See a complete overview of Slicing Pie and how to implement your very own Grunt Fund. Mike Moyer, the author of Slicing Pie, presents the concept for the Small Business Center.
[…] I did a five-minute Slicing Pie overview on dynamic equity splits for an audience in Chicago. It wasn’t enough time to do it justice, but I think it’s a good high level overview. For a more detailed overview you can see a recording of my webinar for the Small Business Centr. […]
In general Slicing Pie seems like a really big improvement over typical splits.
But I don’t see how losing a grunt a year or two into the project is “Perfectly Fair” leaving them with nothing, for reason or not. Seems to me this system needs some form of vesting where old contributions are recognized into perpetuity, but shrink over time after a founder stops contributing. .
This point comes up occasionally and in many cases it is fair to allow someone to keep their equity. Still, it matters how a person leaves the company and my goal is to provide a procedure for each case (outlined in the book) so that everyone knows what they are agreeing to.
The only reason someone would lose their share is if they get fired for good reason or if they leave with no reason.
If you have to fire a non-performer you will not want them to stick around as a disgruntled absentee owner.
In the case of leaving for no reason (like the person can no longer afford to work without pay) In most cases if the person leaves on good terms and was a valuable member of the team you should keep them on as an advisor which will keep them involved enough to justify letting them keep their equity.
You want to avoid people bailing out in the middle of the project and leaving the company in the lurch.
I find it odd to pay someone for hours of learning. Is there an argument for estimating the number of hours to complete a project for those “entry level” partners? We’re figuring on the idea of estimating the hours of a project and then rewarding based on results.
Most entry-level jobs involve on-the-job learning and it is not uncommon for employers to provide formal training programs as well as job-specific training. Many start-up employees are more entry level and paying them for learning should not be seen as a bad thing. They will be more valuable to the company if they have more education. If someone is inexperienced, their lack of skills will be reflected in a lower hourly rate.
However, you can use a more milestone approach if you want. Here is a post I wrote on that subject: http://slicingpie.com/milestones/
[…] model for quantifying founder equity, which he lays out in a book called “Slicing Pie.” Here’s a video introduction to how his approach works. Mike was kind enough to send me an excerpt, which I […]
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