Has anyone used the "Slicing Pie" method of managing equity allocations through a "grunt fund"?

Erik Larson

April 25th, 2013

One of my advisors recommended the book "Slicing Pie" to me. I started to read it, and couldn't put it down. The simplicity and fairness struck a cord.

The basic idea is that you don't formally divide up the company until you have a real financing event, like when the first outside/professional money comes in. Instead you pre-agree to keep track of the contributions of the team (time, money, pre-existing IP, etc.), creating a "grunt fund" that has no value but that will serve as the basis for dividing up equity when external financing or some other event sets a valuation. His argument makes sense to me - the equity has no value until it is priced, and figuring out fair allocations based on future contributions is impossible (vesting only helps a little with that), so any attempts to sort it out fairly and manage incentives are very likely to fail.

But that is all in theory. Has anyone done this?

Mike Moyer

November 5th, 2013

Hi! I'm the author of Slicing Pie and I can't believe I didn't notice this question until now! The Grunt Fund is the most fair way to divide equity for bootstrapped companies. It works, I promise. If you use the model as described everybody will get exactly what they deserve. No more and no less.

Dynamic equity programs are infinitely better than fixed splits. Until now, they haven't been widely used because they haven't been widely understood. Slicing Pie is the first practical guide for implementing a dynamic split.

With regard to implementation, I've sold thousands of copies of the book in the last year and I've been doing a lot of speaking event as far away as Bogota, Colombia. The method has been adopted worldwide and I get emails from readers every day. I've posted a short list of companies who are using a Grunt Fund on my site: http://www.slicingpie.com/grunt-fund-directory/

Also, Clint Costa is a Chicago-based attorney who has helped at least 60-70 companies implement the program in the past year. He offers a Grunt Fund agreement template to help get people started: http://www.slicingpie.com/clint-costa/

You are always welcome to send me questions to mike@slicingpie.com or chat with me on my site www.SlicingPie.com

If, after I die, I'm known as the guy who helped startups implement dynamic equity splits, I'll consider it a life well lived!

Thanks for asking about Slicing Pie!

David Bergman CTO, Co-Founder of Stackray, Inc.

April 25th, 2013

I have applied this scheme twice, but in both cases with "co-founders" I know *extremely* well. I am afraid that there might not be consensus on the relative value of different inputs/deliverables once money is smelled. I am also curious as to why the relative importance/value of the various "currencies" involved would change upon a financial event?

But, yes, for situations where one knows the others VERY well, yep.

Richard Rosen Founder of FastCall --​> #1 Phone Sales Productivity app in the Salesforce AppExchange

April 25th, 2013

I used a basic version of this. Totally agree. Why bother until it matters?

Felipe Lara

April 25th, 2013

I am using it and it has worked great so far, but my team is mostly people with whom I worked for many years before, so we all trust each other. In cases like this, I think the method is great. It takes a big weight off our backs for its transparency and fairness, and lets us focus in developing a product instead of wasting time thinking who is going to get what, why, etc.

Joseph Hsieh Growth Marketing & User Acquisition Specialist

May 1st, 2013

One instance that is similar is done by Philip Rosedale (founder of Second Life) who implemented a peer-bsaed "stock option" process.  It was documented int his WSJ article:

Joseph Hsieh

Sati Hillyer Looking to Hire a Ruby Engineer to join OneMob - 2015 Gartner Cool Vendor for CRM Sales

November 3rd, 2013

I'm starting to try out slicing pie too, do you use this for advisors too? I'm not finished, but it seems to give active advisors quite more than the typical .5-2% range I normally read about. Is that fair?

Here's the team breakdown:
Right now I have me (full-time founder), 1 part-time founder, 1 full-time engineer and 1 active part-time advisor. Part time is less than 5 hours a week. I've given everyone the same market salary / GHRR to keep things simple and level the playing field.


Monica Borrell CEO and Founder at Cardsmith

November 1st, 2013

I just read the book Slicing Pie and wanted to ask the same question, but will comment here rather than starting a new thread. I am working with a team of 3 - one who I've known a very ong time and trust very much. Another guy has just joined as a technical co-founder and my intuition says he is very trust worthy and like minded. 

After reading the book, I'm inclined to give slicing pie a try. I'm curious if anyone has further thoughts on the potential unintended consequences to watch out for. 

I realize the bookkeeping of time and money is a bit of a burden, but it seems a small price to pay for transparency, fairness and the discipline required to make sure all time and money drives value for the business (or theoretical value at least).  

Eric, have you implemented this since your original question back in April?  

Joanne Frederick Healthy people. Effective healthcare.

August 27th, 2014

Thank you for your initial post - had the same question and have benefited from the discussion above. 

Great book - thank you! And your link to Clint Costa above is not working. 

David Wechsler Systems Engineer & Ag-Tech Entrepreneur

June 30th, 2015

I've also started implementing the grunt fund model in my business.  So far I have found an advisor and an angel investor/manufacturing partner to join the team as a part of the grunt fund.

I'm really glad to see others here who are using this method of equity allocation.  Before I came across this, I spent many weeks worrying about how to split things up, especially after "breaking up" with an early partner in a 50-50 split.  This approach has definitely freed up my mental bandwidth!

Pamela Ed.D. Founder & CEO at Deeper Dive Learning, Inc.

July 1st, 2015

I can vouch for this start-up method.  My current company is being built this way.  One of the best things about this kind of start up is the trust that grows as your team develops product together during the primary sweat phase.  I was able to offer stock options in this manner and build the product faster this way with very little money out of pocket.  It is a win-win when everyone is working toward that same goal.