When annual salaries get reported in this context, you have to watch for the pea and the thimble trick where they take the base hourly rate and multiply that by standard hours to arrive at the annual salary, but nobody actually gets paid this amount.
This is because the base rate leaves out all of the various loadings that are applied under different circumstances. There are so many circumstances for loadings that the base rate becomes meaningless.
Overtime is only one way to get paid more than the base rate. Also, overtime becomes a meaningless word when you can get overtime just for working slightly non-standard hours, as opposed to working extra hours.
The agreements are written in a way that makes it really hard to calculate what a worker is actually likely to get paid annually. The only way to be certain is to look at the worker's group certificate for tax purposes.
So, while what Senator Carr said was probably technically correct, it was also meaningless since I would suggest that no worker was actually paid that amount in a year. It would be more meaningful to ask what the average amount on a worker's group certificate was.
You are right that per FTE is probably a better measure technically, but this just leaves the unions a loophole: they can just classify workers as something other than FTE. They are very clever at finding these sorts of loopholes and exceptions.
What they can't do though is lie to the tax office. That crosses a threshold from being misleading to being illegal.
There is a big incentive for unions to be misleading about what their members are paid. It's hard to garner a lot of sympathy from the public when the average member of the public is paid a lot less than the average union member. That's not to say that this is always the case - the wages, agreements and marketing to the public by the unions varies significantly between unionised industries.
I'm not interested in talking about unions like you are. Merely getting an accurate read on how much an employee earned.
What you're proposing is eliminating the value of people's time from the equation. Working extra hours or unsociable hours should be paid more because they represent the employee trading away their spare time for more money, and as spare time approaches zero the amount they require at the margin should also increase.
I don't think standardizing all hours across all employees is fair in that regard.
I'm not advocating what you are suggesting. I agree that workers should be paid extra for working additional hours.
I also agree with you that it's important to get an accurate read on how much an employee earned. My point is that there are some people that have an incentive to obfuscate this amount and that I can only see one unambiguous way to avoid this obfuscation.
I think the starting point in these discussions should be what someone was actually paid, not what they might have been paid. Then if that amount can be justified by unsociable hours, extra hours, or whatever, then that's fine. But if the various hours, loadings or whatever seem unreasonable then that's a different discussion.
I wouldn't even normally be interested in what someone's paid - it's not my business. However, the car manufacturing industry is a different case since there was an expectation that tax payer's money should be used to bail it out. In my opinion, tax payers deserve to know what it is that they are paying for, in detail. Particularly in the car industries case since it seemed like every time that the government tipped in more money that it was closely followed by the workers getting a pay rise.
> I'm not advocating what you are suggesting. I agree that workers should be paid extra for working additional hours.
Ah I'm sorry if I was unclear with that one. I'm not suggesting that you think people should all be paid standard regular rates irrespective of time. I meant that if you use a lump sum "average per employee pay slip" number you're not taking in to account those details.
With full-time equivalent, if George works 60 hours for example he counts as 1.5FTE. After-hours work is harder to quantify, but usually employment agreements similarly put extra value on those hours that can be translated back to FTE.
This seems the sanest and most accurate way to figure it out. The number actual people earn per week is a misleading figure.
I think you might agree with me here, because you said "Then if that amount can be justified by unsociable hours, extra hours, or whatever, then that's fine" and FTE is exactly the way to do that!
I just came across this four corners episode from 2016 which has the quote
I see what you mean and that's a good and interesting idea.
However, I think while it would be revealing in some areas, it would mask other problems.
For instance, if you look purely at the FTE, you wouldn't see that George had worked 60 hours. That's a problem. Why did George work 60 hours? Was he really productive for all of that time or is he gaming the overtime system by deliberately doing less work within normal hours so that he has to do overtime to complete his scheduled work.
Well that’s a different issue isn’t it :-) you’re now getting in to management effectiveness - do people really need to do 60 hour weeks or is there something severely wrong with the factory...
Definitely all related though. In this case to bring it round to the start, I am focusing on the “how much does the average worker earn” problem. I have a little experience is human resource budgeting for a small team, and my establishment was represented in FTE.
The labour unions were unwilling to compromise to stay competitive with international factories.
I was surprised when it was reported that Toyota wanted to reduce the Christmas shutdown period from 21 days to 10 days in line with other international factories and the union rejected this. This was in the context of other car manufacturers shutting down in Australia at the time and they had to know that this attitude was risking Toyota leaving as well, but they just couldn't accept a reduction in any conditions.
