He started two LLCs, both operating through a system of contracts with third-party providers. Let's look at the advantages an LLC offers. Your only risk is capital paid into the business. Business debts and other liabilities can't be squeezed out of your personal assets. Profits and losses are reported and taxed on owners' individual returns.
Members get a percentage of ownership.
If your idea people can't manage their way out of a paper bag, you can hire management help. Smaller LLCs are usually member-managed, but not always. Profits and losses don't have to be distributed in proportion to the money each person puts in. A regular C corporation can't allocate profits and losses. LLCs are tough if you have several investors or raise public money, since you don't have shares or stock certificates to offer.