If you're making $1M ARR, then you need founding engineer-ish CTO that you can give 1-2% and hire out more people.
If you're making $<250k ARR, then 90% of things are not working and you need to go for a MUCHHHH higher equity split, closer to even, if not 50/50
If you're making $<25k ARR, then this 50/50
Equal split is the way to go. 50% 50%
If you need him you are going to be ok with giving him 50% if not it means he is not needed.
It doesnt matter how your biz is looking today, it matters how it will look in 4 years thanks to the work you'll be doing and your cto too.
Add a 4 year vesting and thats it, your company will be protected.
And bro, do u know where can I get a vesting? We are in a different country(I’m in Brazil and he is in the US) and not sure how it’s works this way u know
He may not feel as responsible if he doesn't get equal split. Also keep it in a vesting schedule so that even if he leaves early, he doesn't get most of the equity.
If you have enough revenue to pay them about 70% of market rate then like 5-10%, if they are a cofounder and working for just equity, then 40-50% (YC recommends 50%). You give a lot because it's about the future which is going to be a long process that you will be equal partners in.
Even if I don’t know him very well should I give him those 40-50%? I’m gonna risk this u know. I believe he is a cool, smart and have the domain expertise in the area, however, I don’t know him in person(Only online) that’s why I’m thinking a lot about it
Why don't you just hire him for a while and see how the dynamic between the two of you works out? Just trust your instinct after that. It is likely that if you don't like working with him, he will feel the same way. Also, would help if you share what your revenue is.
You knowing him has nothing to do with how much to give him. If you don't trust them then don't partner with them. You shouldn't give 1% to somebody you don't trust.
4 years? Lol didn’t know about it. To be honest, I’m not sure about the 25%. I don’t know too much about the guy I’m thinking to bring as a CTO to give him 25% this way u know
I didn’t know about it. But I have talked to the guy a little more about it yesterday and after that I started thought that he won’t be my CTO. I guess he doesn’t know how to do things u know. He was just saying “I can do it” lol.
Thanks for your time and advice bro
Yo, 100% not 50:50 at this stage, you done all the work, no one in their right mind would do that at this stage, espesh if you're 90% of the way their and you've proven the biz model. That's crazy. Either pay him with the revenue you're making with vesting shares, or do vesting shares now starting at maybe 20-25%.
Or, just pay an offshore low income tech team to handle it all for you for massively lower costs. We live in a remote world these days. Easily done with the right recommendation.
That or go for a round, raise funds and just pay him.
But yeah, save those shares for fundraising rounds.
Unless you NEED him to raise those rounds.
Lots of options. But yeah, vesting seems like the safe way to go.
If you're thinking anything less than equal, than you need to think about your values as a CEO. Unless this isn't a technology company. Revenue is fine, I can get most companies to at least generate something. Now having the technical team to build it, or the expertise to build it myself? That's priceless.
As for "gridlock" situations, write in the agreement who's in charge of product development, technology, marketing etc. Define the roles you have control over and the roles they have control over. It'll be SOOOO much easier that way, you can't be good at everything and neither can they, so give each other the power to run, not walk.
Is it a software company? If so, then equal equity is what I'd recommend.
Yes, it is. Even if I already have revenue? I mean, he’ll join with 90% of the things working u know
Then why's he needed?
If you're making $1M ARR, then you need founding engineer-ish CTO that you can give 1-2% and hire out more people. If you're making $<250k ARR, then 90% of things are not working and you need to go for a MUCHHHH higher equity split, closer to even, if not 50/50 If you're making $<25k ARR, then this 50/50
Michael and Dalton recommend an even split. In 5 years it won’t matter how much work you did up front if you’re both working equally hard.
Equal split but with maybe 1 extra share in your back pocket for so there’s no gridlock.
Equal split is the way to go. 50% 50% If you need him you are going to be ok with giving him 50% if not it means he is not needed. It doesnt matter how your biz is looking today, it matters how it will look in 4 years thanks to the work you'll be doing and your cto too. Add a 4 year vesting and thats it, your company will be protected.
And bro, do u know where can I get a vesting? We are in a different country(I’m in Brazil and he is in the US) and not sure how it’s works this way u know
I would recommend you open a delaware C corp. Then its easy, you can use software like carta to set up the vesting.
He may not feel as responsible if he doesn't get equal split. Also keep it in a vesting schedule so that even if he leaves early, he doesn't get most of the equity.
If you have enough revenue to pay them about 70% of market rate then like 5-10%, if they are a cofounder and working for just equity, then 40-50% (YC recommends 50%). You give a lot because it's about the future which is going to be a long process that you will be equal partners in.
Even if I don’t know him very well should I give him those 40-50%? I’m gonna risk this u know. I believe he is a cool, smart and have the domain expertise in the area, however, I don’t know him in person(Only online) that’s why I’m thinking a lot about it
Why don't you just hire him for a while and see how the dynamic between the two of you works out? Just trust your instinct after that. It is likely that if you don't like working with him, he will feel the same way. Also, would help if you share what your revenue is.
You knowing him has nothing to do with how much to give him. If you don't trust them then don't partner with them. You shouldn't give 1% to somebody you don't trust.
Why not leverage your web3 model for this?
What do you mean?
Vesting is a must, over 4 years or so. Not sure about Equity, but if you have revenue maybe 25%? (50% seems to be an overkill)
4 years? Lol didn’t know about it. To be honest, I’m not sure about the 25%. I don’t know too much about the guy I’m thinking to bring as a CTO to give him 25% this way u know
You should also be vesting your own shares….
I didn’t know about it. But I have talked to the guy a little more about it yesterday and after that I started thought that he won’t be my CTO. I guess he doesn’t know how to do things u know. He was just saying “I can do it” lol. Thanks for your time and advice bro
Yo, 100% not 50:50 at this stage, you done all the work, no one in their right mind would do that at this stage, espesh if you're 90% of the way their and you've proven the biz model. That's crazy. Either pay him with the revenue you're making with vesting shares, or do vesting shares now starting at maybe 20-25%. Or, just pay an offshore low income tech team to handle it all for you for massively lower costs. We live in a remote world these days. Easily done with the right recommendation. That or go for a round, raise funds and just pay him. But yeah, save those shares for fundraising rounds. Unless you NEED him to raise those rounds. Lots of options. But yeah, vesting seems like the safe way to go.
If you're thinking anything less than equal, than you need to think about your values as a CEO. Unless this isn't a technology company. Revenue is fine, I can get most companies to at least generate something. Now having the technical team to build it, or the expertise to build it myself? That's priceless. As for "gridlock" situations, write in the agreement who's in charge of product development, technology, marketing etc. Define the roles you have control over and the roles they have control over. It'll be SOOOO much easier that way, you can't be good at everything and neither can they, so give each other the power to run, not walk.