.