Frank Demmler’s years of experience working with local start-ups have given him valuable insights into what makes or breaks a start-up. In a recent post-gazette interview, Demmler warns against an equal split of ownership shares, and provides a mechanism for determining ownership: The Founder’s Pie Calculator.
The Founder’s Pie Calculator is intended to force sometimes difficult discussions:
- Who did what to come up with the business idea?
- Who contributed what in conceiving the business model?
- Who has the industry connections?
- Who is joining the company full time?
- Who is responsible for bringing the product to market?
Each founder is given points for contributions to the business idea, business model and other factors. The score is used to determine ownership share.
These are difficult conversations to have, but it’s important to have them before proceeding too far down the road. The wrong choices can put the founders’ relationships at risk and can have a fatal impact on the future of the company.
What other questions should you be asking yourselves early on? What was the most important conversation you had?