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Slicing Pie Deck

Slicing Pie is a universal, one-size-fits all solution for the allocation and recovery of equity in an early-stage, bootstrapped startup.

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Slicing Pie Deck

  1. 1. mike@slicingpie.com @GruntFunds
  2. 2. Slicing Pie is a Universal, One-Size-Fits-All Solution for the Allocation and Recovery of Equity in an Early-Stage, Bootstrapped Startup.
  3. 3. Fun along the way BIG PAYOUT HARD WORK @GruntFunds Why startups start…
  4. 4. Fun along the way ?HARD WORK @GruntFunds
  5. 5. Success Criteria 1. Change the world 2. Lots of money 3. I get my fair share @GruntFunds
  6. 6. Fair = Fun @GruntFunds
  7. 7. Your Share % = The Value of Your Contribution The Total Value Perfectly Fair Equity Calculation: @GruntFunds
  8. 8. So… Value creation estimates Rule of thumb Financial projections Industry standards Lawyers, advisors, professors Girlfriend, boyfriend Mom, dad, rich uncle Darts
  9. 9. Fixed Equity Split 67% split equity at the outset of the venture * Wasserman/Hellman @GruntFunds
  10. 10. “60/40” “51/49” “25/30/45” @GruntFunds
  11. 11. But… Value creation estimates Rule of thumb Financial projections Industry standards Lawyers, advisors, professors Girlfriend, boyfriend Mom, dad, rich uncle Darts
  12. 12. “50/50” “33.3/33.3/33.3” “25/25/25/25” 90%+ of startups do equal splits @GruntFunds Let’s keep it simple…
  13. 13. You do all the work? You bring in another guy? Your partner wants to quit? 1,000,000 other things? But, what if… You want to quit? Your CTO gets hit by a bus? @GruntFunds
  14. 14. Your Share % > The Value of Your Contribution The Total Value Your Share % < The Value of Your Contribution The Total Value @GruntFunds
  15. 15. Alligator Pit @GruntFunds
  16. 16. Not Fair = Not Fun @GruntFunds
  17. 17. What We Need • Perfectly fair • Rewards contributions • Provides motivation • Accommodates team changes • Flexible in the face of rapid change • Gets rid of the gators! @GruntFunds
  18. 18. Dynamic Equity Split @GruntFunds
  19. 19. You Contribute 50% = You Get 50% You Contribute 10% = You Get 10% You Contribute 23.2% = You Get 23.2% No more and no less @GruntFunds
  20. 20. A person’s % share of the rewards should equal that person’s % share of what’s at risk. @GruntFunds
  21. 21. Fair Market Value @GruntFunds
  22. 22. 1.Allocation Framework 2.Recovery Framework @GruntFunds
  23. 23. Allocation Framework 1. Convert contributions to Slices 2. 1. Allow it to self adjust over time (dynamic) Your Share % = Your Slices Total Slices @GruntFunds
  24. 24. Convert to Slices Non Cash Cash @GruntFunds
  25. 25. Convert to Slices Non Cash Cash FAIR MARKET VALUE FAIR MARKET VALUE @GruntFunds
  26. 26. Convert to Slices Non Cash Cash FAIR MARKET VALUE x2 FAIR MARKET VALUE x4 @GruntFunds
  27. 27. Time Fair Market Salary* - Cash Compensation X 2 Grunt Hourly Resource Rate (GHRR!) @GruntFunds * Hourly @ 2,000 Hours/Year
  28. 28. Time $50/hour* X 2 = Grunt Hourly Resource Rate (GHRR!) 100 slices/hr @GruntFunds * $100,000 per year
  29. 29. Time $50/hour* - $10/hour paid in cash = $40/hour at-risk X 2 = Grunt Hourly Resource Rate (GHRR!) 80 slices/hr @GruntFunds * $100,000 per year
  30. 30. Small Money Cash Amount X 4 (Investments Convert When Spent) @GruntFunds
