Using equity to motivate startup founders and early employees is a bad idea. Yep, I said it: equity is a bad motivator. I’m sure there are plenty of smart, successful, experienced people who would vehemently disagree with me, but I stand by my opinion.

Too many founders think that giving equity to an employee is going to magically transform their rag-tag team of renegade entrepreneurs into a well-oiled, money-making machine. I wish it was that easy!

At best, equity is a blunt instrument for creating incentives. There is simply too much uncertainty, volatility and misconceptions about what it’s going to be worth and what an individual can actually do to impact its value. In a startup, the equity could ultimately be worth $0.00 (most likely) to unicorn billions (least likely, unless your name is Elon Musk). When things are going well, owning equity is fun. When bumps in the road to success arise—and they always do—owning equity is pointless and even demoralizing. Watching your employee share value lose thousands or even millions of dollars doesn’t cultivate strong company-employee relationships. Trust me, I’ve been there and it sucks.

Interest in Equity = Interest in Company

Think about your own thought process when it comes to how you might invest in a publicly traded stock. You would be attracted to the investment if you believed in the company’s product, mission, vision, management team, financial performance and whatever other ways you measure potential. The more you believe in the company, the more you will invest. Furthermore, you will retain the investment if you continue to believe that the value of holding it is worth more than the value of selling it. So, your willingness to invest reflects your belief in the future potential of the business.

The Believers and Non-Believers

Investing in stock, therefore, separates the believers from the non-believers. If you do not believe in the future potential of a business owning shares in it is pointless. Most founders want to surround themselves with co-founders, employees and other participants who believe in the business which is why Slicing Pie works so well. Slicing Pie reflects their belief in the company relative to each other. The biggest believers get the biggest share.

Similarly, when you are part of a Pie, your willingness to forgo all or part of your fair market compensation reflects your belief in the future potential of the startup. If you stop believing, you can quit and relinquish your slices which is fine because why would you care about owning shares in a company if you don’t believe in the future payoff? Sure, you may want to keep them “just in case,” but that’s a far cry from being a true believer. You can’t have your Pie and eat it too!

Slicing Pie ends when everybody is getting paid at fair market rates. If someone is getting paid his fair market rate, that person owes the company his full commitment and should perform to the best of his abilities. Given this, how could giving him shares possibly motivate him to do a better job? In reality, if you’re paying a fair market rate you should be getting a person’s best work whether they own equity or not.

Attract and Retain

My distaste for equity as a motivational tool does not mean I don’t think equity isn’t an incredibly valuable and essentially tool for attracting and retaining employees. Because the act of investing in or otherwise acquiring ownership in lieu of cash compensation separates the believers from the non-believers it will ensure that your startup team is filled with people who have an aligned vision and passion for the company mission. First, because the opportunity to attain an equity position in the business will help you attract the right people. And second, because their interest in maintaining their ownership will help you retain the right people.

It is highly beneficial, therefore, to give employees or other participants, the opportunity to acquire equity in the company. You can achieve this in the early days using the Slicing Pie model and later through employee stock purchase programs.

But, just don’t give away equity. That would be simply dilute the ownership of the people who actually care.

A Person’s Best Work

This brings us to another problem: If throwing equity at them doesn’t work to motivate employees what does? How do managers ensure that a person is, indeed, doing their best? In startups, you may not have a clear picture of a person’s potential, especially in a new job at a new company. You never know what is going to happen in a startup and this applies to the people working in the startup. They all made promises of what they are going to do, but you need a way of not only ensuring that they deliver, but also that you don’t wind up wasting your money if they don’t (or, at least conserve as much as you can).

Getting What You Pay For

So, once you have the right people (the believers) on the team you need to make sure they are living up to the expectations you had when you hired them and set their fair market salaries. A good employee who is underpaid will get lured away by the competition. A bad employee who is overpaid will drain the company resources.

