3 ms·

As a sanity check for myself: For those of you who've done start ups with two people, do you not usually go 50/50?

Ixiaus 15y ago
That's the thing, the only time I feel like founders should get a different distribution of equity is if one of the founders is paying salaries, paying for hosting, paying for business cards &c... That's how we are doing it at my company - my cofounder had the money and wanted to bootstrap, I was okay with that (I figure my cut will be worth more if we bootstrap instead of go 50/50 and find VC) so my cofounder is paying for everything including a "median" salary for me; we've done our split 20/80. As far as the other vectors go, I feel like they shouldn't matter - all the cofounders have a role and everyone should be working equally hard!! My test of the app assuming none of the cofounders were paying for everything put the split (for two of us) at 58/42. Which is silly because my cofounder may be the reason why we have customers and is also a key player in the industry - but there would be no app, no features, and it wouldn't be working as well as it would if an outsourced rent a coder had done the work.
adamt 15y ago
I've done about 4 startups now - and always chosen to split the equity evenly between the founders, despite the fact a tool like this one would have suggested I would have been 'worth' more than parity. What this tool forgets is that a startup is a tough emotional journey and an emotional roller-coaster. In every startup's life there are moments of dispair, moments when it will all seem like too much effort. The ability to come through these as a team is as, or arguably more, important as being a brilliant coder, or someone having great contacts. In order to get that team spirit and togetherness that is key to the company being successful, I think it is better to split the equity more evenly. Or - to put it another way - in most cases, founders shares end up being worth almost nothing (statistically most startups never get a proper exit). It's far more important to look at what will increase the chance of that exit, rather than how much you will own at exit.
wonginator1221 15y ago
Joel Spolsky wrote a little on founder equity and a potential method to divide ownership. http://answers.onstartups.com/questions/6949/forming-a-new-software-startup-how-do-i-allocate-ownership-fairly/23326#23326 http://answers.onstartups.com/questions/6949/forming-a-new-s...

That's the thing, the only time I feel like founders should get a different distribution of equity is if one of the founders is paying salaries, paying for hosting, paying for business cards &c... That's how we are doing it at my company - my cofounder had the money and wanted to bootstrap, I was okay with that (I figure my cut will be worth more if we bootstrap instead of go 50/50 and find VC) so my cofounder is paying for everything including a "median" salary for me; we've done our split 20/80. As far as the other vectors go, I feel like they shouldn't matter - all the cofounders have a role and everyone should be working equally hard!! My test of the app assuming none of the cofounders were paying for everything put the split (for two of us) at 58/42. Which is silly because my cofounder may be the reason why we have customers and is also a key player in the industry - but there would be no app, no features, and it wouldn't be working as well as it would if an outsourced rent a coder had done the work.

adamt 15y ago

I've done about 4 startups now - and always chosen to split the equity evenly between the founders, despite the fact a tool like this one would have suggested I would have been 'worth' more than parity. What this tool forgets is that a startup is a tough emotional journey and an emotional roller-coaster. In every startup's life there are moments of dispair, moments when it will all seem like too much effort. The ability to come through these as a team is as, or arguably more, important as being a brilliant coder, or someone having great contacts. In order to get that team spirit and togetherness that is key to the company being successful, I think it is better to split the equity more evenly. Or - to put it another way - in most cases, founders shares end up being worth almost nothing (statistically most startups never get a proper exit). It's far more important to look at what will increase the chance of that exit, rather than how much you will own at exit.

wonginator1221 15y ago

Joel Spolsky wrote a little on founder equity and a potential method to divide ownership. http://answers.onstartups.com/questions/6949/forming-a-new-software-startup-how-do-i-allocate-ownership-fairly/23326#23326 http://answers.onstartups.com/questions/6949/forming-a-new-s...