For founders confused as to what each person should be doing in a Startup v.s. how much equity each person should be getting, it may be better to agree on a Floating Equity Model.
- No % Split of the company is set in the beginning.
- Each person identifies the responsibility he can take care of, and set targets against them, which are mutually agreed.
- Based on the contribution impact to organization, a % is allocated to those targets (plus an upside incase the objectives are over achieved).
- Similar to vesting – those folks who meet their targets get their target % of equity, or even more depending on the agreed upside.
- People who do not meet their targets take a beating on their equity.
- I think inherently the model reinforces the necessity of each party to do more to get the company going forward.
-Janesh
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