4033

October 27th, 2015

Thank you.

Jon Lawrence Tech and media do-er of things.

October 27th, 2015

Wait, what? He wants to work full-time *only* when there is a salary being paid to him, AND he wants majority ownership?

RUN AWAY. That's not a recipe for success.

Jon Lawrence Tech and media do-er of things.

October 27th, 2015

Another one to help (free) is: http://foundrs.com/

Zvi CFA Senior Quantitative Analyst | Data Scientist

October 27th, 2015

First, take a look at the fantastic The Founder's Dilemmas, by HBS Prof. Wasserman. Basically, the full-time/part-time split is going to be very difficult to sustain. It will be hard to balance time vs. contribution and translate those into equity stakes. You should start with you owning the entire thing, and give your part-time helper equity as time goes on, based on hitting some milestones and time-commitment requirements. That way, you make sure he stays engaged. Don't forget that equity stakes are almost always re-negotiated once VC's start to take control of the company. That means that you should both include in your contracts willingness to re-negotiate stakes if required for funding. z

Dennis Robinson Founder, svedu

October 27th, 2015

Look into the dynamic equity split model: http://techcrunch.com/2013/02/09/the-perfect-cap-table/

Todd Kovalsky

October 27th, 2015

My question to you is, who is responsible for sales? if you, I would say this person is an advisor and not much else. Best regards, Todd Kovalsky 917-601-4103

Matthew Mausner

October 27th, 2015

if he literally wants to be majority, as in more than you, that's so wildly unrealistic that you should cut bait right away. If his assumption is 50/50, as the above reasons indicate, that should be modified by any of those models mentioned (eg Wasserman), with things like vesting cliffs and such as well. Is he putting up the cash for any of your expenses (server costs, business cards and brochures, etc.), or is that all you as well?
Having 'a partner' who you know is committed, will share the stress and responsibility and stay up all night making presentations happen, updating the website, delivering for your first customers... is verrrrrry important, but it doesn't automatically mean 50/50.

Kevin Carney Content Marketing works, but needs better tools.

October 27th, 2015

I recently read a very interesting book that addresses this very question. It defines what seems like a very sensible method of sharing equity based on actual contributions.

http://www.amazon.com/gp/aw/d/B0096EFHBI?ie=UTF8&redirectFromSS=1&pc_redir=T1&noEncodingTag=1&fp=1

Nerea Anderson CEO at YumClub

October 27th, 2015

He needs to work now and pay his bills, so he works part time with this company. When our company launches, he said he wants to give it his all and work full time there, but will need a salary to pay his bills.

Lorraine Wheeler President at Redstoke, LLC

October 27th, 2015

How long has he been working and what was your agreement for the time which he has already worked? It sounds like there are two issues here. The compensation (equity or cash) for the time he has already put in and the equity moving forward. For the equity split moving forward, the factors you mention are exactly right. Look at what each bring to the table in terms of risk, time, and expertise. If he wants to take less risk by not committing full time or quitting his other job, then you should have more equity. Hopefully, compensation or consideration for the time he has already put in has already been worked out.

Rob G

October 27th, 2015

sounds like you two are pretty far apart if he is part time and can't contribute more than part time until after you launch/raise money and he is expecting majority ownership/voting. Sounds like he sees his contribution as more valuable (need for majority equity and/or voting) even if if/when you both are contributing full time. The words you used in your question/statement indicate that you don't quite see him as an equal partner EVEN IF/WHEN he is contributing full time as you are. That's a wide gap to bridge. You need to decide if you are prepared to walk away and how that might work if you did (legal issues, schedule set backs, time to find/recruit another partner, etc.). Not saying you should, but you need to go through the calculus as its seems to me you two are far apart. that said, A dynamic equity split like Dennis suggests sounds great, but the devil is in the details - it is something to consider. The challenge, even with a 'dynamic split' is that you still need to agree on a 'currency' (typically hours) and how that currency is valued (what is the value of an hour of your time and an hour of his time and an hour of time for each contributor). then you need to agree on a method to track/account for these hours. Not as trivial as it sounds. This is where you will stat to test your partnership/relationship/flexibility/negotiating skills, etc.

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