[…] To use a dynamic stock split program – . – Slicing Pie is a formula that allows founders to create a PERFECTLY FAIR distribution between founders, investors, partners and employees. […] […] Read more here: slicingpie.com/how-to-use-a-dynamic-equity-split-program-so-everyone-gets-what-they-deserve/ […] […] value relating to the different contributions of each participant. Mike Moyer, who literally wrote the book on dynamic stock splits, puts it in such a way that […] Don`t join a startup unless you can trust other people, especially the leader. The manager controls 100% of the equity while using a dynamic model. This means that an unscrupulous leader can take advantage of anyone. The leader is responsible for tracking stocks and keeping things fair. He or she will provide the appropriate capping table to lawyers preparing the formal fairness agreement when the time is right. The right time to issue equity is when the company provides proof of real, real and concrete value. When it comes to the value of a person`s time, the relative value must take into account not only their skills and experience, but also the demands of the job. You must make sure to deduct the current remuneration that the person receives in cash.
Stock compensation is in exchange for what the people of a new company put at risk. If you pay them a fair wage, you shouldn`t have to give them equity because they don`t risk anything. We`ve had a lot of people coming and going, but we haven`t experienced any of the typical problems that usually occur with the initial equity agreements. Read it like this: Carlos worked 80 hours in January and was paid with $1000 in cash, another 80 hours, he was paid with equity points with x4 multiplier (dedicated partner multiplier). […] The method used to calculate the input and arrive at a calculation of equity is the dynamic share splitting model, where equity is not divided according to what people think about equity[…] The Slicing Pie formula is simple, simple and complete. It includes all the potential contributions that co-founders can make to the table and divides them into cash and in-kind categories. It measures co-founders` contributions over time and dynamically adjusts equity participation to accumulated contributions, but dynamic stock splits are very rare because the process is not well understood. In addition, the dynamic nature of the split scares people who want to grab the biggest piece possible for themselves. Even the founder who is wrong on the side of generosity will end up failing because he himself is treated unfairly. If you think rationally about dynamic division, you will begin to recognize its inherent fairness and elegant simplicity. I am on a personal mission to ensure that every entrepreneur on the planet understands dynamic stock market models before making the terrible but common mistake of using a traditional fixed model. Too many startups are destroyed by conflicts that arise when team members are treated unfairly.
The dynamic model can consider all possible outcomes in a way that motivates and inspires a person who is treated fairly. Agreeing on the amount of a stake in the capital is another aspect that will add fuel to the fire. Smart people in the startup industry say that the startup should be the most important company in a founder`s life, but everyone defines the meaning of „most important“ in their own way. We all have family, friends, and many other tasks that negatively impact the time we spend on the business. It is impossible to know in advance how many bets are needed before the (sufficient) value is created, but if you keep an eye on the bets, you will always know the fair distribution when it happens. In the Slicing Pie model, contributions are tracked using a fictitious unit of risky contribution called a „tranche“. There is no end to the number of slices a cake can have. At one point, the following formula calculates a co-founder`s fair share: The IDEA (also known as Slicing Pie) was first suggested by Mike Moyer – check out his Slicing Pie website. Slicing Pie`s value proposition is a „perfectly fair share split.“ What I mean here is that you and your co-founders will not be the same. The problem is that people tend to react differently to the challenges of a particular situation. I`ve seen many startup co-founders who tended to focus solely on their specific area of responsibility and comfort level, but their startup`s current situation might have forced them to become marketers, for example. Would you be satisfied with your co-founder`s duties and fairness in such a case? […] A framework that contains all the rules for calculating the perfect distribution of actions.
It`s called Grunt Fund and entrepreneurs around the world use them to make sure they […] […] The best way to discover how a dynamic equity fund works is to experience it for yourself by playing the Slicing Pie card game. The game simulates […] So the guys decided that if a partner works more than 80 hours a month, they should be sufficiently committed to the startup and rewarded with more equity points. That`s why John and Carlos get their points with the x4 multiplier in December, after working 160 and 80 hours respectively. Although Andrew holds a CEO position with the highest salary in companies, he was still employed as a parent, working only 70 hours per full month – which translates to 4200 points. Ability to move on later (or check how fair your fixed stock allocation is) – Retrofit Dynamic stock splits make no assumptions about a company`s future value. It doesn`t matter what the future value is. All that matters is that if you really create future value, anyone who has risked anything to help you get there should get their fair share of what has been created. Only a dynamic splitting of shares can achieve this. Only a dynamic allocation of equity provides a framework of fairness and respect for all parties involved. All other methods are prone to failure in their ability to treat people fairly. When I say „everyone, I mean everyone and „others“ is what is commonly used today. This means that the model you`ve used or want to use in your startup exposes you and your team to the risk of an unfair allocation of shares.
Sorry! (It`s not your fault!) If you think a good solution to the above challenges of early inventory allocation is to postpone a decision on stocks, the answer is again „Barely like that“. More bets are placed every day. Time is invested, money is spent, facilities are used. Thus, the model adapts every day to reflect a perfect split at that time. It addresses many of the challenges inherent in fixed share splits (how to make splitting shares wrong) – mainly the main problem that at the beginning it is almost impossible to predict how much each of the co-founders will contribute to the company. If you`re not sure which agreement template you need, check out the infographic below. .