Portfolio Carry Over Single-Bet Equity
Single-bet equity makes operators fight to stay on winners and abandon strugglers — the opposite of what the studio needs. Portfolio carry aligns them with the studio's return profile.
Operators inside a studio see two equity models. Single-bet equity ties them to one venture — if that venture fails, their upside dies. Portfolio carry ties them to the studio's aggregate output — if any of the bets win big, they participate.
Single-bet equity creates the worst incentive in a multi-venture operation: operators fight to stay on the venture that's working and bail on the one that's struggling, which is exactly the opposite of what the studio needs. Portfolio carry aligns the operator with the studio's actual return profile.
The implementation detail that matters: vesting should match the studio's timeline (often 5-7 years), not the traditional four-year cliff. Otherwise the carry pays out before the bets resolve.