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Co-founders

and Employees
CAN!
CAN!
You cant live with em, and you cant kill em.

My Story About Co-founders


I have 100
years in
SoBware!

Im
Tyson!

My Cofounders

Oh Yeah,
Im Dutch

I have 100
years in
MarkeCng!

My Story About Co-founders


I was young and
enthusias;c:
- I knew everything
- I actually knew nothing
- I could write soBware
and am a good architect
My Cofounders
Im
Tyson!
Olivier was old-ish and very
disciplined:
- CEO many Cmes over,
good Dutch pragmaCst
- Most conservaCve of the
group

I have 1w
00 as oldest and a
John
years in
Oh Yeah,
technology
execu;ve:
SoBware!
Im Dutch
- Knew the market
challenges, limits of
today
- Not as good at
technology futurism

Linc was old-ish and truly


entrepreneurial:
- Successful founding CEO
- Very creaCve, great at
markeCng

I have 100
years in
MarkeCng!

My Story About Co-founders


I have 100
years in
SoBware!

Im
Tyson!

My Cofounders

Oh Yeah,
Im Dutch

I have 100
years in
MarkeCng!

We Worked out Great!


What I Needed:
Mentorship
Business 101
Legal 101
Market reality
feedback
To Grow Up

They Provided:
Mentorship
Business 101
Legal 101
Market reality
feedback
ParenCng in business
and in life

How it Was Hard


Im Mo

re Inte
lligent!


r!
to
n
e
v
n
I

e
h
T

m
I

How it Was Hard


Histo

ry Prov
es

Im Rig
ht!

!
I Know ExecuCon

How it Was Easy


Perf
orm
ed th

e ma
rriag
e

Best M
an

Tysons Wedding Day

E!)
M
(

m
Groo

Evaluate a Co-Founder For:


Business Acumen:
The Business guy
Been there, done that with
transacCons, legal, etc.
Interpersonal skills
Sales-orientaCon
Understands nancials
Understands micro- and
macro-economics
Can provide an immediate
service

Content Capability:
The IP guy
Architecture
Knowledge of Best
PracCces
Recognized for or capable
of thought leadership

Tool: Score for Ownership


Metric

Scale

Source of the Main Idea?

0-15

Business Guy?

0-5

Brings Access to Market?

0-10

Content Guy?

0-5

Total:

0-30

Founder 1 Founder 2 Founder 3

Percent of Founder Shares


Always award actual shares for invested capital (unless you are the only owner)
Never weight potenCal to work hard in calculaCng ownership, that is what VESTING
is for!

Tool: Score for Ownership


Metric

Scale

Tyson

J2

Source of the Main Idea?

0-15

15

10

Business Guy?

0-5

Brings Access to Market?

0-10

Brings Access to Capital?

0-5

Content Guy?

0-5

Total:

0-30

22

17

17

17

29%

22%

22%

22%

5%

Percent of Founder Shares

Always award actual shares for invested capital (unless you are the only owner)
Never weight potenCal to work hard in calculaCng ownership, that is what VESTING
is for!

RecommendaCons: Co-Founders
Dos:
Impose a vesCng
schedule, 4 years
Have a method of
calculaCng contribuCon
and therefore shares
Fire founders if they
arent performing (that
is what vesCng is for)
Pick people you can
love, and need now

Donts:
Mix founder shares with
invested shares (when
people put in money,
give shares)
Use deferred salary as
cash-equivalent for
equity buildup
Bring in co-founders
with lots of overlapping
areas of experCse


!
p
a
r
C

s
i

y
t
i
l
a
u
q
E

My Story About Employees


Benchmarks Bar

Im
Tyson!

Always Above Bar

My Employees

All
Poten;al
Employees

My Story About Employees


When I wanted
to get married,
my Co-Founder,
John York
said:

My Story About Employees


Tyson, if you feel it in your heart
to get married, do it.
But when you feel it in your heart
to get divorced, do that too.

RecommendaCons: Employees
Hiring:
Pay employees with cash
Equity, no cash is a Co-
Founder
Equity must vest with a
cli
Most employees are .1-.
5% VPs are .7-1.5%
If you nd you soul-mate,
get them!
You have reservaCons,
dont hire them!

Firing:
Always make sure the
employee knows what
you are expecCng
(metrics)
Always know why you
are ring and dont
sugar coat
Consult a lawyer
Clean cuts are best
Assume they will steal
from you

Tool: What to Pay Higher Level People


Excerpts From 2010 EnY CompStudy Survey

2010 CompStudy: Founders

2010 CompStudy: Founders

2010 CompStudy: Non-Founders

2010 CompStudy: Non-Founders

Im With Stupid ->



(Goja
love advisers)

Advisers Reality

They will not raise you money


They are oBen bad ROI even when free
They are great sounding boards that is free
If you need them more than a few hours a quarter, do a
specic paid project with hours and results

They are best if they invest their


own money


Advisers that the market thinks are dumb or arrogant make
you look bad

Advisers When & What to Pay


Specic project with specic results:
$100-300 per hour

If also a board member:
.1-.5% of equity if board
plus 2-10 hours per month commijed

Advisers What Should They Be


True Mentors

Detailed understanding of your and your business

Scarce not more than a few

Representa;ve of who you are, and your business

Conclusion
You can pick your friends/employees/co-
founders/advisers, and you can pick your nose
but might get a bloody face.


And remember, only you can prevent
Tyson
M cDowell
asshole.
tmcdowell@avadynehealth.com
858-717-4641

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