The Slicing Pie Handbook: Perfectly Fair Equity Splits for Bootstrapped Startups

by Mike Moyer, Noam Wasserman (Foreword)

Entrepreneurs and early-stage company participants get taken advantage of so frequently that we hardly notice. Bad equity deals are the rule, not the exception. The Slicing Pie Handbook outlines a framework for perfectly fair equity splits for early-stage, bootstrapped startup companies. Based on the dynamic equity model popularized by the book Slicing Pie, a formula in use by entrepreneurs all over the world. The Slicing Pie Handbook will help you determine the right share for people who contribute the things you need to start your company including help, equipment, supplies, rent and even credit. You will learn how to fairly allocate equity when people contribute and how to fairly recover equity when people leave the company.

Genres: Business, Entrepreneurship, Nonfiction

214 pages, Kindle Edition

Published September 20, 2016

About the author

Mike is a career entrepreneur and investor who has started and run companies in a variety of industries ranging from clothing manufacturing to marketing technology. Today he runs Slicing Pie, a SaaS company that helps startup founders create perfectly fair equity splits, and MosquitOasis that makes pop-up mosquito net tents for kids.

He teaches entrepreneurship at Northwestern University and has held other faculty appointments at the University of Chicago Booth School of Business and MIT. He has written eight books with a focus on business and entrepreneurship including Pitch Ninja, The Slicing Pie Handbook, and Will Work for Pie.

He has an MS in integrated marketing from Northwestern University and an MBA from the University of Chicago. He lives in Lake Forest, Illinois with his wife and three kids.

Reviews

[Etiene Dalcol · Rating 3 out of 5]

Extremely useful book that could have been written in 5 pages tops.

Here's a summary: Count peoples hours into the project, multiply by what would be their hourly salary and some risk multiplier (2x). Count people's financial investment and multiply by 4. Sum everything and get the resulting % from there.

[Victor · Rating 3 out of 5]

Could have been a blog post. Or the documentation of the Slicing Pie app. The author spends more time selling the benefits of his method than delivering it.

Some takeaways:
- equity is proportional to risk
- milestone-based vesting rather than time-based vesting to keep people motivated while obtaining results
- “slices” as a function of the fair market value of contributions (cash x4 and non-cash x2)
- the fair market value of time is equal to the opportunity cost of salary

I really wonder whether some startups have implemented this fully? And with what results?

[Filip Huysmans · Rating 4 out of 5]

Good book on how to divide equity not on guessing the future but at how much a person actually puts at risk for the startup. Reading this made me realise that we were already adopting this in some form in our own startup so for me it was easy to accept the authors model. I can see why some people would hesitate to use this but then again might be purely out of selfinterest.

Very interesting topic on how to minimize absentee owners and to recover parts of the pie.

Easy to read, good examples and not too long, this books covers a good portion of knowledge on how to divide equity in your own startup inc some tuts of its own software package (we don't use this ourselves so no opinion on that)

[Kianoosh]

Zero Star

[Saied · Rating 3 out of 5]

کتاب برای شخص من تو جایی که ایستادم، یعنی شرکتی که مراحل ابتدایی شزوع به کارش رو پشت سر گذاشته خیلی کارا نبود. ولی تصور می‌کنم اگر شخصی تصمیم داشته باشه کسب و کارش رو شروع کنه و تصمیم به داشتن شریک داشته باشه و دست بر قضا پول زیادی هم برای شروع نداشته باشه این کتاب می‌تونه براش واقعا مفید باشه مخصوصا با ابزارهایی که استفاده ازشون رو یاد می‌ده

[Toby · Rating 2 out of 5]

Pros:
- Sensible general model to calculate risk vs reward with an eye to fairness for unfunded early companies.

Cons:
- A lot of content is a direct advertisement for the author’s legal service and online service, so heavy on the sales pitch that the advice starts to feel like a health supplement scam.
- Makes wildly broad claims that “every” company can “always” benefit from this approach. That’s obviously not true. The simplest counter-example is the claim that all at-risk value is knowable, and therefore you can count slices “perfectly” based on risk. Maybe fair for cash salary, but not when considering common opportunity costs like illiquid equity. If you could perfectly value that, you should start an investment fund ASAP, because you’d have perfect knowledge of risks and rewards and therefore be a wildly successful investor!

Questions:
- There are definitely some unanswered tax implications that come along with this approach. What are they?

