Advice on measuring participation of a new company


I am creating a new startup, the startup is going to consist of 4 members and I need some advice on how to split the participation etc. Here is a brief description of each member and there role.

  1. Developer: Full-time, jack of all trades.
  2. Designer: Part-time: work from home, and 1 morning each week.
  3. Partner 3: Part-time. Works full time on a previous startup, but can put up 2+ hours each day. Works from the same office.
  4. Partner 4: Part-time: Good writer and helps on the marketing side.

So can anyone please advice on a way to split up on the level of participation. I would love to see some scheme with stock vesting involved.

Co-Founder Stock Options

asked Dec 15 '10 at 01:05
121 points

1 Answer


My advice is don't get overly complicated. Just don't.

This early in the game, don't nit-pick on this, don't waste too much time, and certainly don't create a maintenance nightmare. Furthermore, it's very much like a snowball; the more you entertain the idea of fine-tuning compensation, the more you have to fine-tune compensation.

Basically, I'm going to assume there is one founder/CEO/President who has the vision and put the team together. That guy gets around 50-70%. Then, split the remainder amongst the others, with weighting given to those putting in a distinct amount of time more than others. With my KISS philosophy, I usually create three bins: fully invested, partly invested and advisory, with three, two and one point, respectively. Sum up total points and allocate by ratio.

Agree to it, explain and agree that there will be no tweaking because of any reasons so as to not over-complicate things, set it in stone and move on to executing.

Base the vesting of the amounts for these early members on broad, measurable deliverables that everyone participates in, not different deliverables from each or vesting based on time. Again, different deliverables/milestones for different people creates the opportunity for discord. And, basing vesting on time is just silly; someone can just coast and vest. The counterpoint is usually to put a minimum timeframe; vesting is to guarantee the individual stays with the company, and some feel safer with those in play. My thoughts is that if someone wants to leave, they should, else they will be a dead-weight to manage. If they have helped you reach an agreed-upon deliverable/milestone, they should be entitled to what they were promised for it.

An example of a simple milestone I've used is: you get a small x% out of your allotted equity at the outset, and the rest when we sign the first y paying clients.

Also, consult with accountants on the tax implications of your equity and vesting plan for your startup and members.

answered Dec 15 '10 at 02:08
1,383 points

Your Answer

  • Bold
  • Italic
  • • Bullets
  • 1. Numbers
  • Quote
Not the answer you're looking for? Ask your own question or browse other questions in these topics:

Co-Founder Stock Options