I understood, that there is no vesting of slices, which makes perfect sense for me, as value has been produced and the contributor should be rewarded for it. However, with this video I learn, that slices can be recovered by someone. I don’t completely get this in the context, as the past value still remains contributed. So why would someone’s slices be taken back if they i.e. decide to leave. Leaving seems like something that has a forward looking aspect, while value contribution is backward looking. What am I missing? @slicingpie
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.
I understood, that there is no vesting of slices, which makes perfect sense for me, as value has been produced and the contributor should be rewarded for it. However, with this video I learn, that slices can be recovered by someone. I don’t completely get this in the context, as the past value still remains contributed. So why would someone’s slices be taken back if they i.e. decide to leave. Leaving seems like something that has a forward looking aspect, while value contribution is backward looking. What am I missing? @slicingpie
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.