Dividing shares is seemingly the simplest and in practice one of the most complex tasks you have to decide. No matter who we partner with and how committed and committed they are, over time, the conditions, limitations, facilities and capabilities of the partners may change. Therefore, a stock divided by previous assumptions (static stock splitting) can no longer be a fair and satisfactory agreement. In this book, the division of shares is likened to an apple pie (cake) from which each person demands his share.
What most of us have done so far in the field of stock splitting is static stock splitting, which is done at a specific time and with the assumptions, statistics, numbers, figures and agreements of the moment, and there is no forecast or solution for the time when these criteria and Factors change. Also, we do not think about the consequences of changing the situation, mainly due to our inexperience or the busyness and pressure we face when starting a startup.
The book “Dynamic stock division guide” by Mike Moir Teaches how to distribute stocks fairly to those startups in the framework that are growing and growing as bootstrap (starting with very little capital). In this book, Moir teaches a framework that allows each individual to receive a fair share based on the data they provide to the company’s team to form a business.
Introducing the book “Dynamic Stock Sharing Guide”
One of the first problems for startups and emerging businesses is the division of cakes (shares) based on the value of the presence of each person and their contributions. This method, due to the lack of a clear pattern, often either in the very first days, in the absence of agreement between the founders, prevents the formation of the team and the business, or even in case of unprincipled and unfair agreement, will later become critical. For example, in recognizing the weight and value of the contributions and actions that each person makes in different situations, including the crisis for the company, we often make cognitive errors as much as the anxiety caused by the crisis we are in. In order not to get excited about contributing and contributing, this methodology prevents many mistakes and offers a fair and transparent framework.
After years of experimentation, Mike Moir has proposed a way and method of stock splitting that reduces shareholder litigation problems and provides a clear framework for applying it. In addition, Moir gives you the tools to use his model easily. The book encourages readers to consider what dangers they will face. Discuss these risks seriously with your partners first, then refer to the book’s suggested method and see how your business will help you in critical areas.
Most people, even the most intelligent and experienced people with smart goals, work hard to achieve the right way to distribute shares fairly; Because numerous discussions about this type of division make it almost impossible to find the right model. There are countless reasons why old methods cause many problems; But the main problem is that most people use the established method. This method is based on the value that will be created in the future.
Predetermined division means that stock packages are distributed in a predetermined manner based on the extent to which the company has a forecast of profitability for the partners. The company must be optimistic; But predicting the future correctly is almost impossible for humans. Combine this with the impossibility of calculating value added. Now you have a great command to fail. Of course, when things do not go as they should, the team has to go back and sit at the negotiating table again. Their new method will be based on their new prediction, which is just as wrong as the old methods.
This trend is also present in the early days of the company. Each time, these repetitive negotiations are more frustrating than ever and put the partners more at odds. It is basically a matter of who adds more value to the company and how much each one deserves. Each time there will be a number of lengthy lawsuits. All these arguments become sticky and leave the fundamental problem, that is, the predetermined division of shares, unresolved. This process will only cause wars and fights and conflicts. Sometimes people trust and adhere to traditional standards; A standard that says how much each person should contribute. Estimated book accounts are always available; But the problem with the established model remains; Unless everything goes according to plan; Otherwise, another lawsuit will arise.
Dynamic Shares Division تق presents a new way of thinking fairly in partnership that critiques old ways of thinking about equitable distribution; Because traditional methods do not work in startups. People try to use models; But they never come to a fair conclusion. “Dynamic stock splitting” is a comprehensive solution and a way to implement a fair and dynamic stock split. Dynamic stock splitting has two main components:
- Assign a framework that specifies how much everyone should contribute.
- An alternative framework for when someone leaves the company.
This model is dynamic and sometimes changes over time to stay fair. This section sometimes causes people anxiety; But eventually, its meaning will be understood. Research shows that companies that use a dynamic model are better than companies that use a static model. Some also think that the fixed model gives more confidence to partners. Have you ever encountered the following questions when distributing shares:
- Is it possible to start a business and startup with little or no capital?
- How many shares should each of the company’s founders receive?
- What percentage of your stock do you bring to the startup?
- Should the idea owner get the most shares?
- The owner of the idea must be the CEO?
- What happens if someone leaves in the middle of work and leaves?
- Are the results of our first day still the same as the results of our next six months?
- What will be the executive guarantee of agreements and division of shares between individuals?
- Under what contract should we give shares to the investor?
In this book, all these questions are answered and practical tools for their implementation are provided. To succeed in any startup and business and prevent irreparable problems, reading this book is recommended to all the founders of large and small startups.
