RULE 1:
Expect to be disappointed.
RULE 2:
Meet in person and come to a decision before leaving.
RULE 3:
Anyone can be a “founder”.
RULE 4:
Creating a valuable company takes years. The value within the equity includes all that effort.
RULE 5:
Founders’ shares should be granted as “restricted shares”.
RULE 6:
The restriction should be removed in increments over the next four years.
RULE 7:
Splitting the equity equally is usually the wrong split.
RULE 8:
The effort to date is truly worth only 1-2%. But since few people believe that truth, be overly generous.
RULE 9:
Cash, property, and access to equipment all have value too.
RULE 10:
Ideas have little value. Businesses have value.
RULE 11:
When unsure about a teammate, use a cliff.
RULE 12:
Grants of restricted shares need to specify when the restrictions are removed ahead of schedule, e.g., acquisitions and severance.
RULE 13:
For recruited team members, stock options may be better.
RULE 14:
Put yourself in the other persons’ shoes.
RULE 15:
More equity can be created in the future.