Toyota Altona workers were on 11 day fortnights. Were the workers at the international factories that their Xmas holiday time was compared to also on 11 day fortnights?
If I was doing 11 day fortnights I might want an extended holiday period over Xmas to get reacquainted with my family.
It is sad to read so many comments blaming the workers, their union and the quality of the cars.
Australia, a country of 24 million people, has more car brands competing for the customers dollar than any other country bar China.
"The flood of imports has given Australian car buyers more choice than ever before — and more than every other country on the planet except China.
Australia has 64 automotive brands, the US has 38 and the UK has 42." [1]
Why? Well Australia has extremely low import tariffs for cars lowering the barrier of entry for foreign car companies to compete. All while the countries from which Australia was buying these cars maintained import tariffs protecting their domestic car industries.
So Australia lets everyone import but everyone doesn't let Australia export. Sounds fair.
It is sad that politicians dogmatically denied car manufacturers the support of the state while these manufacturers are competing in an international environment where every other country is subsidising and supporting their local car manufacturers.
We see a similar ideological approach with Qantas. A lot of the major international airline carriers are de facto supported by the state but in Australia subsidies are a political no-go zone so we leave them to the dogs.... and blame the workers and their unions.
I'm as opposed to subsidies as the next man in the long term BUT these industries employ huge numbers of our citizens and foster unique and important skillsets. As a nation Australia should work towards the ideals of removing subsidies and trade barriers but why do we martyr ourselves for the cause while every one else is ignoring them?
While I'm not sure that this is a great example for it there's always the matter of deciding if any job is really better than no job - sure, you could stay competitive with other places/countries by matching ever worse conditions, but is that really a good idea? Is a job which doesn't pay someone a living wage really a job that should exist?
I think you've moved the goal posts a long way there.
A living wage as defined by the Harvester judgement, which seems to be what you are referencing, was based on begin paid enough money to be able to afford food, shelter and clothing for a family.
In the case I'm referencing the dispute is over whether the workers should have their standard break for Christmas reduced from 21 days to 10 days. I can't think of any other companies within Australia that offer such a generous Christmas break, but maybe there are some; i think it would be a very small number. What they were being asked to give up seemed very generous and the replacement of 10 days instead doesn't seem onerous - it still seems generous compared to many companies.
You'd have to ask the workers that lost their jobs if they are now better off having lost their jobs rather than stay competitive with other places by bringing their conditions in line with what is typical even within the country they live in.
I don't believe he moved the goalposts at all, he made a valid point. The argument that you have made about staying "competitive" IMO is a classic example of bandwagon fallacy. Just because other countries allow companies to treat their workers like shit does not make it ok for our country to start doing it.
I also disagree with the way you phrased your point, on one hand, you mention that the unions would not budge on conditions, but then state that they should have because "no other company that you know of" allows 21 days of holiday over the Christmas. First of all drawing to the fact that the Union represents workers, not companies, it makes sense why the companies have an interest in shortening the holiday break of the workers. It is not in the interest of workers however. To counter your point that their breaks should have been cut in line with that of other countries, then we should keep in mind that some Northern European countries are going further in terms of workers rights, in the opposite direction, so all of us a sudden, your advice that we should follow the lead of some countries leads us to question which way we go.
I would also like to highlight that the CFMEU (Construction) enforces a 17 day shutdown over the Christmas break, so there are other's who do lengthy breaks.
I also struggle to understand your last point about bringing conditions in line within the country they live in, Australia has Union representation across most industries. If you wish to do business in Australia, then you surely understand this, I would hazard a guess that given this, then good conditions and decent pay is the typical situation. Why would anyone want to degrade that?
But we're not talking about treating workers badly by any reasonable definition. These are workers that were paid more than the average Australian worker, they got far more Christmas holiday leave than the Australian worker. They weren't living on the minimum wage.
They weren't forced to take a reduction in Christmas leave. They company asked if they could, considering the local and international conditions in their industry. The workers weren't forced, it was their decision and they said no, presumably knowing that the consequence might be that this may be the straw that shuts the factory down permanently.
If the company had made a draconian decision that cut workers pay unreasonably, regardless of the current economic circumstances and pocketed this money, I'd agree strongly with you. But, this isn't what happened. The workers kept all of their conditions and the factory shut down.
