Slicing Pie Deck
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Transcript of Slicing Pie Deck
![Page 2: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/2.jpg)
Slicing Pie is a Universal, One-Size-Fits-All Solution
for the Allocation and Recovery of Equity in an
Early-Stage, BootstrappedStartup.
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Fun along the wayBIG
PAYOUTHARD WORK
@GruntFunds
Why startups start…
![Page 5: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/5.jpg)
Fun along the way ?HARD WORK
@GruntFunds
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Success Criteria 1. Change the world2. Lots of money3. I get my fair share
@GruntFunds
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Fair=Fun
@GruntFunds
![Page 8: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/8.jpg)
Your Share % =The Value of Your Contribution
The Total Value
Perfectly Fair Equity Calculation:
@GruntFunds
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So…
Value creation estimates
Rule of thumb
Financial projections
Industry standards
Lawyers, advisors, professors
Girlfriend, boyfriend
Mom, dad, rich uncle
Darts
![Page 10: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/10.jpg)
Fixed Equity Split
67% split equity at the outset of the venture
* Wasserman/Hellman@GruntFunds
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“60/40”“51/49”
“25/30/45”
@GruntFunds
![Page 12: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/12.jpg)
But…
Value creation estimates
Rule of thumb
Financial projections
Industry standards
Lawyers, advisors, professors
Girlfriend, boyfriend
Mom, dad, rich uncle
Darts
![Page 13: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/13.jpg)
“50/50”“33.3/33.3/33.3”“25/25/25/25”
90%+ of startups do equal splits
@GruntFunds
Let’s keep it simple…
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You do all the work?
You bring in another guy?
Your partner wants to quit?
1,000,000 other things?
But, what if…
You want to quit?
Your CTO gets hit by a bus?
@GruntFunds
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Your Share % >The Value of Your Contribution
The Total Value
Your Share % <The Value of Your Contribution
The Total Value
@GruntFunds
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Alligator Pit
@GruntFunds
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Not Fair=
Not Fun@GruntFunds
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What We Need
• Perfectly fair
• Rewards contributions
• Provides motivation
• Accommodates team changes
• Flexible in the face of rapid change
• Gets rid of the gators!
@GruntFunds
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Dynamic Equity Split
@GruntFunds
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You Contribute 50% = You Get 50%You Contribute 10% = You Get 10%
You Contribute 23.2% = You Get 23.2%
No more and no less
@GruntFunds
![Page 21: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/21.jpg)
A person’s % share of the rewards should equal that person’s % share
of what’s at risk.
@GruntFunds
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FairMarketValue
@GruntFunds
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1.Allocation Framework2.Recovery Framework
@GruntFunds
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Allocation Framework
1. Convert contributions to Slices
2.
1. Allow it to self adjust over time (dynamic)
Your Share % =Your Slices
Total Slices
@GruntFunds
![Page 33: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/33.jpg)
Convert to Slices
Non Cash Cash
@GruntFunds
![Page 34: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/34.jpg)
Convert to Slices
Non Cash Cash
FAIRMARKETVALUE
FAIRMARKETVALUE
@GruntFunds
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Convert to Slices
Non Cash Cash
FAIRMARKETVALUE
x2
FAIRMARKETVALUE
x4@GruntFunds
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Time
Fair Market Salary*
-
Cash Compensation
X
2
Grunt Hourly Resource Rate (GHRR!)
@GruntFunds * Hourly @ 2,000 Hours/Year
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Time
$50/hour*
X
2
=
Grunt Hourly Resource Rate (GHRR!)
100 slices/hr
@GruntFunds * $100,000 per year
![Page 38: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/38.jpg)
Time
$50/hour* - $10/hour paid in cash
=
$40/hour at-risk
X
2
=
Grunt Hourly Resource Rate (GHRR!)
80 slices/hr
@GruntFunds * $100,000 per year
![Page 39: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/39.jpg)
Small Money
Cash Amount
X
4
(Investments Convert When Spent)
@GruntFunds
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Equipment
• New = Purchase price x 4 (cash)
• Less than a year old = Purchase price x 2 (non-cash)
• Older than a year = Book value x 2 (non-cash)
@GruntFunds
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Everything Can Convert
• Unpaid Commission x 2
• Unpaid Royalty x 2
• Unreimbursed Expense x 4
@GruntFunds
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Grunt Funds in Action
@GruntFunds
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Grunts Contribute Different Things
Grunt 2Grunt 1Grunt 3
Jr. Developer Founder Rich Uncle
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Convert to Slices
Grunt 2Grunt 1Grunt 3
Jr. Developer Founder Rich Uncle
![Page 45: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/45.jpg)
Add ‘Em Up!