Similarly, a good employee who is overpaid will unnecessarily infringe on company profits. Some companies like to boast that they pay above-market salaries and bonuses to keep good people. As admirable as this sounds, it is done at the expense of the shareholder. (Which, in a Slicing Pie company is you!) In basic economic theory, the act of overpaying isn’t a rational. Sure, you might say, “I pay a premium to get the freshest vegetables at the grocery store.” Yes, the best tomatoes cost more than the regular boring tomatoes and you may have to bribe the grocer or the farmer to be first in line, but you wouldn’t throw in extra cash just for fun. The bribe reflects the additional cost.

YES: Cost of Tomato Cost of Quality + Cost of Bribe

NO: Cost of Tomato + Cost of Quality + Cost of Bribe + Extra Cash for No Reason

Get a premium product, pay a premium price. But why pay more than what it’s worth?

A bad employee who is underpaid is a waste of space and time. You need to move these people off the team without paying extra for the right to terminate. A bad employee, underpaid or overpaid, simply needs to be removed. Many bad employees have a knack for blaming others or making excuses. Most entreprenuers and managers live in fear that they might hire and have to live with deadbeats.

Ideally, we want people who perform at their best and paying them exactly what they deserve for that performance. People who perform better than others will be paid more than others. In order to do this, however, we need a way to monitor performance and make it obvious to everyone involved.

Creating a Lens for Performance and Pay

In the USA, and many other countries, it is not customary for companies to be transparent regarding salaries and bonus payments to employees. Benefit packages are fairly standard and well known, but other compensation is obscure. Slicing Pie implies a certain level of transparency that people sometimes find uncomfortable, but once people see the value and importance of this kind of openness extending into performance and compensation isn’t a big leap.

Lacking a logical structure, however, will make compensation decisions seem arbitrary and unfair.  If coworkers can’t define, monitor, and assess performance they will be skeptical of the outcomes. So, confidentiality is a good defense against a poorly designed or lazy compensation structure. You can do better!

In some positions, like sales, the top salespeople make the most money and everybody understands why. In fact, the high performers are often celebrated in their companies. In other positions, like product management, performance is less clear.

Implementing a Logical Performance Structure

In order to get what you pay for (meaning people who perform at their best and paying them exactly what they deserve for that performance) you will need to implement a program that provides visibility into performance and adjusts compensation to reflect performance.

Bonus Programs

Many companies implement bonus programs to reward high performers. This is certainly a step in the right direction but be careful not to confuse a bonus program with motivational programs. Remember, people who are paid a fair market salary should be performing at their best, so implementing additional incentive bonus programs shouldn’t be necessary. 

Yet, we are drawn to them nevertheless and we they may feel like they work. However, I think the more pragmatic view of these programs is that they allow managers to get closer to the right compensation given the potential variability in performance. In other words, because we have to set fair market values in advance of work being performed, we can’t be sure we are paying the right price unless we can adjust the amount we pay to match the performance we get.

A basic foundation of Slincing Pie is that nobody can predict future events so it's impossible to predict a fair equity split. Similarly, we can't predict how a person will perform in a job so we need to be able to understand a person's performance in the context of the goals of the startup.

If you want to learn more about how to to this, I have outlined a performance program that provides not only incentives for those who go above an beyond expectations, but also provides consequences for those who fall short of expectations in my Slicing Pie folllow up book called Will Work for Pie.  You can buy the book here.

Since then, Baat Medical’s 35-person team has helped developing launch more than 400 medical devices worldwide.

I met Nijenbanning at a NASS medical conference in Chicago, where I was presenting the Slicing Pie concept to a large audience of spinal surgeons. During the Q&A, he stood up and said, “We have used the Slicing Pie model to develop a new medical device. The model really works!”

The basis of a Slicing Pie approach is correct time tracking. Medical was accustomed to project management and tracking time and expenses, but along the way we noticed that this is not a normal way of working for doctors. We had to find a good approach that worked for all parties but in the end everyone was pleased with the results.

