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I'm one of four partners in a litigation technology startup. We're a great mix of skills, everyone brings their own strengths to the table.

One of our partners is our head of sales because he has all the c-suite level sales experience and contacts. None of the other partners will be as strong in sales. He's asked for a sales commission or a "vig" on all new logos that he brings in.

Should a founding partner who's main role is sales receive a sales vig or commission in addition to his or her equity stake in the company? Is this fair to the other partners who will run operations but not receive a similar reward for doing so?

Thanks,

SM

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2 Answers

up vote 2 down vote

In general, I would say that the commission is not appropriate when unbalanced like that. The partner whose focus is sales is being paid from the bottom line, like the rest of the founders. Asking for a commission is basically asking for an additional portion of your company.

If the partner really wants the commission, perhaps the other 3 partners should buy him out, and then he can get paid solely on commission. Alternatively, if that partner already has a smaller equity share than the others, then the request might be justified.

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I think it REALLY depends - on his salary. Forget the founding partner thing for a moment - it is not uncommon for sales people to be paid MOSTLY with comission. Sales managers etc. may be the same, and he may simply have this attitude - and accept a lot payment as part of the whole payment equation.

Consider waht is normal, and waht the mindeset of a sales person is. Work with that.

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