Summary:
This is a good baseline model for new traditional small businesses. For bootstrapped and not-yet-funded startups (defined by going for high growth), I agree it’s better than arbitrarily assigning ownership. For a great many startups, this overlooks complexities and realities of the market.

[Paul Dlugosch · Rating 4 out of 5]

The author presents a compelling case to solve an age-old problem. I am at the critical juncture where the pie must be sliced and allocated to founding members of a new start-up company. I was conteplating the 'fix and fight' method but am now reconsidering that decision. It is so important to get this allocation done correctly and the author has presented a method that should be agreeable to all. The model is build on a foundation of fairness and also on the premise of decent moral behavior. It is not certain that all parties affected will act morally but if not, this method will help identify those who are driven by different motivations.

I'm not sure I agree with every aspect of the model, but it is one of the better methods I have seen and the 'Slicing Pie' method should be given serious consideration a the method to share equity/profits in your bootstrapped startup.

[Shilpam · Rating 1 out of 5]

Overtly hyped book full of promotions

Initially i thought that we will have some understanding of the topic in a lucid way that's why the author have maintained a slow pace on topics but seems like he was always on the head of the topic and never reached to the tail. The topics were just very top level. Maybe this is a book for someone who does not know about the funding jargons as it is full of it but if you want to know more, you have to search yourself as mentioned by author multiple times.
There is lot of repeated stuff and even if you skim certain pages, you won't miss anything. Later chapters were overtly promoting his own sites and links and anyone can lose track. The only gist of the book was at the end as a table and that too was not comprehended properly. So AVOID reading it if you want to know deeper on this concept.

[Jacek Królikowski · Rating 4 out of 5]

Similar content-wise to the "main" Slicing Pie book, with a bit more stress on the bootstrapping situation and a small attempt on describing how one could try to make the Grunt Fund a legal thing.

It's missing the "Summary Calculations" table from the main book, but it works all the same.

I have similar complaints as with the main book (see my other review for those), but reading this one second somehow helped me believe I can retrofit the models into an existing enterprise. I appreciated the description of when the "pie" gets "frozen" too.

I don't love it, but it's still the best book I read on the topic, soo... 4 stars ;)

[Michael Hernandez · Rating 5 out of 5]

Excellent and timely information

I recently started a company and was talking to a friend about loaning/investing some cash. He was interested in a percentage. When I asked how much, he replied whatever is fair. I told him it would be tough because I didn't have revenue and probably wouldn't for a while. Then, I remembered this book. Glad I did. Great read! I meet with him in 2 days and I think he will find this more than fair. Thanks!

[Pascal Wagner · Rating 2 out of 5]

This book has good ideas in “theory” but in practice if you’re building a VC backed company it feels as though you need to recreate the wheel, it’s impractical and there is a lot of room for error.

I’d rather put effort into making the business work and copying the existing and proven models everywhere else.

[Milton Galvis · Rating 4 out of 5]

Propuesta alternativa para dividir de manera equitativa los rendimientos de un emprendimiento teninendo en cuenta el aporte de cada persona (capital, tiempo, insumos, etc).

"A basic rule about investing is not to invest any more than you can afford to lose. If you can't tolerate the risk, don't contribute the cash!"

[Andrzej · Rating 3 out of 5]

The core idea is sound, a great approach to thinking about early stage companies equity. However, I feel these ideas could be condensed into a much shorter book, or an online cheatsheet. There's plenty of repetition.

It lacked real world examples – I'm understading that the "non-handbook" version of this book has more of those (I haven't read it).

[Gustavo Steinmetz · Rating 3 out of 5]

Interesting equity slipt approach. The content is good. But the author spends too much time selling the method, instead of showing it.

The immersion reading (🎧📖) isn't good for this book either. The audiobook and the ebook have a lot of differences, even being for the same version of the book. Making the immersive reading almost impossible.

[Omar El-Mohri · Rating 5 out of 5]

That's what you need to read and apply if you are in business with partner, want to be, or has been. This solved the equity problem most co-founders face. The solution is, a dynamic allocation of equity that changes with the risk and investment levels

[Domas Gerta · Rating 3 out of 5]

Good book and ideas on how to track contributions of people working on a startup and how to split equity in a fair manner. Could have been shorter, some things are repeated many times over different chapters.

[Rik Van Bruggen · Rating 3 out of 5]

The core points (slices in function of the risks taken, dynamic valuation instead of fixed...) are great. But the book very quickly gets lost in details that are probably only really helpful to very specific circumstances.

