Anyone who has ever been involved in an early stage startup knows the "who gets what percent of the business" question. Some default to even splits between founders, others negotiate based on arbitrary metrics and values, who came up with what, etc. Mike and his book Slicing Pie provide a very clean dynamic equity allocation model that anyone in an early stage company can use to fairly and dynamically allocate equity based on the value each founder or team member adds.
Favorite Quote(s)
"How much do we each get? is the most dangerous question of all business questions. It causes more problems than any other question I have found." ~ Mike Moyer (page 13)
"The moral of the story: concentrate on building value and don't worry about percentage ownership. Don't get hung up on it. What matters is that people are treated fairly and they ultimately get a payout that's fair given what they have put in." ~ Mike Moyer (page 26)
"Startups change FAST, really fast. So, when things inevitably change, you and your fellow Grunts will have to endure painful renegotiations to set things right, or live with the inequity of the split." ~ Mike Moyer (page 38)
Key Takeaways
- Fixed equity splits made on day one are guesses. Nobody actually knows upfront who will contribute what over the life of a startup.
- The Grunt Fund tracks every contribution, time, cash, ideas, relationships, and converts it into "slices" based on fair market value.
- Time is valued at your Grunt Hourly Resource Rate, essentially the market salary for the role you're actually doing, not your old corporate title.
- Equity ownership is just your slices divided by the total slices in the pie. As you contribute more, you own more, automatically.
- "Baking" the pie means freezing the split once things stabilize, like before a funding round or when everyone moves to full salary.
- Treating people fairly matters more than any specific percentage. Get the fairness right and the number takes care of itself.