Fairly sharing future profit in a startup

Question

Hey there

I recently graduated and joined up with an old friend of mine, a previous ebay power seller, in business. I've come up with a pretty novel ecommerce idea and with a somewhat makeshift office and perhaps a few thousand pounds of startup capital, we're going to make it work.

The thing is we need more people to help build this but don't really have the money to pay them at the moment. The good thing is I know many people (programmers and otherwise) enthused by the idea and are willing to help build the project.

They all have different amounts of time and commitment and some even money to give, and although it hasn't been talked about yet they will surely be expecting (and of course entitled to) some reward if and when the company is profitable.

So I need to sort this out and get it into contracts so there are no problems later; the problem is how to share the money.

I need a model which will:

• Reward people fairly on what they put in
• support us enlisting the help of more people if necessary
• take into account that this is my baby (idea)
• take into account that people (me included) are working on this project with no wage for a period of time and essentially taking a risk

So what would you guys expect if you decided to help me on my project, or what would you think reasonable to do if you were in my position.

Any suggestions will be greatly appreciated especially the practical ones.

Zenna

Update

I'm really looking for practical mechanisms which you guys think may be reasonable. For example the ones I considered were giving a % based on time put in, but of course there are loads of problems that go with that. So I'm wondering what you guys think.

Answer 1

Get a lawyer. Whatever you do, write it down and get everyone to sign it. You'll avoid a lot of hard feelings that way. Don't depend on any verbal agreements or implicit understandings, because those are sure to go awry.

Answer 2

This sort of question is likely to get better responses at HackerNews.

Answer 3

I'm not sure how this relates to a start up but my favourite paper on team rewarding is by Mary Poppendieck. She talks about the perils on individual rewards and how to focus more on team compensation.