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Paying freelancers in equity and dividends

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Re: Paying freelancers in equity and dividends

#21

Post by Wytwwww »

jjice wrote: post #9
satvikpendem wrote: post #2

I invested $1,000 in Gumroad back when they did the public fundraise, and I got back ~$70 so far. At this rate it'll take multiple years to break even, much less earn a multiplier. But oh well, I liked the Gumroad team so I wasn't looking for much of a profit anyway. Related, I thought it was hilarious how so many creators on Twitter publicly stated they were leaving Gumroad when the 10% fee change was enacted, only…

Sorry, but to confirm, they charge a 10% flat fee and that's it? That's insanely good compared to every other platform I've seen for any type of commerce. Sure, Amazon, Apple, and the like also help offer exposure and some other services, but 10% flat seems completely worth it until you hit a critical mass where it makes sense to handle things yourself. I imagine that number is very high though.

> Sure, Amazon, Apple, and the like also help offer exposure and some other services

Considering you'd only be paying Apple 15% (I doubt many people on Gumroad are making more than $1 million) it still seems like a relatively good deal in comparison.

Re: Paying freelancers in equity and dividends

#23

Post by [deleted] »

earnesti wrote: post #19
AndrewKemendo wrote: post #14

Earlier quoted context omitted.

Everything you wrote was par for the course for a private equity company (note that venture capital is a tiny subclass of private equity) The founder kept everything because investors expect that their relationship with this person is going to continue and eventually this person is going to “make the fund” in a future venture That’s the key thing here, as a CEO/founder if you have gotten the stamp of approval from ve…

I'm not sure that VC's will be investing in the company of a failed entrepreneur. At least something should have changed to make the company "better". In Gumroads case the truth was that the money would be pretty much gone, the company is not going to be valuable. He didn't raise this time from VC's, but from clueless retail investors, which is quite a different thing.

[deleted]

Re: Paying freelancers in equity and dividends

#24

Post by kstrauser »

beejiu wrote: post #15
Aurornis wrote: post #6

> It wasn’t always this way; from 2015-2019, everyone at Gumroad was paid cash, no equity. No one wanted any. Gumroad started in 2011 and raised $8 million. The reason "no one wanted" any equity in 2015 was because they laid most employees off, replaced them with contractors, and the investors wrote their equity down to $1 as a gift to the founder. The founder got to keep the IP, ditch the founding employees, and con…

> him, and I don't know what became of the employees' equity. Probably nothing, given that the company had to be written down to nearly $0 for this transfer. It is somewhat addressed (without specifics) in the article: > We also gave a token amount of equity to alumni who worked on Gumroad from 2011-2015, without whom you wouldn’t be reading any of this. Thank you!

For sufficiently low values of "token", I might be likely to publicly tell them where to shove it. That's like leaving a $0.10 tip: "it's not that I forgot. I just didn't think it was worth more."

Frankly, I'd rather have nothing.

Re: Paying freelancers in equity and dividends

#26

Post by cjbgkagh »

earnesti wrote: post #19
AndrewKemendo wrote: post #14

Earlier quoted context omitted.

Everything you wrote was par for the course for a private equity company (note that venture capital is a tiny subclass of private equity) The founder kept everything because investors expect that their relationship with this person is going to continue and eventually this person is going to “make the fund” in a future venture That’s the key thing here, as a CEO/founder if you have gotten the stamp of approval from ve…

I'm not sure that VC's will be investing in the company of a failed entrepreneur. At least something should have changed to make the company "better". In Gumroads case the truth was that the money would be pretty much gone, the company is not going to be valuable. He didn't raise this time from VC's, but from clueless retail investors, which is quite a different thing.

As best I can tell VCs largely attribute their 99% failure rate to largely random chance rather than their own inability to pick winners - so the failure of an entrepreneur is not a particularly strong mark against them and a weaker mark than the fact they got funding in the first place.

