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

1. mike@slicingpie.com
@GruntFunds

2. Slicing Pie is a Universal,
One-Size-Fits-All Solution
for the Allocation and
Recovery of Equity in an
Early-Stage, Bootstrapped
Startup.

4. Fun along the way
BIG
PAYOUT
HARD
WORK
@GruntFunds
Why startups start…

5. Fun along the way
?HARD
WORK
@GruntFunds

6. Success Criteria
1. Change the world
2. Lots of money
3. I get my fair share
@GruntFunds

7. Fair
=
Fun
@GruntFunds

8. Your Share % =
The Value of Your Contribution
The Total Value
Perfectly Fair Equity Calculation:
@GruntFunds

9. So…
Value creation estimates
Rule of thumb
Financial projections
Industry standards
Lawyers, advisors, professors
Girlfriend, boyfriend
Mom, dad, rich uncle
Darts

10. Fixed
Equity
Split
67% split equity at the outset of the venture
* Wasserman/Hellman
@GruntFunds

11. “60/40”
“51/49”
“25/30/45”
@GruntFunds

12. But…
Value creation estimates
Rule of thumb
Financial projections
Industry standards
Lawyers, advisors, professors
Girlfriend, boyfriend
Mom, dad, rich uncle
Darts

13. “50/50”
“33.3/33.3/33.3”
“25/25/25/25”
90%+ of startups do equal splits
@GruntFunds
Let’s keep it simple…

14. 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

15. Your Share % >
The Value of Your Contribution
The Total Value
Your Share % <
The Value of Your Contribution
The Total Value
@GruntFunds

16. Alligator Pit
@GruntFunds

17. Not Fair
=
Not Fun
@GruntFunds

18. 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

19. Dynamic
Equity
Split
@GruntFunds

20. 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

21. A person’s % share of the
rewards should equal
that person’s % share
of what’s at risk.
@GruntFunds

30. Fair
Market
Value
@GruntFunds

31. 1.Allocation Framework
2.Recovery Framework
@GruntFunds

32. Allocation Framework
1. Convert contributions to Slices
2.
1. Allow it to self adjust over time (dynamic)
Your Share % =
Your Slices
Total Slices
@GruntFunds

33. Convert to Slices
Non Cash Cash
@GruntFunds

34. Convert to Slices
Non Cash Cash
FAIR
MARKET
VALUE
FAIR
MARKET
VALUE
@GruntFunds

35. Convert to Slices
Non Cash Cash
FAIR
MARKET
VALUE
x2
FAIR
MARKET
VALUE
x4
@GruntFunds

36. Time
Fair Market Salary*
-
Cash Compensation
X
2
Grunt Hourly Resource Rate (GHRR!)
@GruntFunds * Hourly @ 2,000 Hours/Year

37. Time
$50/hour*
X
2
=
Grunt Hourly Resource Rate (GHRR!)
100 slices/hr
@GruntFunds * $100,000 per year

38. 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

39. Small Money
Cash Amount
X
4
(Investments Convert When Spent)
@GruntFunds

40. 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

41. Everything Can Convert
• Unpaid Commission x 2
• Unpaid Royalty x 2
• Unreimbursed Expense x 4
@GruntFunds

42. Grunt Funds in Action
@GruntFunds

43. Grunts Contribute Different Things
Grunt 2Grunt 1
Grunt 3
Jr. Developer Founder Rich Uncle

44. Convert to Slices
Grunt 2Grunt 1
Grunt 3
Jr. Developer Founder Rich Uncle

45. Add ‘Em Up!

46. Grunt 1’s Share
÷

47. Grunt 2’s Share
÷

48. Grunt 3’s Share
÷

50. Sales Guy
Grunt 4

51. Sales Guy
Grunt 4

54. Grunt 1’s Share*
÷
*If the Grunt Does Nothing Else

55. Grunt 2’s Share*
÷
*If the Grunt Does Nothing Else

56. Grunt 3’s Share*
÷
*If the Grunt Does Nothing Else

57. Grunt 4’s Share
÷

59. Recovery Framework
@GruntFunds

60. Recovery Framework

61. 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

62. Removing a Grunt
• Keeps pie
• Buyback at Slices x $
• No non-compete

63. Grunt 4
Convert to Slices
Grunt 2Grunt 1
Grunt 3
Jr. Developer Founder Rich Uncle

64. Grunt 4
Convert to Slices
Grunt 2Grunt 1
Grunt 3
Jr. Developer Founder Rich Uncle

65. Removing Contributions

66. Grunt 2’s Share
÷

67. Grunt 3’s Share
÷

68. Grunt 4’s Share
÷

70. Freezing the Pie

71. Freezing the Pie

72. Freezing the Pie
• When you can just pay people!
– Revenues
– Series A investment

73. 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

74. 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

75. 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

76. 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

77. 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

78. 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

79. Freezing the Pie
@GruntFunds

80. Freezing the Pie
Profits or
Proceeds

81. Series A Investor
Negotiate $900,000 Pre Money
Raise $1,000,000

82. Series A Investor
$1,000,000 + $900,000 = $1,900,000

83. Series A Investor
$1,900,000 Post-Money

84. Freezing the Pie- Series A
Profits or
Proceeds

85. 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

86. Slicing Pie
Resources

87. @GruntFunds

91. @GruntFunds

95. EUREKA!
mike@slicingpie.com
@GruntFunds