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Hmmm.... this comment sounds a little sarcastic. Not all the slides have words so Mike couldn't have read those. He did read the transition slides that did have words, do think it would have been a better presentation if he just stayed silent on those slides? People usually like long silences in presentations. Or, maybe he could have talked over those slides with a different message so you could try to listen to his words while also reading the slide if you could. We're always open to ideas.

If s founder wants 51% he or she would make 51% of the contributions. Forcing 51% would be a fixed split and, therefore, not fair. You can always secure control cotractually, but the person with the most at risk should have some influence over the decisions. See: slicingpie.com/keeping-control-of-your-startup/ I'm not sure what you mean does "it" count as cash, if it's cash it counts as cash. If one founder paid another founder the amount would be decucted from the fair market salary and the amount of cash would count as cash for the person who paid it.

Thanks @redantdc

Taxes could be triggered based on the underlying value of the shares at the time they are granted. In Slicing Pie companies this is almost always $0 (or a nominal par value) because the grants occur during the bootstrap stage before any value can be assigned. Thus, tax, if any, is minimal. Additionally, on the off chance that founders think they might wait until after a valuation event (not recommeded), there are other ways to prevent taxes such as the use of restricted shares that use Slicing Pie as the vesting mechanism instead of time (slicingpie.com/bootstrapper-equity-why-time-based-vesting-is-a-waste-of-time/) In the ten+ years since the publication of the first Slicing Pie book thousands of startups have use the model and we haven’t heard of a single case where implementation of the model triggered taxes. Slicing Pie isn't a way to avoid taxes, per se, it just doesn't trigger taxes any more than any other structure or formula.

@@slicingpie if the company raises pre seed, the seed and then series A in first 4 years, the series A will already carry a substantial valuation forcing the parties receiving shares to incur either a tax penalty at receiving the maybe-worthless shares or at the liquidity event losing 40% of the value. I agree it doesn’t matter if you bootstrap but when the external capital comes in, it forces valuation resulting in shares worth increase and subsequently taxation Up front distribution with vesting schedule allows founding team and early employees to extract 40% more money out of their shares than later stage distributions. Is there a way you can apply SlicingPie and preserve the day 1 value of the distributions?

Slicing Pie takes into account what is at risk, it does not account for risk (the chance of losing). Assessing risk in Blackjack depends on a lot of factors. Number of decks, the cards already played, etc. A startup has infinitely more variable so assessing day to day risk is futile. There would be no practical way to calculate it without a huge number of assumptions. Even if you could measure those things it wouldn't change the value of the bets themselves.

In the example, the programming expert bro has no way to increase his share. He gets diluted to oblivion while the big cash guys have more and more power to bring in more cash guys, who programmer never agreed to and takes a huge slice. Zero way to get ahead, despite possibly being the only person capable and willing when the company started. Shizzy AF

Take a closer look, this isn't the case at all. Cash doesn't really have an advantage. The mutiplier simply puts cash and non cash on the same level. slicingpie.com/the-magic-of-mutipliers/ Most startups aren't cash intensive (or shouldn't be) and those that are can seek other types of cash investments. @@calebplumleeoutdoors

@slicingpie I'm looking. I see no way for the programmer in your example to grow their share aside from starting with more money. That person started at 2% equity and it appears no matter how hard they work and how important they are to the company's success, their share wont grow by any significant means other than attrition. It's a disincentive from the start... Rich dudes stand to get immensely richer... smart tech folks stand to get outvoted in everything and go home with beans in comparison. This shouldn't be the case with founders. How would you propose that original partner/founder increase their share?

@@calebplumleeoutdoors Assume the following: the developer is worth $50K, the Founder is worth $100K. Neither is paid. Think of unpaid compestation or expense reimbursement as a "bet" on the future of the company. Week one: Developer works 40 hours or $2,000 in unpaid salary, the Founder works 40 hours or $4,000 in unpaid salary and she spents $7,500 on equipment. The uncle does no work but buys supplies for $20,000. After applying the normalizers you will get a 2%/29%/69% as seen in the video. Fast forward 9 more weeks. The developer's total unpaid compensation (bet) is now $10,000, the founder's unpaid compensation is $20,000 but no more cash is spent. Now this split is 12%/41%/47% Fast forward another 10 weeks with the same workloads and the split is now 17%/48%/35% Another 10 weeks and the split is 21%/52%/28% The founder is now the majority shareholder and the jr. developer is right behind the uncle. In the beginning the uncle had the biggest bet but as other people bet going forward the percentages change. That's the magic of the model. At any given time it's always fair.