There have to be some circumstances where you would see that it would be reasonable for workers to give up some conditions in the industry they are working in if it is under some economic pressure, either internally or externally? They may only agree to give them up temporarily until conditions improve, or make some other offer to help the company to increase output or reduce costs.
The reality is that Australia is an open, market economy. Its companies have to be competitive with the rest of the world in order for those companies to survive.
You say that companies only have an interest in shortening holiday breaks. But if this is the case, how did the holiday break end up as 21 days in the first place? Companies have to compete for workers too - there must have been a time when it was beneficial to the company to attract and retain workers with a longer Christmas break. You point out that some European countries have more workers rights, but this misses the point that the competitive pressure at the time wasn't for workers - it was on total cost of production.
Nobody wants to degrade good conditions and decent pay for workers. However, for many people that work in small business and haven't had a pay rise in several years can only look on with bemusement when highly unionized industries demand 4% pay rises plus extra Christmas holidays and then demand tax payer money when their industries falls over.
It seems like every time a unionized industry is asked to make a small concession that it's seen as a zero sum game, the thin end of the wedge, a race to the bottom and the apocalypse. It's blown completely out of proportion. Most industries go through ups and downs. The inflexible ones go broke.
Not for me. I think The Fall of Hyperion is my favourite in the series, although it's hard to split it with Hyperion.
The pacing is very different between each book, almost to the point it can feel like each book has been written by a different author. Don't read each book with the expectation that it is a straight continuation of the last as Simmons experiments with different styles and perspectives in the same universe.
If we flip the question around - what is it about the profit motive that makes it better? If workers can design and construct a better nuclear power plant why couldn't they do that - within the same budget constraints, etc. - unless there's some third party getting paid just for being rich.
Is greed really the most important thing to add to a human endeavour to make it successful?
Considering that markets when combined with stable institutions, property rights and the rule of law, have done more to reduce poverty, increase lifespans and health than any else in history, I think the onus of proof is on the other side.
If you consider migration a type of voting mechanism, then countries that feature markets tend to attract more votes.
I'm not sure what it is about the profit motive that makes it better, but empirically it seems to result in more successful outcomes for everyone in the countries where it is available when compared with countries where it isn't available.
If workers can construct a better nuclear power plant without anyone making a profit - they are welcome to try. If they did a good job, I would congratulate them. But when it comes to alternate economic systems, there seems to be a lot of talk and little action on the ground where the work gets done. Talk doesn't feed people or keep the lights on.
I think you are misjudging those people that have made large profits as being purely greedy. From what I've seen, they are driven, hardworking and focused on achieving their vision. For most, profits are just the means to the end they imagine.
Do you really imagine the world would be better off if Elon Musk's profits were confiscated and given to some government bureaucrat? Would a workers collective take a risk on inventing new technologies? History suggests not.
The funny thing is that most of the benefits from the hard work of entrepreneurs flows to everyone else, not the entrepreneurs themselves, through more plentiful food, health and technology.
Your "solution" is also well on its way to making the earth uninhabitable, and is also responsible for creating societies that have incredibly poor mental and emotional health.
Worse, the opportunity costs of future development lost because of short-sighted greed - the poor energy choices, the regular financial meltdowns, the fact that so much progress relies on military spending and research, the vast cost of industries like smoking and sugar that are only profitable because they destroy the health of their customers - hardly suggests this is the best of all possible worlds.
If economics came with built-in accounting for the cost of externalities, predictable human failure modes, network effects, and negative feedback for corporate sociopathy, we'd probably be on our way to the rest of the galaxy.
The Internet electric cars are a nice consolation prize, but they're not any more than that - certainly not when the effects of poverty and caste stratification still waste so much human talent and cause so many catastrophes that we're decades behind where we could be.
> Your "solution" is also well on its way to making the earth uninhabitable
It's not just my solution. It's the solution consistently voted for in many countries by the most educated general population in history.
If your point is so strong, why do you need to exaggerate? When will the earth be uninhabitable? Do you know a date?
>Responsible for creating societies that have incredibly poor mental and emotional health
Taking this interesting statement at face value, if you traveled back in time several hundred years and asked someone if they would trade: plentiful food, medicine that can heal infections, nearly eliminating infant mortality, rapid travel to distant destinations, nearly everybody enjoying the luxuries that only the exceptionally wealthy of their own time have access to in exchange for: poor mental and emotional health, what choice do you think they would make?
