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Hire your co-founder. Vested over 4 years. Truly treat them like a co-founder. Involve them in fund raising, hiring, strategy, etc. So trust me when I tell you that you can hire incredibly talented people for 30% of your company. Give them a large sum of equity. I talk about that in more detail here.
As a board member I negotiated with founding CEO’s over vesting when I thought it was their time to go. I’ll offer that both entrepreneurs and VC’s have the wrong model for founding CEO equity compensation. The New Founding CEO Vesting Model. At best this is an argument where no one wins, at worst it’s like a nasty divorce.
Breakups are hard If you’re going to fall out with your co-founder, do it early, recover the equity into the option pool to keep the company going, and recruit someone else great to fill the missing slot. Build in foundervesting (a.k.a. One of the greatest female entrepreneurs in American history.
Introduction This post was originally part of the “ Ask the Attorney ” series I am writing for VentureBeat (one of my favorite websites for entrepreneurs). Question My co-founders and I are working on a cool new site, and we’ll be ready to launch in a few weeks. And please don’t tell us to hire a lawyer.) Vesting Restrictions.
In practice, you raise money or hire an employee because you need to, not because you want to. Say the equity equation tells you to pay a prospective hire above market. You should still pay the hire a market rate and save the company some equity. Say the equity equation tells you to pay a prospective hire below market.
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