Cutting Up the Founder’s Pie
http://www.andrew.cmu.edu/user/fd0n/35%20Founders%27%20Pie%20Calculator.htm

Several weeks ago, we took a look at the founders’ pie. I noted that frequently the founding team divides 100% by the number of founders. I also cautioned that this is the WRONG WAY! I then went on to identify the factors that should be considered when making these decisions. Since then, I have had several people tell me that while what I wrote certainly made sense, it wasn’t very helpful. They said that when it came to “rug cutting time,” absent an alternative method, equal shares was the only method that seemed to be “fair.” As a public service, I have “invented” a Founders’ Pie Calculator. As you will soon see, this calculator is not particularly profound. In fact, I’m sure I haven’t “invented” it, but, at the same time, I have never seen it before. [Caution: perhaps there’s a fatal flaw that I haven’t considered.] Its primary benefits are that it provides a way to quantify the elements of the decision making process, and that it appears to be logical and fair.

Equity Calculation between founders

So, my best advice is to say, "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..."

my best advice is to say, "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..."

Viral Marketing Guru

This is a subject near and dear to entrepreneurs, maybe the dearest subject of them all. Founders start out with 100% of the company and every time they raise capital and/or issue stock and options to their management team, that number goes down.