Seth's Blog: Advice on equity

This doesn't sound like vesting, but a list of milestones to reach before granting the stock. That is a horrible idea.

I disagree with Seth. Any discussion about who contributed what and who more may absorb a lot of energy from the startup. Founders starting together should have the same equity because they can expect from each other to give their maximum to drive the success of their company. And they will have the same motivation and interest to give their maximum.

That strikes me as a terrible idea. His plan would have the founders constantly second-guessing each other over reaching milestones, and would take ordinary disputes ("You never start work before 11AM"; "The design work is taking 3x as long as the development, you're a bottleneck") and turn them into knock-down drag-out brawls over equity every few months.<p>I'm a fan of splitting things up at the beginning, attaching a vesting schedule, and having everyone work as hard as possible.<p>You also shouldn't have this conversation until everyone's committed to working full-time on a business. Trying to give equity to someone who has a day job and promises to leave "when the new business is really underway" is a disaster in the making.

I just say Geddy and Alex of Rush on "That Metal Show". They attributed part of the reason that the band has survived so long to having skipped any nonsense about "who contributed what and its relative value" to simply splitting everything evenly, three ways.

or in other words a vesting schedule, which is how almost all funded startups are structured<p>SG is over-rated, but lets leave that discussion for another time.

&#62; <i>"Today, right now, your contribution is worth 5% of the company and my creation of the company is worth 5%. The other 90% is based on what each of us does over the next 18 months. Here's a list of what has to get done, and what we agree it's worth..."</i><p>Otherwise known as vesting (essentially).

Stop arguing about the value of something that doesn't exist and go build it.

I don't get this. Dividing equity is easy in the beginning, just like slicing a pie: equal shares.<p>The idea of 70/30 or other offset splits only suggests that one partner is more valuable than the other, hence by definition they aren't partners - they are superior and subordinate. You're already creating a situation where the person with lower equity isn't as motivated as the one with more. That has failure written all over it.<p>I think if you're talking about taking a business from piece of paper to something real, and you have partners involved, the only way you can ensure any measure of success is to divide things equally.<p>If the share isn't equal, I don't think partnership is what you should be discussing at all.

don't you have to assign 100% of ownership when you open a company in US? I mean, in my country, the company contract has to sum the shares up to 100%... there can't be a '90% floating', it's not legal...

Equity equates to liability if the company folds and incurred debt. Hence all the shares must be defined at the point in time and not only 5% now and then another 5% when X is done.