
What's the best way of giving away equity to co-founders e.g. on specific targets met, options, vesting etc? - jamescoops

======
lak
It shouldn't hurt to follow the same basic model as most companies use -- some
amount of options, vested at a specific rate, probably with a one year cliff
and then monthly vesting after that.

You have to be a lot more willing to fire, though; you don't want to find
yourself owing stock to someone who wasn't productive for a year just because
you couldn't think of the right way to fire him/her.

------
prakster
In Nov 2006, Seth Godin addressed the concept behind this issue quite
elegantly (I am paraphrasing the relevant points below; the direct link is at
the end of this post):

\--Don't do a deal where each side gets a fixed percentage. A 50/50 split of a
company invented in a bar is always a bad idea. Even paying someone 5% for
some sort of contribution can come back to haunt you. INSTEAD, BUILD THE DEAL
AROUND A SHIFTING PERCENTAGE BASED ON CONTRIBUTIONS OVER TIME.

\--Don't assume that the money you start with is going to be enough. Let's say
you and a buddy each put in $5k and each take half the business. Then what?
What happens when the money runs out and only one of you is willing to put in
the next block of capital?

\--Do a deal with someone you trust, but don't do a deal with a friend. You'll
likely end up with neither a partner nor a friend in the end.

<http://sethgodin.typepad.com/seths_blog/2006/11/dont_make_a_bad.html>

------
jamescoops
Ok so if you're looking to use equity to build your team but already have a
product, brand, some traction what's the best way to give away equity to co-
founders? Obviously you can't just say here's X% of the stock - what if they
leave next week for a new job, dont do any work on the site for the next 6
months? Presumably there are ways of structuring this but what are they and
are they expensive in legal terms?

------
jamescoops
thanks - it seems quite complex - what time period to vest over, how to do the
contracts.

