1. How to Divide the Pie? - Ed Kuiters

2. A brilliantbrilliant business Idea! 3. But.. I have no money to hire.. ..YET.. Equity 4. ? 5. 50/50 6. 60/40 7. 80/20 8. 50/50 50/50 9. 50/50 50/50 What if 10. 50/50 50/50 You do all the work? 11. 50/50 50/50 You bring in another guy? 12. 50/50 50/50 Your partner wants to quit? 13. 50/50 50/50 You want to quit? 14. 50/50 50/50 1,000,000 other things? 15. 16. Wait!.. What if there was a fair & effective way to divide the pie? 17. Dynamic Equity Split Mike Moyer 'Slicing Pie' 18. Fair & effective? rewards for actual contributions accommodates for changes flexible in the face of rapid change motivates to contribute 19. Work hard now Get what you deserve.. later Fair 20. Your Share Reflects What You Actually Contribute 21. You Contribute 50% = You Should Get 50% 22. You Contribute 10% = You Should Get 10% 23. You Contribute 69.2% = You Should Get 69.2% 24. How it works 1. Assign a leader you can trust 2. Assign a theoretical value to the various inputs provided by each participant 3. Individual Value Total Value= Shares % 25. 1. Get a Trustworthy Leader Holds all equity Manages your equity fund Deals with people who are departing 26. 2. Assign Theoretical Values 27. Time Negotiated Base Salary - Cash Compensation X Two 2,000 = Hourly Rate 28. Time 10 million - 4m salary (6m at risk) X Two (12m) 2,000 = Hourly Rate: 6,000/hr 29. Small Money X Four 30. Everything Has a Theoretical Value Unpaid Commission x 2 Cost or resale value Unreimbursed Expense (4x) 31. People Contribute Different Things Person 2Person 1 Person 3 Jr. Developer Founder Rich Uncle 32. Theoretical Total Value 33. Person 1s Share 34. Person 2s Share 35. Person 3s Share 36. Sales Guy Person 4 A new guy..? 37. Person 1s Share* *If the Person Does Nothing Else 38. Person 2s Share* *If the Person Does Nothing Else 39. Person 3s Share* *If the Person Does Nothing Else 40. Person 4s Share 41. What You Get Fair Rewards for contributions Motivation to contribute Accommodates changes in the team 42. Outgrowing Dynamic Equity Real revenues Positive cash flow Organization gets too big (diminishing returns) Significant investment 43. .. or ed@kuiters.net Mike Moyer Slicing Pie ($8 at Amazon)