FAQs – Prospinity

Basic FAQs

What is success pooling?

It’s an agreement. Every year, participants contribute a certain percentage of their earnings into a shared “success pool”. That same year, the pool is distributed evenly among the participants. Prospinity provides the technical and legal infrastructure to make these success pools work. The terms of the agreement are customizable and can vary based on each group’s preferences. Success pooling is a way for students to maximize success, support each other, and diversify career choices.

Why should I join a success pool?

Success pooling offers multiple advantages:

Amplifies Individual and Collective success: Bet on the future potential of your peers and enhance the impact of your collective accomplishments.

Encourages Collaboration: Benefit from a special arrangement that incentivizes members to work together and assist each other whenever possible, fostering a culture of mutual support and collaboration.

Diversifies Your Career: Factors such as luck, economic shifts, technological advances, and personal events contribute to the unpredictability of life. Success pooling maximizes your chances of success by allowing you to take part in a variety of career paths through your peers.

How can I join a success pool?

Once you receive an invitation, you will be able to log into our platform and follow the instructions there.

Why can't I do this myself?

Creating a success pool independently lacks the legal and logistical framework for smooth operation. Forming a group, verifying and distributing earnings, and ensuring compliance can be daunting and costly for small groups. It is impossible for large groups. Prospinity takes care of everything, making the success pooling process easy and seamless for you.

What counts as income?

We have multiple versions of the Success Pooling Agreement that you can choose from. In the simplest one, we define income as “total income” (line 9 of the Form 1040 for the 2023 Tax Year). This includes wages, royalties, bonus, carried interest, interest, dividends, and realized capital gains.

We want to be very clear about three things that are not counted. We do not count inheritance, illiquid assets, or income from your spouse.

Our more complex versions of the Success Pooling Agreement capture various other types of income. If you have received an invite, log into the platform to learn more.

Advanced FAQs

How do you deal with moral hazard/freeriding?

Prospinity’s Success Pooling is structured to encourage continued personal career efforts. While there’s always the possibility of receiving a large sum from the pool in a given year depending on the agreed rate and horizon, such outcomes are unpredictable and shouldn’t drastically alter a person’s work behavior. To mitigate freeriding as an option, our success pooling agreements also include a minimum income feature that members can implement if they want to. If a participant’s income is below a set threshold, they are excluded from the pool for that period. This feature, customizable by each group, ensures that success pooling remains a mutually beneficial arrangement with continued personal effort and contribution.

How do you deal with adverse selection?

We curate Success Pools, ensuring that its members have positive expected utility at the moment of joining.

However, if you want to create your own success pool, while you should take care to choose people who you think will contribute positively, remember that life is full of uncertainty and that outcomes are tied to factors other than perceived “talent”. An array of events beyond your control will likely play a large role in your (and others’) success, from economic shifts to personal challenges to technological advances. Success pooling provides something you can’t achieve on your own - a way to invest in multiple life paths, hedging against the downside and capturing the upside of all of these unpredictable factors.

Is Success Pooling a form of wealth redistribution?

No, Success Pooling is not a form of wealth redistribution. Unlike wealth redistribution, which is about transferring wealth from wealthier to less wealthy individuals, Success Pooling is a collaborative approach where individuals can diversify their career choices and bet on each other’s potential, creating a shared network of opportunity. This concept is based on the understanding that success can be unpredictable and is often influenced by factors beyond individual control, making it advantageous to be part of a system where everyone supports each other’s success.

How does Prospinity make money?

Prospinity makes money when you make money. There are no upfront payments. We take a small commission on the collected money in the pool. A small stake in the game aligns our incentives with yours, ensuring that the success pooling journey runs smoothly and seamlessly.