We used a two tier system where the founders in the upper tier were allowed to put in more money and the founders in the lower tier were limited to about one third of that amount. This enabled us to begin full-time operation with 19 employees and carried us until we obtained outside financing.

The problem was that the president took an equal share with the rest of the top level founders and he should have had five to eight times as much because of his contribution. As the company became successful, the inequities began to eat at him and his actions eventually destroyed the company.

A non-intuitive but equitable division of the shares per the Founder’s Pie Calculator would have gone a long way toward alieviating this situation.

Frank Demmler is to be congratulated on taking a step in the right direction.

Frank Demmler:
Several weeks ago, we took a look at the founders’ pie. I noted that frequently the founding team divides 100% by the number of founders.
I also cautioned that this is the WRONG WAY!
I then went on to identify the factors that sho…