The songwriting environment of that square block in New York was a hotbed of collaboration.

After work, many of the employees would gather at a restaurant around the corner, called Beefsteak Charlie’s. Soul singer Maxine Brown remembers that it was like a music marketplace.

“The place was hoppin’,” Brown says. “Writers, they would run over and pitch their songs. Just right there on the spot, start singing it. And the verse would be on a napkin, and he’d reach in his pocket and the bridge could be on a brown piece of paper bag … [A] lot of the songs that you heard back in the old days were sold right out of that restaurant.”

McCoy had teamed up with a songwriting partner, Charlie Singleton. They set up their office in a booth at Beefsteak Charlie’s.

“We’d write back there,” McCoy says. “People got to know us so well, they used take our telephone calls. We’d meet there every morning, 6 o’clock, and buy a little glass of wine for 30 cents, and we’d sip on that.

You can’t help but connect that to the entrepreneurial activity taking place in your average Starbucks today.

Hell, they even invented an entire company dedicated to bringing beggars (that would be guys like us who want money) and funding sources together on every street corner in America — STARBUCKS!

I am willing to bet that more deals are getting done at Starbucks than ever got done on the fairways, greens and tee boxes of the old boy network. Even at $4 for a freakin’ latte, it’s cheaper plus no sunburn.

—JLM (Jeff), via Howard Lindzon, via Fred Wilson

Collaboration, riffing, working together to create the perfect song, the perfect pitch, the next hit, the next killer app.

As the mid-60s approached, so did change:

The 1950s and early ’60s were the heyday of the professional songwriter in pop music. But in 1964, the music scene was about to change. That year, The Beatles had five of the 10 biggest songs on the Billboard charts. One was a cover of “Twist and Shout,” but the rest were their own songs.

“People like Bob Dylan, et cetera, start emerging [and] perform their own songs,” Bell says. “So they got recognition as a singer, but also a great writer. And literally I saw our industry, for want of a better way to put it, kick the songwriter to the curb, [and] Rose was just another songwriter.”

“When the singers find out they can write for themselves,” McCoy says, “they didn’t want to see your song. They wanted to write their own songs.”

As a result, the Brill Building songwriters had to find new ways to make a living. Carole King and Neil Diamond launched successful singing careers. Some became producers, while others left the music business.

Earlier in the day, I watched the Zapurder-esque video of Gary Vaynerchuk’s FOWA 2009 keynote speech:

Gary hits on a number of themes:

• “Twitter is not a marketing plan.”
• “Do what you love. Love your damn family and crush it.”
• “The people willing to get obnoxiously dirty are going to win.”

But the core theme he drove home was that the content producers no longer need the intermediaries. Kanye doesn’t need Apple, he could do everything he does from kanyewest.com. The democratization of technology and of distribution means that talent wins out in the end for those willing to get dirty and “crush it”.

What Vaynerchuk, Dylan and Diamond Have in Common

Yet in thinking over these two pieces today, I’m struck by the contradiction in Gary’s message. He’s obviously crushing it, speaking all over the country, pumping out Wine Library TV episodes like a maniac. If you’re a lone democratized voice creating content, do you see the parallel to the Brill Building era? It’s not just being a brilliant content creator, just as it wasn’t enough after the Beatles arrived to simply be a brilliant and prolific songwriter. The ones who made the leap and survived were the songwriters—the Dylans and the Neil Diamonds—who got dirty, crushed it and amplified their skill set to adapt to a new environment.

The logical conclusion then, as it appears to be now, is to learn how to perform their own content. To become not just a content creator, but the performance artist. Alignment of passion.

There are no doubt wine store owners and liquor store owners as passionate about their work as Gary, who could create content and ideas just as good, but without that passion to work hard and put themselves out there to perform, you’ll never hear of them. Vaynerchuk is the ultimate performer of his own content—no one else could pull it off or amplify it any better than he can. You can’t perform a “cover” of an impassioned Vaynerchuk rant. Content and performer and performance are inseparable.

If you’re creating brilliant content, and you want it heard, you have to become the brand. Maybe it takes getting into fisticuffs with a hated rival. Maybe you have to speak at 300 dates a year. Maybe you have to have the shameless knack for self-promotion. Whatever it takes.