Together, the inventor and Baat Medical developed an MVP and took the product through the medical approval process. They ultimately brought it to market under the brand name Anser Implants (AnserImplants.com).

“Slicing Pie made it possible for each of us to receive shares in the company that reflected our contributions. There are always obstacles along the way that make it impossible to predict the final investment required. Slicing Pie accounted for the changes, and it was fair for everyone,” said Nijenbanning.

“I think the Slicing Pie model needs to be more well-known. It works!" he said

Fixed equity represents the conventional approach to startup ownership distribution. You and your co-founders determine percentage stakes at the outset and lock them into your company documents. These percentages remain constant regardless of future contributions or circumstances.

The challenge emerges when situations shift. One founder may exit early or reduce their involvement significantly while retaining their original stake. Another founder might invest considerably more time and resources than initially anticipated, yet their ownership percentage stays unchanged.

Dynamic equity operates differently. Your ownership stake adjusts continuously based on actual contributions you make to the venture. This includes:

• Time invested in building the business
• Financial resources you contribute
• Skills and expertise you provide
• Network connections you leverage

Your equity percentage reflects what you've genuinely contributed rather than what you agreed to at inception. The allocation responds to real work and value creation, not just early commitments.

The Romance (and Risk) of Fixed Equity

Fixed equity carries an undeniable appeal. You lock in percentages, sign the papers, and everyone understands their stake from day one. There's clarity in that simplicity.

Yet your startup will evolve in ways you cannot predict at founding. Team members may disengage while others shoulder increasing responsibility. Roles transform as the business scales. The problem? Ownership percentages remain frozen in time.

This creates friction when contributions diverge sharply from equity distribution. You might find yourself working around the clock while a co-founder with identical ownership has stepped back entirely. The disparity breeds resentment quickly.

The damage extends beyond internal morale:

• Investors scrutinize cap tables for red flags
• Talented candidates hesitate when they spot inequitable structures
• Team motivation erodes when effort and reward misalign

Why Dynamic Equity Feels Intimidating (But Likely Shouldn't)

Dynamic equity can seem appealing in theory—everyone receives what they contribute. Yet many founders hesitate to adopt it.

The primary reason is unfamiliarity. This approach differs from traditional equity models, and anything new can feel complex at first glance.

Founders often worry about tracking contributions accurately. You might picture constant spreadsheet updates and uncomfortable discussions about who delivered what value. There's also a common concern: "What if my ownership stake ends up smaller than expected?"

This anxiety typically stems from attachment to a predetermined outcome rather than rational analysis. In a genuinely equitable system, your stake reflects your actual contributions—nothing more, nothing less.

Dynamic equity creates agility, clarity, and strength in your organization. It acknowledges that tangible work builds company value, not initial agreements or titles alone.

When you move past the discomfort of choosing an unconventional path, you're implementing a framework that mirrors how value actually gets created.

Talking Timing: When Equity Models Matter Most

Most founders get this wrong by attempting to lock in ownership splits with incomplete data. At launch, your company likely has no measurable value. You haven't secured funding or validated product-market fit.

Making permanent equity decisions at this stage resembles claiming prizes before earning them.

Dynamic equity models address this timing problem directly. They provide space to observe who stays committed over time. These frameworks track real contributions as they happen, adapting alongside your business instead of relying on predictions.

When institutional investors enter the picture, you'll present an ownership structure built on documented work. This evidence-based approach builds credibility with potential backers.

The key advantage is flexibility during your most uncertain phase. You avoid premature commitments while maintaining fairness as roles and contributions become clear. Dynamic structures let ownership reflect reality rather than early-stage guesswork.

How Do You Even Measure Contributions?

Making dynamic equity function properly requires establishing fair values for various types of contributions. You need to evaluate time by determining appropriate hourly rates or salaries according to market benchmarks. Cash investments might include payments for tools, legal documentation, or development resources.

