Excellent, in-depth method. Worth reading through carefully to understand Joel's method and thinking. Some of the key points:
- All founders should get an equal share (no matter who had the idea). Trying to calculate an uneven split is not worth the trouble.
- Each successive layer of employees split an even-sized yearly pool (among progressively larger numbers of employees).
- All shares vest, with a vesting schedule such as 25% in the first year and 2% for every successive month.
- External investments just dilute everyone.
- If an early employee/founder needs to take a salary, don't solve that problem with a different share allocation - just keep track of how much he/she was paid, and give an IOU to the other founders.
- Having the idea doesn't mean you should get more equity.
- People who don't work full-time on the idea are not founders.
- If someone contributes assets to the company, pay them in cash or IOUs, not shares.
Great tips, well worth reading, though I think the startups that applied all of them can be counted on one hand.