@slicingpie Yes, unless a funder makes an investment that dwarfs the expected compensations of the others. Scenario: Rich uncle see's opportunity, currently has majority, and wants to invest more. Uncle puts in $2M... then brings in friend with another $1M... developer has no say at this point and is diluted to oblivion. It shouldn't be an option to dilute a ciritcal founder into obscurity just because a rich guy is willing to gamble some money to sweep the entire company up. This "fair" method heavily relies on the most wealthy member to not be greedy and run away with the entire bag.

You're totally incorrect, fool.

Slicing Pie works regardless of the nature of the company. It considers at-risk cotributions (unreimbursed cash, unpaid labor) as "bets" on the future outcome of the company. Each person's share of the equity is based on each person's share of the bets. Check out www.slicingpie.com to learn all about it.

Hooray! You'll love it!

In the Slicing Pie Handbook there is a chapter on retrofits that will help correct the all-too-common 50/50 split debacle!

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Thank you?

Both books cover the same formula. The Slicing Pie Handbook is newer and better, I think. Mike also wrote Will Work for Pie which goes into depth on bonus programs and sales compensation. (amzn.to/44RKP0j)

If you have cash you don't have to give any equity away. Just pay people. If you don't, you're going to have to give something up. Slicing Pie will help you determine the fair split. Think about it from the standpoint of risk. You're a guy with an idea. You have very little at risk. Someone comes along and gives you a bunch of cash. How does their risk compare to yours? If they have more at risk, they should expect a higher reward (equity)

Yes. A significant pivot may actually be a whole new company and, therefore, a new Pie!

In a startup, contributions are put at risk. They are essentially "bets" on the future outcome of the business. If someone gets fired for cause or resigns for no good reason they are, in effect, walking away from their bet and, therefore, experience the natural consequence of doing so which is losing their bet. If they want to keep playing the game they shouldn't quit or get fired. This is easier to understand if you consider a single founder. If she stops working or does a poor job she loses everything. Why should it be different for cofounders?

@@slicingpie Thank you for the additional explanation. Just for clarification: So non-cash contributions would be recovered if someone leaves. However, if there was a conversion to shares event, then this would not apply anymore, as we are then leaving the pie level towards the shares level, correct? Also, from your experience, would you then still recommend to have an additional cliff and vesting in place for those shares, after the conversion from slices? Thank you in advance!

@@sosaschadotcom Cash contributions turn into a loan that needs to be paid back before paying dividends or proceeds of a sale. Yes, once the Pie is baked everyone gets their shares. This happens at breakeven or Series A investment. Think about it this way: creating a viable, valuable business that can sustain itself profitably is "winning" the game. So, the bets pay off at this point. Now, if someone leaves or gets fired he or she can be replaced at a fair market rate and harm is minimized. In the case of a Series A investment the investors may impose restrictions, such as reverse vesting, on the founder's shares.

@@slicingpie Thank you for the clarification.

Glad you found Slicing Pie. Take a look at our new online class here: slicingpie.com/learn-slicing-pie/

Yep....we get that sentiment a lot! It's not too late for your next venture though! :^)

Glad to help! Please check out SlicingPie.com!

Multipliers are based on research I did about 10 years ago on global tax rates such as sales tax income tax employment taxes vat taxes, etc. Taxes very widely all over the world but the average is about 50%. That's where the two and four come from. I originally used three multipliers one, two, and four. But then I realized that there are only two types of contributions cashing on cash. Hence the two and four multipliers. I've never seen the model work better with different multipliers.

This is a good approach if you are prepared to personally cover salaries and expenses for the business from day one!