so one thing I havent quite got to grips with is how to reward effort and achievement in a new company. When I say new company, I really mean… one with not much cash!
The obvious (and only?) answer is splitting equity since thats all a startup company has.
the problem is, when you decide on initial shareholdings, none of the work has been done. so, whats the best way to reward effort? How does that work?
The solution I came up with, which may be pretty dodgy, is to initially allocate a tiny fraction of the equity, say, 1% to each partner. Then, as the work progresses, each shareholder gets rewarded based on concensus. I even came up with a cool spreadsheet that calculates this, based on each partners independent assessment of their contribution.
So, does this work? is there a better way? let me know you guys have any thoughts!