Are you setting up a Startup?
Have you ever lost all your money or got an unfair share?
Have you ever wondered how to put a value on ‘sweat equity’?
Today we are pleased to share an interview with our host Roland Frasier and the author of The Slicing Pie Handbook, Mike Moyer. Mike is a serial entrepreneur who wrote this incredible book and blueprint for Fairness in business equity deals!
“Our share of winning should be based on our share of the bets”. Mike Moyer
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“It kind of revealed itself to me that you can’t base equity splits on future events because you can’t predict the future. When you try to do that, you get it wrong”. Mike Moyer.
Listen Today For
The background that premised his closer look at Fairness in business, his subsequent expertise, and this super helpful framework.
“There aren’t multiple versions of Fairness, so I can’t change something and have it turn out fair. So like, if our dad gives us a cookie, the three of us, we’re going to split it a third, a third, a third, because we each paid equal amounts of nothing to get it. Okay? There’s no other way to do it. Now you could give me half or your share, but your generosity doesn’t make it “more fair”. Right? And you should have decision-making rights over that third of the cookie.” Mike Moyer.
- What’s a dynamic split?
“When you do equity splits on the outside of the venture, it’s comforting to know what you’re going to get. The problem is it’s always going to be the wrong number, right? But with a Dynamic split, you don’t know where you’re going to get, but you can rest assured that whatever you get, it’s going to be the right number. That’s a real difference”. Mike Moyer.
- How to deal with capital and intellectual property, as opposed to effort and labor.
- Why he doesn’t think stock options are a good idea.
“People think you throw stock options at someone, and it’ll make up for bad management, that it will miraculously turn people into great employees, but I haven’t seen evidence of that. I haven’t seen research to support that either. I have seen research support as good, clear communication, clear goals, milestones, and clear vision”. Mike Moyer
- What to do when someone leaves or bails on a deal, but they want to be bought out.
“And this is one of the most heartbreaking things when somebody kind of poops out at the beginning of the deal and they’re often the only one who ever makes any money”. Mike Moyer.
The Most Common Mistakes In ‘Fairness’
1) Equal Shares
2) Premature Evaluations
3) Time-based vesting
“Every time we contribute to a startup, and we’re not paid a fair market rate for that cost contribution, it’s essentially a bet”. Mike Moyer
And SO MUCH MORE.
Find free resources AND connect with Mike.
Mentioned In Today’s Episode
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