Content is just the start. Focus on building value and intellectual capital first, but realize that at some point you’re going to have to create the social capital, and then turn that social capital into flat out live performances. Keep this in mind when you have heady thoughts about democratization of voices, and the rise of the masses.

Rose McCoy is 86 now, living in Teaneck, NJ, about 25 miles away from Gary Vaynerchuk’s wine store. No word if she’s a Jets fan, but if anyone has the passion to turn her into one, it’s Gary.

On the IPO:

Who cares that Twitter is not making money. Now is the perfect time for their IPO. At a time when ‘Too Big to Fail’ is the myth, Twitter is just the right size for an IPO. It’s ‘Too Small to Fail’ as an IPO and public company. It has something more important than profits for the moment, believe it or not….demand and a clean balance sheet.

All you ‘knucklehead ANALysts’ are thinking ‘…but Twitter has no assets’. I say I would like to block you from this blog. I think Donald ‘hairpiece’ Trump had assets, Las Vegas Sands had ‘em too. A large black hole of capital – Sirius Satellite Radio – did as well. They used those assets to transfer capital from you to them. Once upon a time before ‘Asshat’ Ken Lewis was born into the banking world, Bank of America had assets. Lot’s of good that has done us.

On Social Leverage:

It’s time to make up some new rules and lead by example once again. In the end, confidence comes from trust. There are millions of good people on the social nets who have built up unprecedented levels of trust and although each of them may never MONETIZE the new found trust and responsibility, he/she can use it to lead in different ways. Healthier ways.

Trust and confidence are not built overnight, but there are thousands of smart people in the public world of finance and Venture Capital on the blogosphere and social nets to pick this country up itself and just MOVE FORWARD.

Thought provoking. This call to action will take some time to mull over.

Imagine the pleasure my grandfather would have had if he’d been able to have crows collecting coins for food. From the description of the experiment:

- THE DEVICE -

The first version of the device consists of a box from which protrudes a perch, a food tray, and a funnel. The whole thing is made out of sealed wood so as to minimize noisy clanging which might result from using metal components while retaining the ability to leave the thing out in the rain.

The goal is to be able to deploy the device wherever corvids are found and to have it designed such that it will train the corvids to deposit coins in exchange for food. The device should do said training on its own without human intervention.

Inspired, I’ve decided to apply the same Skinnerian training principles to squirrels and folding money. Hilarity and early retirement ensues.

StartupWeekend brings together anywhere from a few dozen to as many as 70 contributors who work like maniacs over a three-day weekend to incubate a company from concept to corporation. In exchange for the effort, participants are given equity in the nascent company based on the number of days they’ve participated. For example, showing up for all three days of the Houston weekend would have earned you a 2.2% equity stake in TipDish. Half of the shares of the company are doled out in this fashion, plus another 5% to the event organizer. The remaining 45% of the company is retained for future allotment to employees and investors.

StartupWeekend, for all its quirks, is at the very least an iterative attempt to address the myth of free labor.

Marcus raises a question many others have posed: should people whose total contribution involved simply showing up for the first three days of a new company really collect 2.2% of the value of that company should it ultimately succeed?

He goes on to ask:

However, in the longer run the current distribution creates real challenges for the go-forward team. Even if we assume there is no further dilution and there are only 10 people on that team, dividing the rest of the equity evenly would give each of them another 4.5%… or roughly double what you could have gotten in a single weekend. Not only would that be absurd, but dividing the equity evenly would likely be as well… shouldn’t the CEO (whoever that is) get more?

Let’s put a value on the post-StartupWeekend tipdish.com. We have 30 people putting in roughly 1000 cumulative hours of free contracting work. Assigning this a nominal $50/hour rate for labor, we end up with what could be considered the value of paid-in capital for the new enterprise of $50,000. With half the equity distributed, this suggests that the enterprise valuation of TipDish after the weekend would be in the ballpark of $100,000. The “extra” $50,000 could be considered goodwill, or free advertising generated by bloggers and StartupWeekend participants doing free marketing.

The real value of the company is no doubt much less than this. Guy Kawasaki’s Truemors.com achieved a similar level of development (on a not wholly dissimilar idea) for about $12,000, and even Guy took heat for not being wise with his spending. Is a weekend of work worth 2.2% of $12,000, or a little over $250? Probably not. So let’s assume that a least a few of the equity-holding participants would believe in the likelihood of the venture achieving a short term valuation of $100,000.