Excerpts from the book “Dynamic Stock Sharing Guide”
“Do not close the contract!” This was my reaction when in 2008 I saw the stock split calculations with Thomas Hellman. Personally, I had problems setting up teams; But now I have documents from thousands of American startups. Documentation that says: The most common way of dividing shares in a company is actually the most dangerous way possible. More specifically, we found that 73% of startups split their shares in the first month, leading to a lot of uncertainty in their portfolio, strategies, business model, and individual plans and responsibilities. Most teams spend little time negotiating shares in order to avoid stressful stock-sharing negotiations; As a result, they divide the stock quite steadily, which virtually eliminates any possibility of a balance.
We attribute the term “quick contracting” to teams that distribute shares in this way. Our analysis shows that such teams face a clear and severe financial error after the first investment. This error manifests itself in the reduction of capabilities or poor valuation, assuming everything remains the same. Of course, what has been said is financial problems. Numerous structural tensions will also arise from such incorrect stock segmentation, which will lead to greater problems.
If you are just starting out in business and your partner wants a quick contract, you may want to get rid of it so you can see what is important in practice. Do not tolerate pressure; Because even when a startup has a smart idea, it can stop completely with such decisions. Of course, there are startups that, despite splitting static stocks, have succeeded. Startups like zipcar with CEO Robin Chase Or Facebook with management Mark Zuckerberg And his partnership with Edward Saurin; Of course, the former angered the CEO and the latter caused numerous legal disputes between the partners.
On the other hand, countless startups that survive the catastrophic catastrophic stock market catastrophe fail for this reason. In fact, how the shares are distributed is the most important decision that the partners will face; So make sure your decision to statically split your stock will increase your chances of success, not failure. Also, do not pay attention to the spatial expectations of your colleagues as entrepreneurs, at least in the first days. Naturally, all unsuccessful experiences like Robin and Mark split the stock when they were not going to have a big problem.
How can founders prevent destructive anger and legal tensions and legal problems that occur through improper distribution of shares? Robin Chase realized that he had to share a more authentic and pure element than the share; An element that remains constant in the absence of uncertainties and can also influence its consequences. Perhaps the purest possible way is to divide the capital consumed by the share. In the United States, capital expenditure is usually based on the time spent by individuals; But 10% of teams prefer to use capital based on roadmaps and milestones.
We live in an age where entrepreneurs and new corporate partners are being abused, and we do not pay much attention to this issue. The unfair distribution of shareholders’ rights has become law and does not occur only in a particular situation, and justice is rarely done. In fact, everyone wants to be fair; But in practice they do not observe this issue. Dynamic stock splitting is a fair model that allows individuals to put the intention of fairness into action.
Imagine you are playing with your friends. You and your teammates do not know if you can win or how much you can win. In other words, the future is unpredictable, and the only thing you can be sure of is that what you have shared may be completely lost. If you make a profit and the amount of your investment is the same, you divide it by fifty; But if, for example, you bet twice as much on your partner, is the division of fifty-fifty still fair? Probably not, but 75% of what you get is yours; Because 75% of the risk was for you. In fact, this is the nature of the “dynamic stock splitting” method. If you have an account of the amount of investment of individuals, you can calculate exactly what the share of each.
Mike Muir, author of The Dynamic Stock Sharing Guide, offers what every startup and business needs to know. The framework taught in this book helps each individual to receive a fair share based on the input he or she provides to the business team. Research shows that dynamic stock splitting is the best way to prevent the issues and conflicts that growing startups face. If you are planning to start your own startup and have very little capital, reading this book will open up new avenues for you. Also, if you have started in the past, reading this book gives you a new horizon and reading it can definitely reduce the potential problems you face. It also explores a new way of thinking in partnership. In Dynamic Stock Sharing Guide, Mike Muir offers the best way to split stocks for startups with little money.
About the author and publisher of the book
Mike Moir is a professional entrepreneur; Someone who started businesses empty-handed, connecting startups to commercial companies. He helped many people start their own companies, increased the startup capital by millions of dollars, and helped increase the sales of startup teams. He has worked in a variety of industries, from vacuum cleaners and classic home motors to beverages. He holds a master’s degree in integrated marketing communications from Northwestern University and an UMB degree from the University of Chicago. He teaches entrepreneurship at both universities. Moir lives with his wife, three children and a pet in Likfarst, Illinois.
The book “Dynamic Stock Sharing Guide” was published in 2012 with the full title Slicing Pie: Funding Your Company Without Funds. New publication of this book with translation Kiarash Abbaszadeh، Mahyar Ahmadpour، زهره لورک And محمد جلیلی It has been published in 218 pages.