Splitting profit - Equal share vs equity investment (work & money spent = share)

Question

Coming up with an appropriate one-liner question was so hard I wrote the body before the header...

So we're a team of 4 developers; two designers, two coders to put it simply (naturally we don't tie ourselves up with labels). We've come up with a great game design together, and we're prepared to spend a great bulk of our time making a prototype.

Problem is, there's a major difference of opinion when it comes to sharing potential revenue made by the game.

Investment = Share

Two of us would like to have everyone keep a rough log of hours spent. Converting that to a previously agreed upon per-hour salary, we could add it up with real money invested, and from that determine each developer's 'stake' in the game, i.e. their share.

Equal Share

The other two do not agree with that, among other reasons because they think some pieces of work are worth more than others, like a really great idea for a feature. Because of such immeasurables, they think an equal share for all would be the easiest.

Another argument said: (paraphrasing) "logging hours would take away the fun. I'm serious about this project, but I want to work with it on hobbyist terms, not like a second job."

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We need to formalize an agreement before development has gone too far, but how can we get past these core differences of opinion? Is this a common problem among first-time startups?

Answer 1

I prefer equality, because if it's time based then someone who works twice as efficient or is madly talented will be punished for doing twice the work per hour.
On the other hand, people might argue that someone talented puts in as much sweat as the less talented so the hours are of equal value.
I do know that not being based on equality might demotivate people, whereas you'd hope that everyone will be as motivated as can be.
You don't want the wrong sentiments to influence a process that is hard enough to pull off as is.
Besides, the coders can't draw, and the designers likely can't program so you're equally indispensable. As between the coders and the designers, if people feel the others don't work hard enough you have the wrong team. Being a company is hard, especially if you're friends. I've done it for 5 years (same setup) and we were on equal shares. Sometimes the designers had to work harder, sometimes the coders. Generally we all put in 80 hour weeks anyhow.

Answer 2

I would say it is a very interesting problem to have.

If all of you are already in the project, then I guess doing Equal Share would be the best thing to do. You cannot quantify productivity in hours and I know sometimes i spend a couple of hours thinking and then implement something complex in just a few hours(which is imposible without the thinking part, which seems imposible to measure).

That being said, if someone is putting money in or out, then its a different thing. If someone is investing, they probably want more shares, if someone is planning on charging money early on(which is fine, I mean maybe he wants to quit hes day job?) then he would get way less equity.

The most important thing would be to agree that you are all the team making the game, and that you will put everything you can into the project, if you all agree with that, why not go to the equal share option?

Answer 3

In our gamedev-studio we have a system of ten grades, you earn them for like working on the concept or spending time to code etc.

In our conferences everyone gives his self-assessment about his work done and then those will be discussed.

For just being active and doing some little concept stuff is a grade of 2 and coding the whole month is like an 8, so together they add up to a 10.(Just an example)

The money now is shared very simple: All points of all members are added up so they are 100% and therefore everyone of the team gets the money he worked for. Fair and simple.