Intellectual property contributions deserve careful assessment. Someone might provide essential technology or code that becomes foundational to your business. Relationships also carry value when a co-founder can secure meetings and connections that would otherwise remain out of reach.

Reputation adds another dimension to consider. A person's name and track record can instantly boost your venture's credibility with investors, customers, and partners.

Document everything you agree upon. Use specialized tracking tools built for equity management to maintain clear records.

Perfection isn't the goal, but honesty is non-negotiable. Transparent tracking now prevents uncomfortable equity discussions later when your company has evolved and memories have faded about who contributed what.

A Quick Reality Check

Dynamic equity won't appeal to everyone. Those who prefer traditional hierarchies or expect compensation tied to seniority rather than contribution may resist this approach.

However, teams genuinely committed to building together often find this model empowering. It eliminates uncertainty about whether contributions are being recognized fairly.

Key benefits include:

• Transparency in how ownership reflects actual work
• Reduced conflict over who deserves what stake
• Recognition based on performance rather than initial concepts
• Clear visibility into contribution patterns over time

This approach maintains structure through defined metrics and regular evaluation periods. It replaces static allocation with an adaptive framework that responds to real effort and results. Your stake grows as your contributions increase, creating alignment between what you do and what you earn.

Which Model's Right for You?

If you're working alone, fixed equity doesn't apply. You own everything until you add a co-founder or early team members.

Working with partners changes the equation. Consider whether contributions will remain balanced over time. Think about whether you want to lock in equity immediately or allow it to shift based on actual effort.

Ask yourself how you'd react if someone left with a large ownership stake after minimal contribution. Fixed equity can work when you and your co-founder share a long history and have already completed a startup together.

For first-time partnerships or early-stage relationships, locking in equity may be premature. Dynamic equity offers protection for your company by aligning ownership with real contributions. It prevents scenarios where departed team members retain disproportionate stakes relative to their actual work.

The right choice depends on your relationship history, contribution patterns, and comfort with uncertainty. New partnerships benefit from flexibility that adjusts as roles and effort levels become clear.

Don't Just Guess—Track the Pie

You don't need to create an equity tracking system from scratch. Slicing Pie provides a proven dynamic equity framework that removes guesswork from ownership decisions. The platform has assisted thousands of startups in determining fair equity distribution without conflict.

What you need:

• A method to monitor contributions as they happen
• A framework that adjusts equity in real time
• Tools that eliminate disputes before they start

The objective extends beyond keeping your startup alive. You want to build a company that operates fairly, stays competitive, and positions itself for sustainable growth. Tracking contributions accurately keeps everyone aligned and motivated throughout your startup journey.

Final Slice: Choose the Equity Model That Moves With You

Selecting between fixed and dynamic equity goes beyond paperwork. It shapes your company's culture, relationships, and long-term strategy.

Fixed structures work smoothly at first but can create friction as circumstances change. Dynamic models may seem unconventional initially, yet they deliver fairness when contributions shift over time.

Key differences:

• Fixed equity remains locked in place
• Dynamic equity adjusts based on actual input and effort

When you need a framework that mirrors genuine involvement and adapts as your business evolves, dynamic equity offers the flexibility required. This approach protects founder relationships while ensuring everyone receives value proportional to their contributions.

Sign up today to explore how the right equity system can support your venture's growth.

“Isn’t there an app for this??” Thought an exasperated Enzo Zamora as he rifled through his belongings searching for his garage door opener. He was riding his bike, so he had it tucked away in one of his bags or pockets. This was his Aha! moment. He decided then and there that the garage remote control problem had to be solved with 21^st century technology and he was the guy who was going make it happen.

But he was alone.

