My team and I are nearing the launch of our initial product this August. We are wanting to develop a metrics-based system that will be implemented upon product launch that will determine founder's equity throughout the life of our company.
Relevant Company Background:
- Organized as LLC. (Not sure if this matters)
- There are four founders, two "business" guys and two "tech" guys.
- We currently have equal equity stakes in the company (25%).
- We all believe that there needs to be a system in place that holds us all accountable.
- We all believe in the merits of performance-oriented, measurable goals and achievements.
"Dilute" our individual equity down to 5% and place the remaining equity in an escrow account. In order to earn our founder's equity back, we have to reach benchmarks. Since the "business" team's primary responsibility is to increase unique users, they will be able to earn equity based on the total number of unique users. Since the "tech" team's primary responsibility is to build a product that users find value in, they will be able to earn equity based on user retention. Taking into account the extended functions of both teams and their need to work together, we have also decided to implement an 80/20 split. Since the "business" team needs to deliver user feedback to the "tech" team in order to build a more valuable product, 20% of their benchmarks will be determined by retention. Since the tech team (of a small company at least) needs to help with marketing and selling, 20% of their benchmarks will be determined by unique users. By implementing this system, we ensure that we hold ourselves accountable, have measurable metrics to base performance on, and promote a performance-based atmosphere instead of an effort-based atmosphere (hours worked, lines of code, etc.)
Too ideal? Anybody have significant problems with something similar to this? As of right now the benchmarks are undetermined and the 80/20 split is more of a reference point.
Thanks in advance for your help, suggestions, and thoughts regarding our new initiative...