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START-UP PRE-NUPTIALS 
AVOIDING 
FOUNDER MELTDOWN 
10 TOPICS TO DISCUSS FIRST 
https://www.flickr.com/photos/blacktanso/
Fighting with your co-founders sucks
Yet founder meltdowns are 
incredibly common in the start-up 
scene
Heck! Facebook’s founder 
squabble was so bad it become a 
feature-length move called The 
Social Network!
They typically happen about 2 or 3 
years in
when somebody starts thinking that 
somebody else is not putting in 
their fair share of sweat
or that the strategy is just wrong
or life priorities are pulling you apart
or when the thrill is just gone
Whatever the case, it is almost 
always emotional, irrational, and 
painful
That’s why you should always 
prepare a “prenup” for the worst, 
when things are the best
All founder teams should have a 
heart-to-heart and produce a 
signed founders contract at the 
outset of any venture
Here are 10 things that you should 
discuss and agree upon before 
signing
0 1 SHAREHOLDING 
How will we divvy up equity, assign 
vesting rights, and why? Be 
quantitative here. It needs to make 
sense. Don’t just split it equally among 
friends. You are acting on behalf of the 
firm’s best interest here.
0T I2ME AND PRIORITIES 
How much time will each of us 
explicitly commit to during years 1, 
2, & 3? 
What are known, acceptable other 
priorities (and how will we agree to 
schedule them)?
0D E3LIVERABLES 
What are our shared goals for the 
company? 
What are each of our SMART 
milestones and deliverables (as 
defined in a job description)? What 
if one of us does not deliver?
0L O4ANS & CASH INJECTION 
How much $ will each of us put in? 
What if we need a cash injection 
from founders mid-stream? Who 
pays what, how will we determine 
valuation, and what happens if one 
of us can’t pay?
0S A5LARY 
How much will everyone be paid? 
What happens if we need to adjust 
up or down?
0R E6TIREMENT 
What if one of us has an accident, wants to 
leave or relocate? Needs to take another job 
to survive? What if that other job is 
competitive? What if it turns out that we hate 
each other? 
What is expected in terms of leaving? How do 
we deal with shareholder loans & shares?
0T IE7 BRAKING 
What if we disagree on strategy or 
tactics? How do we make a final 
decision?
0R E8ALITY CHECK 
What are each of our known 
strengths and weaknesses? What 
are we each not prepared to do?
0E X9ITS 
What type of exits are we OK with? 
How will we deal with the sale of 
shares (see standard shareholder 
agreement terms like tag-alongs, 
drag-alongs, right of first refusal, 
etc)?
10 WORST-CASES 
SCENARIOS 
What is the process for dealing with 
a breach of these agreements?
good luck
be honest
be respectful
listen to each other
But know that if you cannot 
candidly discuss these 
hypotheticals and agree upon 
resolutions when things are good, 
then something smells fishy!
Selena Sol asks….. 
SHARE THIS 
DECK & 
FOLLOW ME 
(please-oh-please-oh-please-oh-please) 
http://www.slideshare.net/selenasol/presentations 
selena@selenasol.com 
http://www.linkedin.com/pub/eric-tachibana/0/33/b53 
Please note that all content & 
opinions expressed in this deck 
are my own and don’t necessarily 
represent the position of my 
current, or any previous, 
employers
CLICK HERE FOR MORE!!!!

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Avoiding founder meltdown founder pre nups

  • 1. START-UP PRE-NUPTIALS AVOIDING FOUNDER MELTDOWN 10 TOPICS TO DISCUSS FIRST https://www.flickr.com/photos/blacktanso/
  • 2. Fighting with your co-founders sucks
  • 3. Yet founder meltdowns are incredibly common in the start-up scene
  • 4. Heck! Facebook’s founder squabble was so bad it become a feature-length move called The Social Network!
  • 5. They typically happen about 2 or 3 years in
  • 6. when somebody starts thinking that somebody else is not putting in their fair share of sweat
  • 7. or that the strategy is just wrong
  • 8. or life priorities are pulling you apart
  • 9. or when the thrill is just gone
  • 10. Whatever the case, it is almost always emotional, irrational, and painful
  • 11. That’s why you should always prepare a “prenup” for the worst, when things are the best
  • 12. All founder teams should have a heart-to-heart and produce a signed founders contract at the outset of any venture
  • 13. Here are 10 things that you should discuss and agree upon before signing
  • 14. 0 1 SHAREHOLDING How will we divvy up equity, assign vesting rights, and why? Be quantitative here. It needs to make sense. Don’t just split it equally among friends. You are acting on behalf of the firm’s best interest here.
  • 15. 0T I2ME AND PRIORITIES How much time will each of us explicitly commit to during years 1, 2, & 3? What are known, acceptable other priorities (and how will we agree to schedule them)?
  • 16. 0D E3LIVERABLES What are our shared goals for the company? What are each of our SMART milestones and deliverables (as defined in a job description)? What if one of us does not deliver?
  • 17. 0L O4ANS & CASH INJECTION How much $ will each of us put in? What if we need a cash injection from founders mid-stream? Who pays what, how will we determine valuation, and what happens if one of us can’t pay?
  • 18. 0S A5LARY How much will everyone be paid? What happens if we need to adjust up or down?
  • 19. 0R E6TIREMENT What if one of us has an accident, wants to leave or relocate? Needs to take another job to survive? What if that other job is competitive? What if it turns out that we hate each other? What is expected in terms of leaving? How do we deal with shareholder loans & shares?
  • 20. 0T IE7 BRAKING What if we disagree on strategy or tactics? How do we make a final decision?
  • 21. 0R E8ALITY CHECK What are each of our known strengths and weaknesses? What are we each not prepared to do?
  • 22. 0E X9ITS What type of exits are we OK with? How will we deal with the sale of shares (see standard shareholder agreement terms like tag-alongs, drag-alongs, right of first refusal, etc)?
  • 23. 10 WORST-CASES SCENARIOS What is the process for dealing with a breach of these agreements?
  • 27. listen to each other
  • 28. But know that if you cannot candidly discuss these hypotheticals and agree upon resolutions when things are good, then something smells fishy!
  • 29. Selena Sol asks….. SHARE THIS DECK & FOLLOW ME (please-oh-please-oh-please-oh-please) http://www.slideshare.net/selenasol/presentations selena@selenasol.com http://www.linkedin.com/pub/eric-tachibana/0/33/b53 Please note that all content & opinions expressed in this deck are my own and don’t necessarily represent the position of my current, or any previous, employers
  • 30. CLICK HERE FOR MORE!!!!