Zamora had just moved to Spain and did not know anyone. “I set out to build a team,” he recalled, “I remembered the three H’s of building a startup team: a Hustler, Hacker, and Hipster.” He knew he was a Hustler. He could bring the team together and work hard to make connections, find users, generate sales, raise money and all the Hustler type work. He needed a Hacker, someone to engineer and figure out how to build the product. And lastly, he needed a Hipster, some to create his marketing and brand image.

Networking the Startup World

His first step was networking like crazy. He went to university tech centers, maker spaces, coworking spaces. He attended startup events and meetings. He posted on job boards and social media. He interviewed 52 people in all searching for the right mix of founders who believed in the vision of making the garage a convenient, safe access point for homes.

“From the beginning equity was part of the discussions,” said Zamora. He was not a rookie, he had created startups before, but this was the first time he had brought on a team of cofounders right away. “I found Slicing Pie on Google and bought the book. It was an easy read, but I read it 2-3 times to be sure I understood everything.”

Everyone agreed right away to the Slicing Pie model. “The model was fair to everyone, and they all got it,” Zamora reflected, “at first I was afraid that nobody would want to keep track of their time, but most of the people I spoke to were already tracking their time as freelancers so it was not an issue.”

The Changing Startup Team

After building a team of five co-founders, HOMYHUB was born. The concept was an app and device that can replace an old-fashioned garage remote control and allow users to control, monitor and manage access to their garage, anytime, anywhere using their smartphone.

Slicing Pie isn’t just for allocating equity to participants, it also provides the logic for recovering equity, if appropriate, when someone leaves the company. Not long after getting started one of the team members quit to join his family’s business. This was considered resignation without good reason, or a bad leaver. This means that the participant must face the consequences of their action, specifically they lose their slices in the Pie from non-cash contributions and cash contributions are paid back prior to the distribution of any dividends. “The guy left the company on good terms knowing the impact of his decision. We are still friends today. I don’t think that would have happened without Slicing Pie,” said Zamora. Some months later another team member felt burned out and left facing the same consequences. The Slicing Pie formula kept it fair for everyone.

The team terminated the Slicing Pie model when it raised a substantial round of financing. Slicing Pie ends when there is enough cash on hand to pay people fair market rates for their contributions.

Now when Zamora rides his bike up to his house his garage door opens automatically. He can provide access to guests, housekeepers, dog sitters, even the delivery guy (so long porch pirates!) Thousands of happy users enjoy the benefits of HOMYHUB everyday.

“We used Slicing Pie for almost three years until our funding round. It was a key ingredient to our success,” said Zamora. Now a frequent guest at local universities in and around Madrid, he mentions Slicing Pie to all of his students!

Cragholm found the Slicing Pie model.

“It was exactly what we needed,” explained Bird, “my previous deals were all fixed-split equity deals. As soon as the work became uneven among my partners tension got high and disagreements damaged relationships. The dynamic Slicing Pie model perfectly accounted for our different contributions so we would each get exactly what we each deserved.”

Cragholm and Bird engaged Slicing Pie-friendly attorney Matt Rossetti to put together a Slicing Pie LLC Agreement and the two were officially partners in a new business called GrapplApp.io.
 
They quickly realized there was more than just pent-up demand for access to mobile instruction. Jiu Jitsu grapplers were eager to connect with others and build a community. The two decided to design the GrapplApp as a free app that helps grapplers cut through the clutter in finding open mat and private instruction opportunities at home or on the road.

But neither of them were developers. So, they set out in search of a CTO. The Slicing Pie model gave the two a basis for working with other partners. “We met a developer who wanted to build our app for a fixed 50% share and didn’t want to learn about Slicing Pie…that was an easy ‘no,’” said Cragholm.
 
Rossetti, introduced the two to Eric Dykert, a CTO and fellow grappler who understood the Slicing Pie model and wanted to be part of the company. With Dykert’s help they launched the app in April of 2024.

Each member of the team has different levels of commitment but provides regular input to the company. Cragholm has set up reoccurring allocations of Slices in the Pie Slicer software, but team members log additional contributions if they spend extra time in any given week. They are generating revenue, but all the cash goes back into the company for marketing and growth.

