Keynote, Lecture
How Much Equity to Give Your Cofounder - Michael Seibel
- Equity splits are projected to incentivize co-founders to remain for "years and years and years" necessary to build a large company, countering the expectation that most startup teams will break up and founders will leave.
- Grants are anticipated to utilize a four-year vesting schedule with a one-year cliff, where a one-year cliff serves as the primary safety mechanism resulting in founders receiving nothing if they depart or are fired within that first year.
- Correcting co-founder mismatches within the first year is expected to prevent long-term harm, while being generous with equity is believed to benefit the company more often than not due to this vesting hedge.
- Significant equity stakes are expected to foster feelings of true ownership and long-term motivation to endure periods when the business is not working well, leading founders to work weekends, late hours, and recruit friends.
- Achieving the correct equity split is predicted to make a company far more valuable by ensuring all co-founders are motivated, whereas equal splits are noted as a "nice and easy rule of thumb" that cannot be applied in all cases.
- Co-founders who are not deemed worthy of a generous equity grant or for whom the CEO does not anticipate a long-term need should be reconsidered for the team.