[phamilton]

The big accounting firms in the US are an interesting case to look at. Accountants will join the firm and spend 8-10 years there. Eventually, they either become partners or they wash out (most don't make partner). The culture has developed in such a way that "washing out" is not really seen as a negative thing. They've established a concept of alumni and maintain good relationships. The "washed out" alumni go on to become CFOs and CPAs and there is a steady stream of referrals to and from the big firms.

Maintaining relationships after letting an employee go is hard. If employees are only let go for incompetence, it may not even be worth the effort. But if an employee is let go because there's a resource mismatch I think there is a lot of value in maintaining that relationship.

Netflix seems to say "We just don't need your exact skill set right now" instead of "You aren't good enough for us". That seems like a prime situation to try and keep a good relationship.

[gruseom]

I've often wondered whether the structure you describe, which is also used by law, consulting, and investment firms, could be adapted to startups. It seems like it might be a way out of the employee/founder dichotomy.

The key concept here is that of partner. I like that word, but would like to know exactly what it means in such a structure. How, besides having high status, do partners differ from non-partners? How are they compensated? What sort of equity do they get?

[ghaff]

In a (US) Limited Liability Partnership, partners get a share of the firm's profits--while still having their individual liability protected in a similar way to a corporation. In a large firm, you probably have multiple levels of partners. While I'm hardly an expert, I imagine that this structure would probably limit the options for raising capital.

[gruseom]

Presumably you could set the details up however was necessary to satisfy investors. What I'm really interested in is the conceptual structure. Joining as an associate, proving yourself, and working your way to a possible partnership seems intuitively like a more rational way to attract and reward talent than the employee model is. I don't like the idea of being someone's employee. I'm fine with the idea of being their partner. In fact, if it's someone I respect, that's a goal worth working for. My thesis is that lots of creative people feel this way and more will.

[lkrubner]

LLCs vary by state in the USA. Some states allow almost complete freedom regarding the structure of the business entity. I lived in Virginia for several years. My friends and I launched a business in 2003. We decided to go for a custom LLC structure. We spent about $5,000 on lawyer fees, but we got a structure that allowed us to sell shares in our LLC. It was a hybrid structure, partly a C form, partly a normal LLC.

[absconditus]

LLPs are not LLCs.