If we don't take it at face value, how do you even measure poor mental and emotional health? Do people with alternate economic systems have better mental and emotional health? I don't think the millions that died in mass starvation in Mao's China appreciated having superior emotional health.
> Worse, the opportunity costs of future development lost because of short-sighted greed - the poor energy choices, the regular financial meltdowns
What opportunities are we passing up? Our energy choices are largely driven by obtaining energy most efficiently, just like the rest of nature. The energy choice you are probably most critical of, coal, is largely responsible for lifting the worlds poorest people out of poverty. Is not wanting to be impoverished being greedy? Are you using a device that runs on electricty? Does it contain plastic?
As for financial meltdowns, economists have discovered recessions throughout history. They are a normal feature of all economies and they affect non-market driven systems too. I'm not sure how you think you would avoid recessions, but lots of people have tried with little success.
> the fact that so much progress relies on military spending and research
I wouldn't agree that a lot of progress relies on military spending. I think a lot of resources are wasted on military spending. However, there needs to be sufficient spending to deter other parties that might start to think they would be better off taking from others rather than creating for themselves.
> the vast cost of industries like smoking and sugar that are only profitable because they destroy the health of their customers
At the time these industries came into existence, there was no evidence they were harmful. All of the evidence is relatively recent. Are you saying in your alternate system you would have foreseen this and banned them before they were ever produced? Perhaps you are saying that as soon as there was evidence they were harmful you would have banned them. But, when trans fats were invented, health conscious scientists wanted to replace all of our fat intake with trans fats because they thought they were healthier. Would you have enforced this change too? What about when it was found they were mistaken about trans fats? Would you force everyone to change back? Maybe it's better to let people make up their own minds.
>If economics came with built-in accounting for the cost of externalities, predictable human failure modes, network effects, and negative feedback for corporate sociopathy, we'd probably be on our way to the rest of the galaxy.
If what you are saying is true, then surely an alternate economic model, like those attempted in Communist Russia and China would have smashed our poor little capitalist economies. Or some other model would have arisen throughout the ages. Or maybe you are saying our situation is hopeless and there is no economic model, either market driven or other, that can force people to behave the way you want them to? In which case we're all doomed and you don't have much to contribute.
> The Internet electric cars are a nice consolation prize, but they're not any more than that - certainly not when the effects of poverty and caste stratification
It's hard to believe that you can throw away all of the achievements of the industrial age so lightly. If you don't value a significant reduction in poverty, longer life expectancy, increased living standards, reduction in child mortality, vastly improved standards of literacy and education, elimination of many infectious diseases, improved environmental outcomes in developed countries vs developing/ex-communist countries... then what do you value?
I'm not saying we can't improve the systems we have. But I think we can be proud of what we've already achieved and feel confident that we will be able to do even better in the future. There isn't any reason to be defeatist or cynical.
> Considering that markets when combined with stable institutions, property rights and the rule of law, have done more to reduce poverty, increase lifespans and health than any else in history, I think the onus of proof is on the other side.
Actually, the markets created some of the most disease-ridden, sewage-infested hellholes with jobs that exploited child labor and threw away the sick and injured.
It was people who took up arms, got shot at, but persisted in wrenching some measure of control from the "capitalists" who managed to pass child labor laws, get medical insurance, and 40 hour work weeks.
Your fairy tale narrative is a pleasant fiction, but we have plenty of examples of unfettered capitalism in history--the vast majority of them were horrible.
>Actually, the markets created some of the most disease-ridden, sewage-infested hellholes
The two most polluted places in the world currently exist in China and Russia and stem from when they were run by Communist dictators ships without markets. So, an absence of markets doesn't seem to reduce pollution, it actually seems to increase it.
Market's aren't pefect, far from it, but alternate systems seem to do worse at providing for the things that you specifically care about.
> jobs that exploited child labor
In agrarian societies, children worked in the fields and still do. This has been since near the beginning of human civilization. It's only in advanced, developed countries with mature markets that there are barely any children working.
>threw away the sick and injured
What evidence do you have for this?
>It was people who took up arms, got shot at, but persisted in wrenching some measure of control from the "capitalists" who managed to pass child labor laws, get medical insurance, and 40 hour work weeks.
What are you talking about? Who got shot at in advanced developed economies to ensure these laws were passed? The laws were passed through the acts of various parliaments, not through revolution. These changes were made peacefully with in most cases broad agreement across the community. In countries that have experienced violent revolutions, like China and Russia, there are still many children working today, even though they've passed anti child labour laws.
