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Ok I invested in my business and built the software, now got to run it! If I hire my friend, to do all this business, and I do all things technical. How should I pay him? 1) salary 2) with company shares 30/70%. (70% me, 30% him). EDIT: which option is best for long term, have a partner or have an employee? he is good, really good! I know if I go with him, everything will work out ok, without him, its going to be tough. |
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Do you consider him as vital as you are? Would you still be in business without him? If so - equity for sure. Otherwise, salary with a small equity and three year vesting. The idea being that he's got an incitement to stay on for a longer run, with the vesting forcing him to sell the stock back to you if he leaves early. That's pretty standard anyway. |
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Sorry i am a newb to this site, but in my opinion you should do both. Give him some equity so that he has a vested interest in its growth, and give him salary so that he can stay committed and working on the project without trying to find a job that will pay his everyday bills. Sadly I have the opposite problem, I have a small group of business people and no tech guy to create our site, looks like we need to outsource |
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Paying him salary instead of giving away equity is always to your advantage in the long run unless you can't pay him enough to keep him on board. Paying by sales/transactions commissions may also work, depending on your product. Remember, the way you compensate him isn't necessarily tied to the extent of responsibilities he'll take (assuming he's willing to take them of course). Of course if he reads this post and asks for equity, you'll probably have to oblige in order to keep him on board (and maybe your friendship). |
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Do you want an employee or a co-founder? It ultimately depends on: 1) What will motivate your friend; and 2) What will it cost you in the long run? That 30% could prove either expensive or cheap depending on how the business goes. Just don't give him 30% all at once on the promise of him doing work; have it vest over time. Also understand that giving up equity is going to add some complexity to the arrangement. If he works for 12 months, ends up with 20% and then walks away, is that a good result for you? |
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