My startup is in pre-incorporation phase. I am planning to partner up with a sales/marketing guy. At this moment, I am planning to collaborate with him on 3-month probation to start with.
In this 3 month period, I want to understand his working style, lead generation and his way to attack a problem. Once I feel he is a great fit, I would like to get him on board as a permanent employee and share equity percentage.
Since my startup is still in the pre-incorporation phase how should I design the contract around above? Please advice.
You want to make sure you use some sort of a collaborator agreement- check out seekhack.
First, I am skeptical that you should hire anyone at this stage - you can go to by website for blogs on that issue.
However, if you are:
- What is his goal during this 3 month period?
- How do you quantify and measure this goal?
Hold him accountable to achieving this number(s).
Not sure I would put a lot into understanding his "working style", or how he "attacks a problem" - whatever those are. This assume you have already vetted him in terms of buying into your mission and aligning himself with company values.
BTW - in a startup, first mission of marketing:
- Define the product/market/brand/etc
- Validate the Market
- Create a Go To Market Strategy
If you have not done those thing, it is way to early for a salesman.
A salesman takes in MQL (Marketing Qualified Leads) and converts them to a customer by using a set of methods for overcoming objections and process for moving them through the funnel.
If he does not have any MQLs, or methods, or process, he will likely not be successful.
There are very few sales people who understand how to develop these systems.
As someone who has led a large B2B sales organization, and as a co-founder, I would say that the first several employees (or co-founders) you hire will come on-board because of you - at this stage, you are sales-person-in-chief and the product you are selling is - *you*. Setup the discussions that way - tell them you want to develop a permanent relationship with this particular employee, but because you are a deliberate leader, you want to make sure it's the right person, and for that, you would need a temporary arrangement first. In return, the employee will be at the initial phase of building something very special. When you do offer them a full-time gig, tell them that the time they spent as temporary will be heavily weighted because they took a chance on you. Lure them. If this person won't be around in 3 months, I would keep the legal cost and exposure to a minimum with a simple NDA with a non-compete clause .
Not sure if you need to make any paper-agreements here. A good business practice would be to discuss a "what if %" and I mean if you work with this person and he delivers everything as planned and acts as a co-founder/business practice you would give him an option for x% of the company (with cliff & vesting and all the beauty).
And then there are two passways: 1) happy pass: when all is ok and at incorporation, you just sign an option agreement; 2) unhappy pass: when you the person is not ok and you just stop working with him and not issuing the option.
Read Slicing Pie before you do anything, by Mike Moyer. I would never do equity at this early stage with anyone before you know if it is going to produce results. Lots of people come and go (particularly in sales) in an early stage company.