Fair enough. Just my personal opinion. A quick anecdote to contextualise though:
- About 3 years ago an entrepreneur friend from Colorado started a business with 2 people from where he was working. They split equity 3 ways and worked on the side for over a year (past the cliff of their accelerated vesting). - One of the three of them barely contributed during that time, citing how his work projects were far more onerous than expected and he just didn't have time to help out, but would certainly quit his job like the other 2 once they raised their seed round and begin pulling his weight. - After a year, they raised that seed round. My friend and the second co-founder quit their jobs and began working full-time as planned. - 6 months later (18 months in), despite very little contribution, the third co-founder decided that he was quitting McKinsey to pursue a career in politics and would not be working on the startup. Having already vested half of his shares, he was now dead equity totalling 1/6 of the company and refused to sell back that equity. - It nearly killed the company, and lawyers had to get involved to sort it all out and it certainly ruined their friendship. Sadly this is not isolated either, as I know of a nearly identical (but more easily resolved) situation with a former classmate. I guess I would suggest that granting sweat equity before it has been earned can be problematic and that same thing can be accomplished by having the equity held by the company as a pool or some other mechanism and not granted until it has been truly earned. And while I firmly believe in the power of working on something part time (perhaps I was too harsh before), I also feel that nearly every story of a side gig turned successful startup has to involve a "moving from part-time to full-time" stage. Cheers, Sincerely, *Kevin Baum* [image: AgriWebb] <http://agriwebb.com/> Kevin Baum / CEO/Co-founder Ph: 0449 606 144 AgriWebb http://agriwebb.com Level 6, 227 Elizabeth Street, Sydney 2000 On Wed, Apr 11, 2018 at 11:05 PM, Dean Collins <[email protected]> wrote: > Pretty good advice apart from quitting your job part. > But agree with everything else. > > Cheers > Dean > > > -----Original Message----- > *From:* Kevin Baum [[email protected]] > *Received:* Wednesday, 11 Apr 2018, 8:04AM > *To:* [email protected] [silicon-beach-australia@ > googlegroups.com] > *Subject:* Re: [SiliconBeach] Startup equity split > > Hi Luke, > > Co-Founder of a 4 year old SaaS company here. > > Having had multiple experiences with Equity that led to conflict I would > recommend the following: > > - *Always split equity evenly between founders* (unless one is > bringing * defensible IP* or *$$* to the table. Ideas do not count. > It's not about ideas, but execution). Roles change and become more and less > important over time. Splitting it based on perceived value in the future is > impossible to do. > - *Everyone Vests* - Typically 4 yr with a 1 yr cliff. I personally > have dealt with and know several others who have dealt with founders > leaving early and having dead-equity nightmares that decimated funding > rounds. > - *Nobody gets equity granted until they quit their job* - people's > circumstances change and you should not grant equity based on a promise. > Part time is 1/10th as effective as full, and sweat equity should not be > realised until someone goes full time. > > Happy to chat more about some of my horror stories if you like. > > Sincerely, > > *Kevin Baum* > > [image: AgriWebb] <http://agriwebb.com/> > > Kevin Baum / CEO/Co-founder > Ph: 0449 606 144 > > AgriWebb > http://agriwebb.com > Level 6, 227 Elizabeth Street, Sydney > <https://maps.google.com/?q=Level+6,+227+Elizabeth+Street,+Sydney&entry=gmail&source=g> > 2000 > > > On Fri, Apr 6, 2018 at 4:56 PM, Luke Haddrick <[email protected]> > wrote: > >> Hey Guys >> >> >> I am in the early stages of setting up a SaaS company with 2 other >> partners. The dilemma I face is all too common, what should the split be? >> We haven't started selling the product yet, however we need to address this >> upfront now as you know. >> >> Summary of the role of the 3 founders and the level of involvement: >> >> Founder 1: CEO - owner of the idea, and will be responsible for >> day-to-day, pitching, bus-dev etc >> >> Founder 2: Tech Director (CTO) who will manage the development >> requirements (time is scarce as working FT elsewhere) >> >> Founder 3: Director - who will bring the network of contacts and has >> founded another creative agency (time is scarce as working on multiple >> other projects) >> >> Question 1: Should costs for development and design of the website be >> split even through the other two partners are taking a chunk of equity >> each? As opposed to startup expenses being invested by each party i.e. >> development costs / design costs to be earn their equity stake. >> >> Question 2. With respect to sweat involvement or grunt a flexible >> structure is needed where the amount vested can be adjusted over time. >> >> How do I approach this? >> >> Thanks >> Luke >> >> -- >> -- >> You received this message because you are subscribed to the Silicon Beach >> Australia mailing list. Vist http://siliconbeachaustralia.org for more >> >> Forum rules >> 1) No lurkers! It is expected that you introduce yourself. >> 2) No jobs postings. You can use http://siliconbeachaustralia.org/jobs >> >> >> To post to this group, send email to >> [email protected] >> To unsubscribe from this group, send email to >> [email protected] >> For more options, visit this group at >> http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en >> >> --- >> You received this message because you are subscribed to the Google Groups >> "Silicon Beach Australia" group. >> To unsubscribe from this group and stop receiving emails from it, send an >> email to [email protected]. >> For more options, visit https://groups.google.com/d/optout. >> > > -- > -- > You received this message because you are subscribed to the Silicon Beach > Australia mailing list. Vist http://siliconbeachaustralia.org for more > > Forum rules > 1) No lurkers! It is expected that you introduce yourself. > 2) No jobs postings. You can use http://siliconbeachaustralia.org/jobs > > > To post to this group, send email to > [email protected] > To unsubscribe from this group, send email to > [email protected] > For more options, visit this group at > http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en > > --- > You received this message because you are subscribed to the Google Groups > "Silicon Beach Australia" group. > To unsubscribe from this group and stop receiving emails from it, send an > email to [email protected]. > For more options, visit https://groups.google.com/d/optout. > > -- > -- > You received this message because you are subscribed to the Silicon Beach > Australia mailing list. Vist http://siliconbeachaustralia.org for more > > Forum rules > 1) No lurkers! It is expected that you introduce yourself. > 2) No jobs postings. You can use http://siliconbeachaustralia.org/jobs > > > To post to this group, send email to > [email protected] > To unsubscribe from this group, send email to > [email protected] > For more options, visit this group at > http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en > > --- > You received this message because you are subscribed to the Google Groups > "Silicon Beach Australia" group. > To unsubscribe from this group and stop receiving emails from it, send an > email to [email protected]. > For more options, visit https://groups.google.com/d/optout. > -- -- You received this message because you are subscribed to the Silicon Beach Australia mailing list. Vist http://siliconbeachaustralia.org for more Forum rules 1) No lurkers! It is expected that you introduce yourself. 2) No jobs postings. You can use http://siliconbeachaustralia.org/jobs To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en --- You received this message because you are subscribed to the Google Groups "Silicon Beach Australia" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/d/optout.
