Category: Employees and Consultants
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Importance of Using Exact Share Numbers Instead of Percentages
It is very common for startup founders to talk about the ownership of their startup in terms of percentages. This makes perfect sense when providing a snapshot of the startup ownership at any given moment. But without immediate follow-through it may not be the best way to give a prospective co-founder or new hire an…
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Outsourcing Software Development: Riding the Elephant
“Technical co-founders are hard to find.” This is a phrase that is likely said daily in any startup ecosystem. Thus, many startups choose or are simply forced into outsourcing software development. But a startup’s outsourcing software development at such an early stage is like riding an elephant in a horseback polo match…sure, you are on a big beast, but…
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The Contract ROI Trap
Several weeks back, 37signals asked “Employment Contracts: What are they good for?” on Signal vs. Noise. Basically, they questioned the value of their employment contracts since they have never had an employment dispute: “Why have we become so dependent on lawyers to control every relationship inside our companies? Why is “just in case” the default…
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Knights In Shining Armor & Wolf Tickets
Why does it seem like those who claim to be the “miracle solution” for your startup end up letting your startup down? Of course, as a service provider to startups I’m in a bit of a quandary writing this post. (Your startup might need a lawyer; it might not.) But if a lawyer or any…
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Saks Does Not Take Restricted Stock
It’s no secret that a good founder team is an essential step for a successful startup venture. You hope that your co-founder has the mental toughness to stay strong through the bootstrapping process where short-term milestones typically go unrecognized and bank accounts dwindle. But what about your co-founder’s wife, husband, girlfriend or boyfriend? Your Partner’s…
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What is Four Years With a One Year Cliff?
Four Years with a One Year Cliff is the typical vesting schedule for startup founders’ stock. Under this vesting schedule, founders will vest their shares over a total period of four years. The one year cliff means that the founders will not get vested with regards to any shares until the first anniversary of the…
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You Can’t Polish a Sneaker
Why your startup may have the right employee incentive plan but the wrong employee
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Why Giving Your Employees Phantom Stock Can Boost Your Company
The problem of motivating and retaining key employees without giving away your company’s equity can be solved by the use of a phantom stock plan. Many company owners are hesitant to provide key employees with an actual company ownership interest. Such an ownership interest would likely entitle key employees to notice, inspection, and voting rights.…
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Labor Day Labor Law Links
Here’s a short Labor Day Weekend themed post. Check out the following links regarding United States Labor Law: United States Department of Labor Compliance Assistance Policy Fair Labor Standards Act Family and Medical Leave Act Employee Retirement Income Security Act Occupational Safety and Health (OSH) Act The links provided cover federal labor law and most…