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Here's a tip I heard from a friend (assume 2 co-founders, can be extended to n without loss of generality): Have both founder sit down and write a list of thin
by shalmanese 16y ago
Here's a tip I heard from a friend (assume 2 co-founders, can be extended to n without loss of generality):
Have both founder sit down and write a list of things they think the other founder brings to the table. Assign an equity value beside each point (with the remaining equity belonging to you). Spend some time doing this, encourage them to take it seriously.
After both of you have completed this, sit down and run through the entire list. Have an open and honest debate about each point.
Once adequate consensus is reached, add up the total % of equity assigned. Hopefully, this number will exceed 100%, if it does not (ie: both co-founders believe they make an outsized contribution), it's probably a good sign you need to go back and restart this process again. Multiply your personal equity stake by the total % equity to get your share.
It seems like a good idea because it avoids making the argument self-serving and talking about your own contributions. Instead, it's about getting the partnership off on a foot of mutual respect & understanding.
Disclaimer: I've never tried this myself, results may vary.
- shalmanese 16y agoSo, as an example, with a business guy & technical co-founder, the business guy believes the technical co-founder should deserve 80% of the company, the technical guy believes the business guy should deserve 40% of the company. 80% + 40% = 120%. Thus, the business guy ends up with 40%/120% = 33.3% and the technical guy ends up with 80%/120% = 66.6% of the company. Both walk away happy that they got more than they felt like they deserved.
- borism 16y agosince when tech guy gets more than business guy? (to all the downvoters: I'm genuinely interested)
- zackattack 16y agoMaybe when there are real technical challenges? Developers capable of creating CRUD business applications are basically a commodity
- jarsj 16y agoIt totally depends on the nature of the company. In many successful tech companies like (Google/FB/DropBox etc..), I believe tech guys owns majority.
- roel_v 16y agoTo quote from the grandparent "So, as an example,..."