FairSoftware virtualizes startups

Why not use a web app to create your web app startup? And what's more, why deal with all the physical realities of incorporating a company and setting up its accounting system when you can visualize the whole thing? That's the proposition of Fairsoftware.net, which debuted an alpha version of its online startup creation application today at TechCrunch50.

While other web apps help you find people for your startup, FairSoftware goes several steps further by letting you, as the founder, parcel out pieces of the online revenue collected via PayPal by FairSoftware your startup (hopefully) generates.

The more shares of a startup you own within FairSoftware, the larger your share of revenue. The software lets you make provisions for those pesky unvirtualized expenses businesses have, and then pipes the revenue to each founder in accordance with their shares, less FairSoftware's 9.9% cut.

There are interesting aspects to the virtualized startup you create: you can bring other people to a project and pay them in shares, and if the project generates revenues this means real money in their pockets. You can either hire for the long term, vesting new staff with permanent shares, or pull in temporary expertise who get a share of the revenue until the task is completed.

I tried the product and found a lot to like:

• While still in alpha, the Web app worked without a glitch from signup to being ready to count my incoming money.
• Developers, web designers and professionals with skills startups need can join FairSoftware, hook up with multiple projects and both make money and earn a lasting piece of the action.
• FairSoftware's open (to a project's founders) accounting system and one share, one vote mechanism should moderate one of the main reasons startups go belly up: disagreements between founders.

Since you are not actually incorporating a company when you create a project, FairSoftware's legal foundation is something it calls its Software Bill of Rights, which spells out each how the system works. Alain Raynaud, CEO of FairSoftware, pointed out that the founders could "graduate" to being an actual subchapter C corporation if they so choose.

If FairSoftware takes off, and can survive the inevitable legal challenges that arise when people, money and who gets what come into play, this could become a standard infrastructure product for technology startups.