The vision is to create a community of Jiu Jitsu enthusiasts all over the world and to give instructors the tools they need to monetize their talents. “Right now we’re all doing this because we love Jiu Jitsu,” Cragholm explained, “but, Slicing Pie gives us the framework we need to keep things fair as we build the community and the business. Hopefully we’ll all make money, but that’s not the focus right now. We all know we’ll get what we deserve in the end.”

To learn more about Grappl App and join the growing Jiu Jitsu community visit them at www.grapplapp.io or on Instagram

To learn more about Space Coast Mobile Jiu Jitsu visit www.spacecoastmobilejiujitsu.com You can also contact Michael Cragholm to set up your own mobile business.

Warsaw/Wroclaw: thanks to the efforts of Jędrzej Szymczyk, Partner at Lewczuk Łyszczarek Szymczyk, who customised for Polish founders the Cofounder Agreement template using the dynamic equity split. The dynamic equity split is based on Mike Moyer’s slicing pie method. This is great news for Polish early stage founders, as it gives them the opportunity to use the ‘fairest equity split tool’ and avoid many potential issues that are caused by fixed equity split in too early stages.

Jędrzej Szymczyk, Partner at Lewczuk Łyszczarek Szymczyk: Dynamic equity split based on the slicing pie method provides an effective tool for solving a significant issue discussed within the Polish startup ecosystem. At the same time, it does it in a simple, transparent and very fair way. I am glad that we had an opportunity to support implementation of the slicing pie method in the Polish legal system.

The solution is based on the standardised templates developed by Jana Nevrlka, the founder of Cofounding, who coordinates the development of the slicing pie solution for European founders together with great help and support of Mike Moyer and other local slicing pie experts.

Mike Moyer, the US-based inventor of the Slicing Pie model, was pleased to hear the development “Slicing Pie is used by thousands of companies all over the world and most countries encourage fairness, but it is always nice to give founders that extra certainty that the model is aligned with the local rules and have local Slicing Pie expertise available.”

Jędrzej Szymczyk, LL.M., Partner in Lewczuk Łyszczarek Szymczyk (LLW)
Jędrzej is an attorney-at-law who advises in venture capital and private equity deals, as well as on capital market law and M&A transactions. He also advises in providing legal services for entities of the new technologies sector and for public companies.He works with startups from incorporation stage, throughout the fundraising and supports them in relations with VC funds and angel investors. Jędrzej advises institutional investors on their investments and exit transactions on local and international markets. He is a graduate of Illinois Institute of Technology - Chicago Kent College of Law in Chicago, where he earned an LL.M. degree in International & Transnational Law.

Lewczuk Łyszczarek Szymczyk (LLW) is an experienced law firm with robust VC, M&A and financial markets practices. Should it be for equity or debt financing transaction, regulatory proceeding, distribution or IP protection strategy, LLW aims to become a firm of choice for fast-growing startups as well as ma-jor venture capital and private equity funds in Poland.

About Cofounding
Cofounding is creating tools and know how for founders, which include cofounder agreement templates, equity split tools and courses, and a proven 7 steps of cofounding the right way methodology, developed by Dr. Jana Nevrlka. It is summarised in an international bestseller, Cofounding The Right Way. Jana is driven by the mission of “No more failed business partnerships!” .. that could have been prevented. She is focused on helping founders build cofounding teams that win and last.

About Slicing Pie
Slicing Pie is a universal, one-size-fits-all solution for the allocation and recovery of equity in an early-stage, bootstrapped company. It is a formula that allows founders to divide equity based on the fair market value of each participant’s contribution. It is a fair, logical and structured way to align everyone’s interests and incentives. Slicing Pie is used all over the world. It is, by far, the fairest way to split equity in an early-stage, bootstrapped startup! Developed by Mike Moyer.

Who Can Fire Who?