Two Classes of Shares

To address the concerns of the differing level of contribution between hangers-on and core contributors, I would suggest that the solution is to create two related but distinct classes of shares: Weekend Shares and Go-Forward Shares.

Weekend Class Shares hold a par value reflecting the nominal consulting rate, and vest only if there’s a funding event. They are treated as a liability for the go-forward company, but a liability that is capped at a fixed enterprise valuation of the $50,000 in paid-in capital. Show up all weekend and erase whiteboards for your 2.2% share of the company, and you can expect a fat $1,100 should the company ultimately get funded. Or receive nothing if it goes nowhere. Put more traditionally, Weekend Class shares are simply options that only vest for a fixed amount when the company meets certain funding or revenue milestones.

At the conclusion of the weekend, a board is created from a subset of the top equity holders. Let’s say this consists of the CEO/coordinator (StartupWeekend sponsor Andrew, holding 5% of the company) and the three-day contributors (who individually hold around 2.1% of the company each). Contributors who choose not to participate going forward opt out, but retain their Weekend Class Shares. (Cut to the punchline–if TipDish moves forward, it will do so without Marcus, who bowed out from the follow up team shortly after posing his question, presumably opting for the Weekend Class status.)

This board meets two weeks to a month after the Startup Weekend to assess progress, select a CEO, and vote on assignment of Go-Forward Class Shares. The timing is important since the shareholders should have enough time to have assessed who is really part of the go-forward team, and who’s hanging on, and vote accordingly. Coups involving a plurality of passive board members taking out active members is mitigated somewhat by the fact that the enterprise itself is hurt if key contributors are run off, although should there be funding imminent, such power plays may inevitably occur, clearing the decks to reduce dilution.

This is really the make or break meeting—the wrong CEO could be picked (or the true CEO deposed, left only with a potential realization of 2.2% of $50,000, or $1,100.) The team could become completely fractured and flounder in the aftermath. In some regards, it’s the prisoner’s dilemma for all involved. Or perhaps more optimistically, mutual assured destruction working to keep all players cooperating.

Assuming that this initial meeting is successful, Go-Forward Class Shares would default to the equivalent of Weekend Class Shares (and would replace them). Subsequent board meetings would allocate any remaining shares in an equitable manner, with reserves for VC ownership.

Let’s say that 6 months later, an angel funds the company with $250,000 in exchange for 10% of the shares. The Weekend Class Shares would vest, netting participants anywhere from $100 to $1,100 depending on their participation. The investment indicates that the Go-Forward team would then be looking at a valuation of $2.5 million. Assuming there were four of the 2.5% team members and a 7.5% CEO, all of whom doubling their positions over the course of the Go-Forward period under the board’s charter, the CEO would hold $375,000 in value, the other board members $125,000 each. Not exactly a fat IPO-style payday, but healthy enough to maintain the incentive to further increase the value of the company and to continue to stick around to receive incentive options from the pool reserved for founders.

Coming out of this funding event, the initial Weekend Class shareholders would be vested and their “debt” retired—in fact, only a fraction of the $50,000 may actually need to be paid out since the Go-Forward owners’ shares converted to real equity and no longer show up as the same type of liability. The company would be left with $200,000 in seed capital. As many as 55% of the shares remain for future funding or incentive compensation or hiring.

Dying on the Vine

What if the business collapses, dying unfunded?

One option is the route Kiko took: sell the assets (code and domain) on eBay. Kiko took in a little over $250,000 when it sold its code in 2006 on eBay. Assuming the same happens for a failed StartupWeekend payday, and no debt exists, Weekend Founders get their small payouts. Go-Forward founders split $200K in a ratio related to their ownership.

Too complex? Possibly, but an approach like this could make it fair for all involved. The weekend warriors still have a shot at some fair compensation for their efforts; the Go-Forward team and future investors still reap rewards commensurate with their ongoing contributions.

The real value of a Startup Weekend appears to be, for casual participants, a networking and learning opportunity. For potential lead founders/CEOs and VCs/angels, it presents an opportunity to identify startup talent in what amounts to an extended job interview in a near real world setting. If the equity issues can be resolved in a repeatable fashion, a model of impromptu startup collaborations could flourish, further eliminating friction, and reducing cost and time-to-market for new ventures.