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This is like reading the early chapters of a fiction story about an alternate universe. What, to you, is the difference between these two situations? 1. One p

by smeej 3y ago

This is like reading the early chapters of a fiction story about an alternate universe. What, to you, is the difference between these two situations? 1. One person decides to form a company and has all the shares. After six months, he realizes he should really have worked with a cofounder, so he closes that business and opens a brand new one with this cofounder, the two of them now equally owning half the shares. 2. One person decides to form a company and has all the shares. After six months, he realizes he should really have worked with a cofounder, so he hires a very high level early employee and gives him half the shares. How does this change based on the number of co-founders/early hires? Why does it make a difference if their need for a new person surprises them, so they start all over with the distribution of the equity of a new "business," or they plan for it in advance and set equity aside for such hires?

dahart 3y ago
First sentence I agree with, but I don’t understand your hypothetical. #2 is what usually happens, and non-co-founder very high level early employees don’t usually get 50% or anywhere close. If the original founder made any progress and has anything of value in the first six months, a 2nd co-founder may not get 50% in either case.
- smeej 3y ago
  It's a direct question for the parent commenter who's going on about how it shouldn't be OK to give individual people shares to convince them to come work for you. If you get six months into "working" on a project and realize you're missing some core skill, "hire" someone. Call them "cofounder." Give them an appropriate amount of the shares. It's exactly the same in the end as closing one business and starting a new one that's divvied up the same way. I'm arguing that being able to give important employees a stake in the company is just good sense, and having to "sell them on the open market" instead is about as inane an idea as I've heard this year.

by smeej 3y ago

dahart 3y ago

First sentence I agree with, but I don’t understand your hypothetical. #2 is what usually happens, and non-co-founder very high level early employees don’t usually get 50% or anywhere close. If the original founder made any progress and has anything of value in the first six months, a 2nd co-founder may not get 50% in either case.

smeej 3y ago
It's a direct question for the parent commenter who's going on about how it shouldn't be OK to give individual people shares to convince them to come work for you. If you get six months into "working" on a project and realize you're missing some core skill, "hire" someone. Call them "cofounder." Give them an appropriate amount of the shares. It's exactly the same in the end as closing one business and starting a new one that's divvied up the same way. I'm arguing that being able to give important employees a stake in the company is just good sense, and having to "sell them on the open market" instead is about as inane an idea as I've heard this year.