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Grunt 1’s Share
÷
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Grunt 2’s Share
÷
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Grunt 3’s Share
÷
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Sales Guy
Grunt 4
![Page 51: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/51.jpg)
Sales Guy
Grunt 4
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Grunt 1’s Share*
÷
*If the Grunt Does Nothing Else
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Grunt 2’s Share*
÷
*If the Grunt Does Nothing Else
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Grunt 3’s Share*
÷
*If the Grunt Does Nothing Else
![Page 57: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/57.jpg)
Grunt 4’s Share
÷
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Recovery Framework
@GruntFunds
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Recovery Framework
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Recovery
• No pie for non-cash
• No multiplier for cash or tangible property
• Buy back (if possible) at 1x cash contributions
• Non-compete
• Loyal employee protection
![Page 62: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/62.jpg)
Removing a Grunt
• Keeps pie
• Buyback at Slices x $
• No non-compete
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Grunt 4
Convert to Slices
Grunt 2Grunt 1Grunt 3
Jr. Developer Founder Rich Uncle
![Page 64: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/64.jpg)
Grunt 4
Convert to Slices
Grunt 2Grunt 1Grunt 3
Jr. Developer Founder Rich Uncle
![Page 65: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/65.jpg)
Removing Contributions
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Grunt 2’s Share
÷
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Grunt 3’s Share
÷
![Page 68: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/68.jpg)
Grunt 4’s Share
÷
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Freezing the Pie
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Freezing the Pie
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Freezing the Pie
• When you can just pay people!
– Revenues
– Series A investment
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Time
$50/hour* - $0/hour paid in cash
=
$50/hour at-risk
X
2
=
Grunt Hourly Resource Rate (GHRR!)
100 slices/hr
@GruntFunds * $100,000 per year
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Time
$50/hour* - $10/hour paid in cash
=
$40/hour at-risk
X
2
=
Grunt Hourly Resource Rate (GHRR!)
80 slices/hr
@GruntFunds * $100,000 per year
![Page 75: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/75.jpg)
Time
$50/hour* - $20/hour paid in cash
=
$30/hour at-risk
X
2
=
Grunt Hourly Resource Rate (GHRR!)
60 slices/hr
@GruntFunds * $100,000 per year
![Page 76: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/76.jpg)
Time
$50/hour* - $30/hour paid in cash
=
$20/hour at-risk
X
2
=
Grunt Hourly Resource Rate (GHRR!)
40 slices/hr
@GruntFunds * $100,000 per year
![Page 77: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/77.jpg)
Time
$50/hour* - $40/hour paid in cash
=
$10/hour at-risk
X
2
=
Grunt Hourly Resource Rate (GHRR!)
20 slices/hr
@GruntFunds * $100,000 per year
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Time
$50/hour* - $50/hour paid in cash
=
$0/hour at-risk
X
2
=
Grunt Hourly Resource Rate (GHRR!)
0 slices/hr
@GruntFunds * $100,000 per year
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Freezing the Pie
@GruntFunds
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Freezing the Pie
Profits orProceeds
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Series A Investor
Negotiate $900,000 Pre Money
Raise $1,000,000
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Series A Investor
$1,000,000 + $900,000 = $1,900,000
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Series A Investor
$1,900,000 Post-Money
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Freezing the Pie- Series A
Profits orProceeds
![Page 85: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/85.jpg)
What We Got
• Perfectly fair
• Rewards contributions
• Provides motivation
• Accommodates team changes
• Flexible in the face of rapid change
• Gets rid of the gators!
@GruntFunds
![Page 86: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/86.jpg)
Slicing PieResources
![Page 87: Slicing Pie Deck](https://reader031.fdocuments.net/reader031/viewer/2022021813/58ce80bc1a28ab210a8b5723/html5/thumbnails/87.jpg)
@GruntFunds
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@GruntFunds
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