Re: Paying freelancers in equity and dividends

#27

Post by smarm52 »

I'd never heard of gumroad, so I took a look into it.

The Wikipedia isn't much help, but does do a decent definition.

"Gumroad enables creators to sell digital products, such as e-books, music, videos, software, and physical goods."

https://en.wikipedia.org/wiki/Gumroad

--

Then MakeUseOf has an article, which makes it sound good. They compare it to Etsy as another site for selling things on.

see: https://www.makeuseof.com/what-is-gumroad-what-can-you-sell-...

--

Checking on scamadvisor, the site rates it pretty highly, but user score is low. I'm guessing this has to do with creators getting burned by their history and/or price increases.

see: https://www.scamadviser.com/check-website/gumroad.com

--

Some reddit posts have positive things to say. With a common theme of BYOA (Bring Your Own Audience), as gumroad seems to do a minimal job of pushing content; Which matches up with my experience of never having heard of it before.

see: https://www.reddit.com/r/selfpublishing/comments/h02pls/anyo... https://www.reddit.com/r/artbusiness/comments/17ij8nz/is_gum...

--

Checking pitchbook and crunchbase shows it's a private company with pretty good financials. And so there's minimal risk of being "Actively Evil" that public companies can be; i.e., selling out the company for short term profits while grifting customers for all their worth.

see: https://pitchbook.com/profiles/company/53830-99 https://www.crunchbase.com/organization/gumroad/

--

One caveat is that they don't seem support commissions; That is, paying a fee to an artist or creator for a customized piece.

see: https://www.reddit.com/r/selfpublishing/comments/h02pls/anyo...

Re: Paying freelancers in equity and dividends

#29

Post by omnimus »

satvikpendem wrote: post #16
jjice wrote: post #9

Earlier quoted context omitted.

Sorry, but to confirm, they charge a 10% flat fee and that's it? That's insanely good compared to every other platform I've seen for any type of commerce. Sure, Amazon, Apple, and the like also help offer exposure and some other services, but 10% flat seems completely worth it until you hit a critical mass where it makes sense to handle things yourself. I imagine that number is very high though.

Well it was more so compared to LemonSqueezy which is 5% or Stripe Checkout which is 3%. But I believe both don't offer hosting of the actual products such as ebooks or videos while Gumroad does.

LemonSqueezy didnt exist when Gumroad changed the pricing. Lemon has some hidden fees on top of the 5% but they are a lot cheaper. Stripe checkout is not Merchant of Record so completely different product.

The company that was (still is) eating Gumroad is Paddle that have true 5% + 50¢ pricing.

Gumroad, Lemon, Paddle all do digital files fulfilment. Paddle wont give you website just pay links / overlay. I guess thats main reason why some people choose Gumroad/Lemon over Paddle.

Re: Paying freelancers in equity and dividends

#30

Post by satvikpendem »

omnimus wrote: post #29
satvikpendem wrote: post #16

Earlier quoted context omitted.

Well it was more so compared to LemonSqueezy which is 5% or Stripe Checkout which is 3%. But I believe both don't offer hosting of the actual products such as ebooks or videos while Gumroad does.

LemonSqueezy didnt exist when Gumroad changed the pricing. Lemon has some hidden fees on top of the 5% but they are a lot cheaper. Stripe checkout is not Merchant of Record so completely different product. The company that was (still is) eating Gumroad is Paddle that have true 5% + 50¢ pricing. Gumroad, Lemon, Paddle all do digital files fulfilment. Paddle wont give you website just pay links / overlay. I guess thats…

LemonSqueezy was founded in 2020. Gumroad changed their pricing to a flat 10% on January 31, 2023, as stated in the article.

Yes, Paddle is also a competitor but my main point was that many people on social media thought Gumroad was too expensive yet it turns out no sellers in the real world actually cared. The benefits of Gumroad (apparently to them) outweigh the extra 5% they pay.

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