Chicago entrepreneur, Mike Moyer, has been refining his Slicing Pie system for the past decade or so. (I’ve used it. It works.)
The gist is that you assign equity in a startup dynamically based on a simple principle of fairness. The value of each person’s contribution is determined by assigning relative values in advance to everything material to making the startup progress…and I do mean everything…and tracking each person’s contribution.
At any point in time, a person’s share of the business is equal to their contribution divided by the sum total of everyone’s contribution. If someone flakes, they’re doing less and their percent starts to diminish. If someone else leaps into the breach they are appropriately rewarded.
When it comes to the competition there are no holds barred. When it comes to our company and our team, however, we need to treat everyone fairly and honestly.
Most start-up books are about breaking the rules. This one is about making them. In this book is an outline of rules conduct about how we will treat one another when it comes to the equity in our start-up company. Equity in the business will ultimately reward us for our individual contributions to success, when we get there. So dividing the equity fairly is critical. We need a few rules.
The reason we need these rules is simple:
Fairness is More Fun.
You can get the first chapter here. The first chapter provides a great overview and it’s a quick read. The rest of the book digs into implementation details.