You don't like the current system, obviously. But any alternate systems that have been tried appear to have done a poorer job on achieving the objectives that you desire. So what alternative do you propose and what evidence do you have that it will do a better job than our current systems?
>Your fairy tale narrative is a pleasant fiction, but we have plenty of examples of unfettered capitalism in history--the vast majority of them were horrible.
It's a shame you don't give any examples. I'm presuming you would be referring to the early industrial revolution. Supposing this is the case, you would be right - at the start of the industrial revolution the working conditions for many people (including children) were poor compared with the standards we enjoy today. Yet, despite this, people still flocked to the cities from the country side to work in factories. Why do you think this is? Do you think that people back then were stupid, or that they hated children? Or do you think they could see for themselves that compared with living on subsistence farms that they were better off? As I said earlier, it is common for children in to work on farms, so they weren't any worse off, and the extra income they provided their families made their whole family better off. It's easy to apply today's morality to people having to deal with conditions hundreds of years ago, it's harder to actually live under those conditions and make the best decisions for one's family.
Also, without going through the early industrial revolution, how do you think we all would have escaped living lives that were poor, nasty, brutish and short?
Everyone is scared of deflation, but is completely comfortable with the rapid drop in the price of electronic goods over the last few decades.
I'm simplifying a bit. The traditional theories that warn against deflation are concerned about consumers delaying spending in the hope of waiting for even cheaper prices. This delay theoretically forces the economy to grind to a halt. I think most people accept now that this is an unlikely outcome.
Now when Central Banks worry about deflation they are concerned that it might trigger a fall in real incomes, while debt remains at the same level, meaning people aren't able to pay back their debts. In our debt addicted economies, this is a real risk.
> Everyone is scared of deflation, but is completely comfortable with the rapid drop in the price of electronic goods over the last few decades.
Those are two absolutely different things. One stems from production, transportation, and financial improvements across the board, the other comes because fewer people want to buy anything.
> The traditional theories that warn against deflation are concerned about consumers delaying spending in the hope of waiting for even cheaper prices. This delay theoretically forces the economy to grind to a halt.
It's not so much about consumers delaying spending. It's what happens further up the chain. If the holders of wealth that seed the economy figure out that it's better for them to hold on to their assets rather than invest them, then people lose jobs. We need them to keep investing their money.
Deflation also penalizes debt holders. The dollars you spend to pay back your mortgage are worth more than the dollars you make now. Since most Americans hold more debt than assets, deflation hurts common people more than it helps.
>If the holders of wealth that seed the economy figure out that it's better for them to hold on to their assets rather than invest them, then people lose jobs.
That's the theory, but I'm skeptical. If the economy is healthy they'll have investment opportunities that compensate adequately for risk and they'll still invest.
Conversely, in an inflationary environment people with savings may invest their money, but they may also buy fixed assets like gold or real estate. That doesn't help the economy very much.
>Deflation also penalizes debt holders.
And inflation hurts savers. I don't see a benefit to prioritizing the interests of debtors over savers.
> If the economy is healthy they'll have investment opportunities that compensate adequately for risk and they'll still invest.
A healthy economy will, in most cases, exhibit inflation. For most economies, it would take a concerted act by a central bank to force deflation in a normal, growing economy. People are making more, spending more. The government has to print more money to keep up, otherwise it will fall short of people's needs. Only in special circumstances does this not hold up.
> I don't see a benefit to prioritizing the interests of debtors over savers.
There's a huge benefit. We want to encourage economic activity over inactivity. Money in circulation is the very definition of economic activity. Money saved is the very definition of economic inactivity. Nobody borrows money unless they want to spend it, it makes no sense to borrow it just so you can keep it in the bank or under a mattress. Money borrowed is money invested.
>A healthy economy will, in most cases, exhibit inflation.
A healthy economy will exhibit monetary inflation as it grows. But there's no reason for it to exhibit price inflation.
>The government has to print more money to keep up, otherwise it will fall short of people's needs.
That's a circular argument. It's not like people in a deflationary environment don't have any money - they have less money, but that money is worth more.
>There's a huge benefit. We want to encourage economic activity over inactivity.
Sure. I'm just not convinced getting people to go into debt really does that. Oh, it does in the short run. But once your debts start to pile up not only do you have to pay for the things you've already purchased, but you have to pay interest. If, instead of borrowing money, you'd just bought things as you could afford them, you would end up spending more.
