13. Positive Procrastination


History doesn’t repeat itself but sometimes it rhymes…

There is by definition only 100% of the equity pie to be split right now, but remember, more can be created in the future.

RULE 15:
More equity can be created in the future.

At any time in the future, with the agreement of half the shareholders, the company can create new shares (or options or warrants) and distribute this new equity to whomever it wants.

This is how new shares are created for investors, for future employees, for acquiring companies via equity, etc.

When these new shares are created, the existing owners have their ownership equally “diluted.” For example, if there are 1,000 shares in existence, 500 owned by Adam and 500 by Betty, and the company creates another 500 shares for Charlie, then Adam and Betty are each diluted from 50% ownership (500 of 1,000) to 33% ownership (500 of 1,500).

With this in mind, you need not try to predict what will happen across the next four years. Any or all of the team members can be granted more shares in the future for work that they do in the future.

Thus, if you think a recruited team member might step up to lead the sales team versus just be a salesperson, you can promise to renegotiate the percentage in the future, when that decision is made, rather than now.

In other words, not all equity decisions need to be made right now, just enough to keep the team together and the company moving forward.



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