We work our socialism out in the tranches When we repackage, when then reallocated We ship in shifts and then sit inundated Look how our labor has now accumulated
K. Argyle Marks
Preface
"Tranche Socialism" could have just as well been called "Allocation Altruism" or "Long Tail Liberalism". It describes a means of redistributing accumulated capital from a common enterprise, not in the Howey test sense, but in the sense of a shared effort in which collaborators jointly contribute labor, goods, or capital; especially, a business by which one is employed or a bazaar in which one sells goods. All the ideas contained herein are derivative and in-progress. If interested, please respond with citations of prior art or similar schemes. I'd be mighty appreciative!
Asset Backed Securities
In 1985, Sperry Lease Finance Corporation sold ~$200 million in fixed-rate notes (corporate debt, like a treasury but issued by a private enterprise) that payed monthly interest and principal, and which were collateralized by leases on computer equipment lent by Sperry Corporation (now Unisys). At a high level, an asset backed security (ABS) is a set of cashflows whose interest and principal payments are distributed on a pro rata basis (evenly) to shareholders. In reality, cashflows are broken into pools called "tranches" and ordered by their credit risk and corresponding yield.
The "tranche" in "tranche socialism" simply refers to a pool of cashflows, not necessarily debt; for example, subscriptions, recurring revenue, or an income (salary) could serve the purpose.
Beats, Packs, and Melodies
For a time I tried selling melodies in the Michigan music market on Instagram. In an attempt to generate network effects, we partnered with producers who turned our instrumental melodies into vocal-less beats. We packaged collaborations into packs of 4 or 5 beats which we released as a drop every week on IG. We structured the compensation model as follows:
- For a given collaboration we split sales down the middle, 50:50.
- Of our 50%, 10% was reserved and placed into a tranche
- Each 10% cashflow in the tranche was spliced into equal parts (i.e. 2%-2.5% varying by pack size)
- Each slice was recombined with a single slice of every other collaboration to produce an aggregate 10% cashflow
- We then allocated these aggregate 10% cashflows to every collaborator in proportion to the number of collaborations they contributed to on the pack
On a pack of 4 beats with 4 separate producers the per collaboration split worked out to be:
- Us: 40%
- Producer: 52.5%
- Pack Collaborators: 7.5% (2.5% each)
This meant for every $1 sold of a particular collaboration. We saw $0.4, the direct contributor $0.525, and the collaborators $0.025 each. The idea here was that producers would be more incentivized to push the entire pack, rather than their collaboration alone, if they would see revenue from any sale. Analogizing with ABS:
- the 10% of income from a beat sale is a cashflow
- the tranche is the pool of these 10% sales incomes
- the securities are the aggregate 10% incomes composed of 2.5% slices from each first-order cashflow
The "socialism" in "tranche socialism" refer to the redistribution of individual income to the group via the securitized tranches as described above.
Tranche Socialist Enterprises
Over a given duration, say a quarter, an enterprise sells some number of goods or services into a market and concurrently completes some number of projects or tasks internally. At a high level, a tranche socialist enterprise is any business which takes a percentage of the cashflow realized over some duration, tranches (pools) and securitizes (repackages) it, and allocates securities to projects in some proportion completed in the (or, a) prior duration (e.g. the projects which loosely, or precisely if measurable, caused the tranched cashflows). Tranche socialist enterprises vary in the kind of cashflows involved, the nature of the pooling and repackaging, and the nature of the reallocation.
Tranche Socialist Labor Unions
Probably wouldn't be a labor union, probably a PEO with exotic by-laws. We're talking tranching billing rates.
Stacker News & Territories
I argue Stacker News and especially Territories are proto-tranche socialist. Revenue sharing is tranche socialist in spirit but to embrace the full range of expressible tranche socialisms we need the ability to adjust the split in more exotic ways. A democratic tranche socialist territory, a despotic tranche socialist territory, a meritocratic tranche socialist territory, a ... tranche socialist territory, we need them all! Especially, market based tranche socialism where we bid on tranche socialist security parameters governing the next duration at auction. Lightning is clearly the transmission media for tranche socialism, Stacker News is its festering breeding ground.
Gramsci and Dominating the Discourse
I'm all about socialism, if its a good form of tranche socialism! Tranche socialism pools together socialism and capitalism, repackages them, and reallocates their meanings in a more interesting and motivating direction. I think tranche socialism could become so popular no one even remembers what socialism used to mean. When are the shorts? "I'm a tranche socialist, of course I allocate a portion of my income to get tranched with the network."
Evaluating Under Evolutionary Game Theory
Left as an exercise for the reader.
Conclusion
Tell me what you think. Can I get a Trotsky for my Lenin here? I know I'm playing, but I'm also serious. I hope that came through.
Autotranche accumulators of the world, unite!