>Money borrowed is money invested.
No, money borrowed is money spent. Sometimes that's investment. Sometimes it's not. If I borrow money to buy a bed made in China, that's not helping the US economy very much.
The idea deflation is bad for an economy doesn't hold up to historical scrutiny. The US grew strongly in the 19th century (far more strongly than today), and during that time it experienced long periods of growth accompanied by low deflation. People still have to buy food, pay the rent, buy clothes, etc even when the currency is deflating.
>Money saved is the very definition of economic inactivity
When people save money, do you really think they put it under a mattress? No, they put it in a financial institution like a bank, who can then use it as capital to loan out further funds. By increasing the amount of saving you should naturally reduce interest rates. Saved money doesn't just drop out of the economy.
Even if someone did put money under their mattress, they are risking having inflation eat away as its value. Also, if they never spend their money, all they have done is increase the value of everyone else's money. Prices have to fall to the point that markets will clear.
>Those are two absolutely different things. One stems from production, transportation, and financial improvements across the board, the other comes because fewer people want to buy anything.
That's true, but they are measured the same way: through the nominal value of goods and services. The people that the economists are worried about, consumers, only have the price of goods to guide them, they have no information as to whether the falling price is due to improvements in efficiency or lack of demand.
>It's not so much about consumers delaying spending. It's what happens further up the chain. If the holders of wealth that seed the economy figure out that it's better for them to hold on to their >assets rather than invest them, then people lose jobs. We need them to keep investing their money.
I'm not sure I've read this as being the main driver of the theory previously. To me, it doesn't really make sense since theories concerning deflation don't make any predictions concerning the return on investment. If deflation is uniform, then the return should stay the same since the cost of inputs should fall as well. If deflation isn't uniform, then you'd see changes in the allocation of resources as some industries make large profits due to falling input costs, while other industries might go bust due to their input costs staying the same even while their sell prices fall.
Personally, I think that that productivity growth is far more important than deflation and will compensate for any short term negative effects that deflation might or might not bring.
I find it frustrating that so much journalism these days exaggerates environmental issues, with any factual errors seemingly brushed off as just showing an excess of virtue.
I have been mulling over a similar idea. I was thinking about including the creation of an MVP as part of the offering to encourage non-technical founders to get involved.
However, the financial model I had been thinking about was that I would charge the founders at cost for time and materials for all the initial set up. With scale you could do it much faster and cheaper than they could and would reduce their risk. Max implementation time frame of 2 months. Hard limits on scope creep/late changes. Use frameworks to make implementation as fast as possible. Probably cost the founders $20k - $30k. You want them to pay up front to make sure they are committed to the project and aren't just wasting your time. I would head towards having standard code bases for various types of start up models.
Retain 20% equity in the start up that you've helped create.
Worst case scenario, the start up goes nowhere and you've covered costs. Best case start up does well and you've got 20% equity.
It's a good deal for founders because they reduce their risks, they get speed to market and they have access to a development team for further development if they get traction.
I understand what you are saying and I agree that our visions are very different :)
What would be your financial model? Bear in mind that I'm in Australia, so $20k - $30k to me might be something completely different to you. From my perspective, if you can't find $20k, you aren't serious about your business. Also, in my model, $20k gets you to a point where you have a business that you can market, run and start taking orders.
AFAIK, YCombinator doesn't build you an MVP, or provide you hosting or do all the items on your start up checklist, so I don't think this is a fair comparison.
As for valuation, at the point that you walk in with an idea and nothing more, I think your idea is worth about $1. Valuation at this stage is fairly meaningless. They are paying $20K at cost for the services I'm providing. I forgo making a margin on these services in exchange for 20% equity. So, in effect we share the risk. I reduce my risks by making sure I at least cover my costs. They reduce their risks by knowing they'll get to MVP stage without any hassles caused by their inexperience or lack of technical prowess.
Maybe 20% is too much equity, I don't know. What I do know is that I want a potential piece of any large upside I might help create. That's my price for forgoing margin on the initial services I provide.
Yes, for the model you envision the marginal costs should be low. However, you are looking at requiring a very long runway. How long do you think it would take before you start making money? You've got to include the time not only to launch your own start up but launch the first customer's start up that makes money. Considering a potential 90% + failure rate, you might be waiting a while. This is why I think you need to at least try and cover your costs.
https://imperatorworks.com/
They are very expensive, but I've always wondered if getting one would be worth it.