http://t-machine.org/index.php/2009/03/02/manifesto-for-a-game-development-studio-or-any-creative-tech-company/#comments I failed in the security certificate process at T=Machine, so I will post my...
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I failed in the security certificate process at T=Machine, so I will post my comment here to Adam's very thoughtful piece on how he will design his next game company...
Adam,
Great post, great ideas here.
But you are breaking the law...
The amazing thing is what you have designed here with the manifesto is actually illegal in the United States. I am not sure about Europe's interpretation of corporate laws (I suspect they are very similar to US at their root).
Let me explain why it is illegal - Dodge vs. Ford
This Supreme Court case established that the only purpose of a company is to produce profits for the shareholders. Any acts of good that benefit employees, management, customers or the community MUST Be by-products of making even more money for the shareholders.
All corporate charity is at its core a marketing & PR program.
The Google 20% was established to enhance the profitability of the company.
Your manifesto was actually LEGAL until you responded to Osma. The manifesto itself you would have to argue will result in better, faster, cheaper products that will decrease costs, or increase revenue or both for the shareholders.
However, you screwed up by saying that you don't care about the sustainability (and even more important) the profitability of your company and that you hold your values to be more important than the shareholder's interests.
So, going forward with a very straight face, say earnestly that the manifesto will create a ferociously competitive engine for shareholder wealth due to the superior organizational structure.
Of course, you do not have a company yet, or even profits that a minority shareholder could sue over yet. But conceivably if an employee was a shareholder they could bring a suit to the directors and charge that they have failed their fiduciary duty by not running the company in the shareholder's interests. As a result their property rights have been damaged etc...
While this main seem esoteric, it does explain the gut, blink reaction that investors would shy away from your manifesto and back someone who says she will squeeze the most value out of their teams.
At the end of the day, like anything this is a marketing problem. You need to find someone with the cash to fund the company who believes that they will make more money by sharing this manifesto.
I agree with the general step back and ask what are we really trying to accomplish? My ideal would be that everyone is free to work as few or as many hours that they want. And that their pay would be directly proportional to the value added to the project... Working 80 hours a week and coming up with crap is crap. Working 1 hour per week and yet getting Walmart to pre-order a million copies of your packaged $19 client is quite a bit of value for an hour.
So it is a game design problem - how to measure the value of work? How to transparently report that? How to empower the team itself to iterate, find their own process flaws and rapidly increase value? As part-owners the employees should then be naturally driven to be aligned with the shareholder...
-Erik <div
Originally posted on LiveJournal
kboesky — March 21 2009, 18:04:54 UTC
Erik, Your interpretation of the case you cited is a very common mistake. The Ford case surrounded dividend payment and the language you a citing is dicta, not the opinion of the case. Ford was withholding profits when payment of dividends was very common and often an expectation of investors. At the time, the market valued companies based on anticipated dividends, not growth. It was also decided well before the disclosure requirements arising with the birth of the SEC and the two securities acts. The relevance of the opinion today is only that minority shareholders have rights. Even if your interpretation was accurate, it would still not be relevant. First, the shareholders would be investing with full disclosure. They know a portion of the profits will be reinvested in employee projects. Perhaps they would do this because they believe the employees will be more productive if management lets them work on things of personal interest. Ford did when they did the factory lighting tests. Second, the projects are authorized by the management who serve at the pleasure of the board. There is a mechanism for the shareholders to replace management if they don't like the decision. The beauty of the disclosure and statement of the principles is that if you don't agree, you don't have to participate. Keith
erikbethke — March 21 2009, 19:46:55 UTC
I have to admit I am interpreting from one source: The Corporation from Joel Bakan.I would be happy to be wrong!But it comes down two two essential threads: A) We will have a non-standard company organization in order to improve productivity = e.g. more profit for you the shareholders...= or =B) You knew we were NOT about optimal profits for the shareholder Mr. Investor, and so how would you like to fund our lifestyle?To me what Google does is essentially A in marketing to the retail investor, even if at the heart of the company their is a grossly profitable ad business and the rest is a bunch of lifestyle hobby R&D.In short I would think if Adam is to be successful in raising money he would have to market the investment as A over B...-Erik
anonymous — March 15 2009, 14:10:44 UTC
Does this override the articles of association, and the shareholder agreements?My understanding was that these documents trumped everything else. I thought (amongst other things) they defined - on a company by company basis - the interpretation of that vague idea of "benefitting the shareholders".I'd be interested in Dodge v Ford, although I'm sure it's not that simple. Just thinking about it, in most cases executives on a daily basis do many things that most of their shareholders would consider "not beneficial" but the execs do because "we know better than you do, that's why we're running the company; if you dont like it, fire us at the next AGM/shareholder meeting".
dhw — March 15 2009, 13:25:20 UTC
Dodge v. Ford (which, incidentally, is a Michigan Supreme Court Case) isn't quite as clear as that, and there are some legal experts who argue that it is in fact, "dead law" at this point. Others of course, disagree.http://www.professorbainbridge.com/Lists/Posts/Post.aspx?ID=1581
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Published: March 15, 2009 6:45 AM
Last updated: February 20, 2026 5:04 AM
Post ID: da7f19a4-fe5e-49f1-8296-a192339228f1