How should we compensate a non-founder in a new web-based business who is critical to the launch of the business?


1

We are in the very early stage of organizing and launching a new web-based business. There are two co-founders - one who is CTO and one who is CEO. In addition, we will be including a third person who is an accountant and thus will provide the service and guidance that implies. We have virtually no start-up capital other than personal resources. All of us are retired, not employed and have income that allows us to not need an immediate monetary return. The third party (financial) desires more to be functional and busy than to make money at this point. We want her to have a strong sense of belonging, a strong emotional attachment to the business and a sense of being a highly valued member of the team, but she will essentially be an "employee", rather than a "founder". How do we structure her compensation??

Compensation Intellectual Property Micro Startup

asked Feb 15 '13 at 02:15
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User25024
6 points

3 Answers


1

Pay them or give them equity.

Also, if you are in such early stages, there is no such thing as CTO and CEO.

answered Feb 15 '13 at 17:46
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Joel Friedlaender
5,007 points

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I'm wondering what financial tasks need to be accomplished for a company that has no money / revenue streams. Unless you are raising capital... but even that seems a bit premature.

Following Joel's answer, I would say that pay or equity is an option here. Not sure her tasks / contributions would merit equity - but that is my opinion: whatever you two CxOs decide goes. If equity is decided, then consider something like a grunt fund so equity assignment is based on deliverables.

answered Feb 16 '13 at 00:27
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Jim Galley
9,952 points

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Salary plus stock options, like any early employee. For such an early hire the option package can be extremely generous (10% or 20% wouldn't be out of line, don't forget it will be diluted when you give future employees options).

answered Feb 16 '13 at 12:48
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Joel Spolsky
13,472 points

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Compensation Intellectual Property Micro Startup