Still happy I read it.

[Ahmad Mhaish · Rating 4 out of 5]

Its somehow repeating ideas but includes key concepts to fair equity sharing

[József Szalay · Rating 5 out of 5]

Love the concept. Will read it again before I start another company.

[Chase · Rating 3 out of 5]

Content and ideas were very interesting, but the writing was poor. This book should have been run by a more thorough editor.

[Ian Carswell · Rating 5 out of 5]

If you plan on starting, funding, or joining a startup, this is a must read. Super quick read and easy to understand. Slightly repetitive, but top rating for the value.

[Parker Lee · Rating 3 out of 5]

A handy guide to ownership options when starting a company

[Manoj · Rating 5 out of 5]

I am using Mr. Mike Moyer's model, so far it's working well for my startup.

[Joseph Hargreaves · Rating 3 out of 5]

Great concept. Book needs editing though, goes round the houses too much. Felt like I read the introduction 5 times.

[Madeline Lucas · Rating 5 out of 5]

Really helpful for navigating startup equity/profit share splits and provides an easy to understand framework for creating a fair cap table.

[Pedro Henriques · Rating 4 out of 5]

Not a relevant book for everyone, but if you are building a startup, you should read this in the first week. Presents a fair, valid, independent approach to manage equity.

[Greg Loughnane · Rating 5 out of 5]

The book in 3 sentences:
Moyer provides a practical approach for splitting equity in early-stage startups that is aimed at radical openness, honesty, and fairness. The overall frameworks, designed to align people's "intent of being fair with their ability to actually pull it off," is made up of two sub-frameworks - allocation, and recovery - both of which can be calculated based on cash and non-cash contributions over time. The companion tool set - including the free slicing pie excel spreadsheet -can be downloaded at slicingpie.com, along with many other resources to help you implement Moyer's ideas in your company.

My personal commentary in 3 sentences:
I love this book as a guide to keep close at hand for those days that you find yourself in one of many "founder's dilemmas" that require you to answer equity questions. When reviewed at a high-level so you know when you might need it in the future, it will sit until the day that you really need it, at which point you'll agree that it was a 5-star read that was worth it's weight in gold. This book must be used tactically, and to truly read the book you probably need to (at least once) create your own slicing-pie equity projection spreadsheet, for a real-life company, that you're actually talking to about equity splits.

[Segovia Smith · Rating 5 out of 5]

Entrepreneurship That Just Tastes Great - As a cereal entrepreneur having started, closed and sold many businesses over the past 20+ years, I thought I had seen it all. When I was first introduced to the concepts Mike puts out on slicing pie, it was as if I had been attempting to navigate the wide world of start-ups and entrepreneuring with one arm tied behind my back.

Mike Moyer breaks down the concepts of "Fair and Square" in such simple terms that it's hard to think that people would ever go for the traditional 50/50 or equal thirds splits after reading this book. The ideas presented in this book are so profound it's taken the world by surprise. And it's no wonder this book as become such a bestseller. Once upon a time the world was believed to be flat. This book will change the way humans look at treating each other with respect when it comes to dividing up equity in a business.

This "Handbook" is the perfect condensed version to hand off to your would-be business partners before you settle in for the long journey together. It's got just enough to cover the basics, but it's under 4 hours which makes it something people can get through and complete in an afternoon.

[Cristos · Rating 5 out of 5]

More focused, easier to understand

I've read the original slicing pie, but I like the handbook better. Besides some small updates that come from the author's increased experience of using the model, I think the terminology in this version is simpler and more consistent. I'll definitely be recommending the handbook to my cofounders instead of the original book.

The author mentions an online tool, but isn't quite as transparent as I think he should be about pricing -- at the time of this writing, the pie slicer software is $10/month or $100/year. Although I think that's a reasonable price, it's easy to get the impression from the book that the pie slicer software is freely available to you. That is not the case (but there is a trial period). I've been implementing the model with just a couple of spreadsheets, so it's certainly easy enough without the specialized software, too.

[Nik Anderson · Rating 4 out of 5]

I am right in the middle of starting a new venture with friends and we were wondering how to fairly split our business equity. We all wanted to make sure we got our fair share, but how do we accurately measure the effect we have on the business. And if someone does not pull their weight or leaves the venture completely, how do we rectify that? I asked those questions to a mentor and he pointed me to this book. Those questions and more were answered by this book.