  31. 31. Equipment • New = Purchase price x 4 (cash) • Less than a year old = Purchase price x 2 (non- cash) • Older than a year = Book value x 2 (non-cash) @GruntFunds
  32. 32. Everything Can Convert • Unpaid Commission x 2 • Unpaid Royalty x 2 • Unreimbursed Expense x 4 @GruntFunds
  33. 33. Grunt Funds in Action @GruntFunds
  34. 34. Grunts Contribute Different Things Grunt 2Grunt 1 Grunt 3 Jr. Developer Founder Rich Uncle
  35. 35. Convert to Slices Grunt 2Grunt 1 Grunt 3 Jr. Developer Founder Rich Uncle
  36. 36. Add ‘Em Up!
  37. 37. Grunt 1’s Share ÷
  38. 38. Grunt 2’s Share ÷
  39. 39. Grunt 3’s Share ÷
  40. 40. Sales Guy Grunt 4
  41. 41. Sales Guy Grunt 4
  42. 42. Grunt 1’s Share* ÷ *If the Grunt Does Nothing Else
  43. 43. Grunt 2’s Share* ÷ *If the Grunt Does Nothing Else
  44. 44. Grunt 3’s Share* ÷ *If the Grunt Does Nothing Else
  45. 45. Grunt 4’s Share ÷
  46. 46. Recovery Framework @GruntFunds
  47. 47. Recovery Framework
  48. 48. Recovery • No pie for non-cash • No multiplier for cash or tangible property • Buy back (if possible) at 1x cash contributions • Non-compete • Loyal employee protection
  49. 49. Removing a Grunt • Keeps pie • Buyback at Slices x $ • No non-compete
  50. 50. Grunt 4 Convert to Slices Grunt 2Grunt 1 Grunt 3 Jr. Developer Founder Rich Uncle
  51. 51. Grunt 4 Convert to Slices Grunt 2Grunt 1 Grunt 3 Jr. Developer Founder Rich Uncle
  52. 52. Removing Contributions
  53. 53. Grunt 2’s Share ÷
  54. 54. Grunt 3’s Share ÷
  55. 55. Grunt 4’s Share ÷
  56. 56. Freezing the Pie
  57. 57. Freezing the Pie
  58. 58. Freezing the Pie • When you can just pay people! – Revenues – Series A investment
  59. 59. Time $50/hour* - $0/hour paid in cash = $50/hour at-risk X 2 = Grunt Hourly Resource Rate (GHRR!) 100 slices/hr @GruntFunds * $100,000 per year
  60. 60. Time $50/hour* - $10/hour paid in cash = $40/hour at-risk X 2 = Grunt Hourly Resource Rate (GHRR!) 80 slices/hr @GruntFunds * $100,000 per year
  61. 61. Time $50/hour* - $20/hour paid in cash = $30/hour at-risk X 2 = Grunt Hourly Resource Rate (GHRR!) 60 slices/hr @GruntFunds * $100,000 per year
  62. 62. Time $50/hour* - $30/hour paid in cash = $20/hour at-risk X 2 = Grunt Hourly Resource Rate (GHRR!) 40 slices/hr @GruntFunds * $100,000 per year
  63. 63. Time $50/hour* - $40/hour paid in cash = $10/hour at-risk X 2 = Grunt Hourly Resource Rate (GHRR!) 20 slices/hr @GruntFunds * $100,000 per year
  64. 64. Time $50/hour* - $50/hour paid in cash = $0/hour at-risk X 2 = Grunt Hourly Resource Rate (GHRR!) 0 slices/hr @GruntFunds * $100,000 per year
  65. 65. Freezing the Pie @GruntFunds
  66. 66. Freezing the Pie Profits or Proceeds
  67. 67. Series A Investor Negotiate $900,000 Pre Money Raise $1,000,000
  68. 68. Series A Investor $1,000,000 + $900,000 = $1,900,000
  69. 69. Series A Investor $1,900,000 Post-Money
  70. 70. Freezing the Pie- Series A Profits or Proceeds
  71. 71. What We Got • Perfectly fair • Rewards contributions • Provides motivation • Accommodates team changes • Flexible in the face of rapid change • Gets rid of the gators! @GruntFunds
  72. 72. Slicing Pie Resources
  73. 73. @GruntFunds
  74. 74. @GruntFunds
  75. 75. EUREKA! mike@slicingpie.com @GruntFunds

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