Sean

I really like the idea of Grid7. There are so many ideas out there that aren’t being developed and you’ve come up with a brilliant method of getting those ideas produced.

I know we talked a little bit about the socialistic/capitalistic viewpoints of how it all works but my thoughts were all kind of jumbled at the time so I’m not sure how concise I was in the manner that I presented my ideas. As such, I thought I’d hop on here and attempt to write them out. That way you can review and/or ignore/correct my thoughts at your leisure. :)

Basically, here’s a summary of what I was thinking.

Current incentive/compensation model (to my incomplete understanding):
– Compensation model is based on "revenue blocks".
– Revenue blocks entitle you to a percentage of the income that is pulled in through the entire grid of projects.
– 60% of the revenue blocks for a project belong to the project leader.
– 20% of the revenue blocks go to Grid7 for management/hosting costs?
– 20% of the revenue blocks go to developers?
– As the number of projects increases, then the number of revenue blocks increases.
– As the number of revenue blocks increases, your residual income goes down.

So let’s put together a basic example:
1. "X-Project" is a new web app in need of development.
2. This project, when finished, pulls in $1,000 a month in revenue.
3. For simplicity’s sake, let’s say the project is divided into 100 revenue blocks.
4. $600 (60 blocks) of this revenue goes to "John", the project envisionary.
5. $200 (20 blocks) of this revenue goes to "Bill", the developer.
6. $200 (20 blocks) goes to Grid7.

So. We effectively have 100 blocks on the "grid" now, as it were.

Now, let’s put together another project:
1. "Y-Project" is another new web app in need of development.
2. This project is a failure and, when finished, pulls in only $100 a month in revenue.
3. Once again, for simplicity’s sake, let’s say the project is divided into 100 revenue blocks.
4. $60 (60 blocks) of this revenue goes to "Zach", this project’s envisionary.
5. $20 (20 blocks) of this revenue goes to "Bob", this project’s developer.
6. $20 (20 blocks) goes to Grid7.

So here’s where I see the problem. The pricing model suddenly is flawed because the blocks aren’t based per-project, but are for the entire grid.

Here’s what I see ends up happening:
1. Since there are two projects on the grid, we now have 200 total revenue blocks.
2. This means the grid’s total income is now $1,100.
3. Each revenue block is now only worth $5.50.
4. Instead of making $600 a month, suddenly "John" is only making $330 and "Bill" is only making $110.
5. On the flip side, "Zach" is raking in $330 a month even though his project idea sucked and failed.

Am I totally confused here or is this actually how this model works? Quite frankly, this model scares me…

On the other hand, if the revenue blocks were only based per-project, then nobody feels slighted.
They only get paid for the work they invested in and they don’t get paid until that project starts earning real money. If they chose a good project to invest in and they did a really good job, then the project is more likely to succeed, and they reap the benefits.

Final key observation:
The concept of Grid7 entices me because it allows me to cash in on an idea of ownership. What is the biggest advantage of ownership instead of being an employee? Residual income. If you own a business, you want to be able to walk away and have money still flow into your pockets. You want to be able to go to the golf course and take life easy because a great idea you had, is earning money for you. I don’t see how this is possible with the current Grid7 model, because the current Grid7 model effectively turns you into an employee. You have to keep putting work into it to keep earning your share.

Keep up the good works!

-sean

db