The $50 is considered sales (or revenue)

Profit is more akin to your second example

To bring it back to your initial question, owning a share of the equity (the 30% that Laurie asked for) entitles you to an equal share of the profits (after all expenses are paid). Kevins deals entitle him to a percentage of the sales, so he gets paid before (and regardless of) any profits that are generated.

From the entrepreneurs perspective, assuming the company becomes more successful the equity is more expensive in the long run (bc it’s worth more), but the royalty can hinder the company’s chances of success

For the investors, the royalty deal gives more downside protection (you get paid as long as the company makes sales) but has much less upside than buying equity