An excerpt from Will Work for Pie

People often ask me who can fire who in a start-up. It is a source of much consternation and people often want to boil it down to a question of control.

Slicing Pie simply keeps track of the equity split. It does not specify or dictate organizational structure or replace managerial responsibilities. Slices in the Pie do not carry voting rights per se; those rights are generally outlined in the company's organizational structure. At a basic level, slices convert to equity, which usually does have voting rights, so the person with the most slices tends to consider themselves “in control.”

The number of slices each person has in the Pie represents their risk relative to others. It is reasonable to respect the interests of those with the most to lose. But, in theory, in a Slicing Pie company, anyone can technically fire anybody else.

It may be difficult to understand why this is fair. As a solo founder firing a co-founder, you might feel uneasy knowing that your new partner could one day have the power to remove you from your own company.

The Slicing Pie model’s recovery framework keeps things fair even when a person has more slices than the other.

Here is how things would play out if a person with the most slices separated from the company. We will call this person the “Big Slice” person, and the person or people with fewer slices are the “Little Slice” people.

Firing a Big Slice Person

Slicing Pie does not favor one person over the other; it favors the business's survival. When a team member is not pulling their weight or is engaged in gross negligence, Little Slice people should be able to hold the Big Slice people accountable. The Little Slice people need to provide two warnings before termination.

If you have an organized plan with goals and milestones, it will be obvious when there is a problem with any individual that they will start to miss goals and milestones. So, this isn’t a subjective “feeling.” The performance problem will not be ambiguous.

Many Big Slice people are dismayed by the prospect of getting fired by people with fewer slices. But just because a person has a big slice does not mean he or she can slack off and miss milestones or goals. Other people depend on the Big Slice people.

If the Big Slice person does not care enough to get back on track, he or she will take the whole organization down. With Slicing Pie, the two-warning protocol will give ample time for discussion and corrective actions.

If the Big Slice person does not correct the behavior, a second warning will be issued, and termination should follow if the second warning does not work. This should probably be okay with the Big Slice person who did not care enough to remedy the situation.

Big Slice Resigns

If there is a problem with the Big Slice person and the Little Slice people think he or she would be better suited to a different role, the team can adjust the Big Slice person’s responsibilities. For example, the Big Slice person may have been the founder and CEO but does not have enough time to dedicate to the business. The Little Slice people can fire Big Slice for good reason, or Big Slice can resign for no good reason with the same consequences.

Or, if the Little Slice people want Big Slice to stick around, they can ask Big Slice to stay on as an advisor. This new position is a change the Big Slice person can either accept or reject. By accepting the new role, he or she would keep slices and carry on in the business. He or she can also reject the new role and keep the original position but with the expectation to improve performance or risk termination.

If the Little Slice people insist the Big Slice person changes roles, this would provide a good reason for Big Slice to resign and retain slices subject to future dilution as more slices are added. It is still fair.

Pulling Rank

A Big Slice person could “pull rank” on the Little Slice people and stay in the business despite the performance problems. But now the Little Slice people would have good reason to resign because the Big Slice person, who promised to work hard and treat them fairly, did not keep the promise. The Little Slice people can resign for a good reason, keep their slices, and start a competing firm.

This is logical. It would not be fair for the Little Slice people to be taken down by the Big Slice person.

Of course, if the Big Slice person is not doing the job, the Little Slice people can step up and fill in. In this case, they may contribute enough slices to become Big Slice people themselves.

The benefit of the Slicing Pie recovery logic is that the right conversations can take place, and logical consequences apply. Instead of jumping into a fight, participants can use the model's logic to determine the right course of action.

No matter what happens, people will be treated somewhat based on their decisions. Nobody has to feel inadequate about their choices, and nobody has to accept an unfair outcome.

If you want to learn more about our startup equity calculator, please contact us today to discover how Slicing Pie can help you achieve a fair and dynamic equity split.