https://slicingpie.com/learn-slicing-pie-model/ https://stripe.com/en-ca/resources/more/how-to-split-equity-among-cofounders-in-a-startup#what-is-equity-in-a-startup ## What is slicing the pie - Traditional equity example - 1 year cliff 4 year vest - Problem: It can be hard to feel fairly compensated for your efforts during long timeframes, and there can be unexpected events that prevent you from receiving compensation due to early leaving - Slicing the pie - The goal is to keep track like a scorecard, since you can't predict the future. You earn points that represent your efforts and risk involved, not value created. When value is created it is distributed based on the points earned from risks. This helps recognize every contribution, to promote fairness. - This is best used for initial uncertainty and variability in commitments, but when pie is baked through freezing, then can switch to traditional equity model ## What are slices - Slices are what comprise your equity, which is calculated by the amount you have divided by the total amount. - money (give x2 slices) - everything else (x1 slices) - Time put in - Resources + relationships (connections, potential customers) - Ideas mentioned ## Stages ### Earning Slices #### Tracking - Money - Create a well (company bank account) - Keep track of everyone's contributions - When money is taken out, split evenly across people who have money in the well - Slices are allocated only when money is drawn from the Well and spent on company expenses - Time tracking - Hourly, to be logged weekly - Include description of the tasks performed during that time - Don't need to show proof, just manually add to the database - While time tracking may seem tedious, the sources highlight its multiple benefits: - Fairness and Transparency: It ensures everyone is rewarded proportionally to their time commitment. - Performance Insights: It provides valuable data on individual productivity and helps identify areas for improvement. - Management Tool: It assists in managing employees, allocating resources, and tracking project progress. - Investor Due Diligence: It offers potential investors detailed records of the team's efforts and how time has been utilized. - Much more adaptable imo - Apps - https://toggl.com/track/pricing/ - Free for up to 5 users - [Clockify](https://clockify.me/pricing) - Have a spreadsheet where we continually update slices #### Updating ##### Example Application - During Saturday meeting, talk about any changes to pie - Weekly time tracked - Any new resources - Every month, add slices based on financial contributions (monthly subscriptions) - Also keep track on how much some people have over others ## Example Application - During Saturday meeting, talk about any changes to pie - Weekly time tracked - Every month, add slices based on financial contributions - Also keep track on how much some people have over others ### Freezing pie - When contributing to the business is no longer risky (able to cover operation costs and salaries) - Sometimes people freeze in 2 years as well ## Recovery method For when commitment changes happen. Outcomes are based on the specified reason: - Fired for a cause - forfeit slices from non monetary - Fired without cause - keep all slices - Resignations for career reasons - keeps all slices - Resign for personal reasons - keeps all slices ## Meeting - [[My Meetings/Slicing the Pie|Slicing the Pie]] %% An top notch AI expert that would develop something in 6 hours would worth (x$/h*2)*B where B could be a bias bonus towards the fact it’s well executed or whatever creative incentive to not screw other (ie. take 6 years to deliver the piece), while someone working on a drag and drop site for 20 hours would get more equity. %%