How to Slice the equity pie fairly
How does $50k from 5 investor cofounders with successful careers in exchange for 85% sound? Nine years ago I had a failed startup, an empty bank account and nothing more than an idea, it sounded amazing!
Today not so much.
Mike Moyer provides a framework to address equity splits in his book Slicing the Pie. This model applies to bootstrapped startups who have not done a priced round. It’s 199 pages so I have summarized it with this TLDR version.
The model aims to be fair for everyone as circumstances change. This avoids unpleasant renegotiations. It’s hard to feel good if you feel the equity split has become unfair.
Everyone should get compensated fairly for their risk taken
Logging Hours
I hate time sheets … a lot.
That said it keeps everyone accountable and can identify productivity issues.
Unlimited vacation policies are awesome. Take as much time as you need as long as your work gets done.
Dynamic equity adjusts the contributions over time
Since the business is cash poor, hours get rewarded with “slices of pie”.
