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Need Startup Resources – Look into Dynamic Equity Allocation

Are you looking to take your startup to the next level?

The Start of the Problem

As for me, things have started simple enough – from being inspired by 200 years’ worth of improving the growth of plants using electricity, I started off thoroughly researching the topic, writing a book on it, put it up on Amazon, and then proceeded to turn this into something more.  Along the way I found that there has been a need to get more capital to get things going.  After getting a little media attention, people started coming out of the woodwork to offer some support.

I was open to it, but once I started meeting people and feeling things out, things started to get tricky… because in my mind, I want to be fair – giving people what they deserve, but at the same time, I started to get completely overwhelmed – how does one structure a company to best handle the taking-on of investors or just people who want to contribute “sweat equity”.  In earlier business dealings, I was involved in a 50-50 partnership with another company but came across the common problem of the other party not pulling their share of the weight.  It was extremely frustrating to put in all of your efforts into making something happen, but the other guy only put in a fraction.  Now had we agreed to a smaller percentage, that may have been fine, but then he wouldn’t be incentivized to work any harder because his share was fixed.  In the end, I ended up breaking the partnership up and we went our separate ways.

A Solution Emerges

Like I said before, this is an all-too-common occurrence in startup circles, and for the past few months I’ve been wracking my brain on this dilemma rather than spending my valuable creative energy on making progress.  Until one day I came across an answer posted in a forum answer on Quora (sorry – lost the original link)… The poster, Mike Moyer, posted a method that he was promoting in a book he wrote called “Slicing Pie“.

That said, I got a copy of his book and found it to be pure genius.  I believe he attributed the original idea to Harvard economist, Noam Wasserman, who I originally heard about while listening to one of my favorite podcasts, Stanford University’s ecorner or Entrepreneurial Thought Leader Series.  It turns out that he wrote a book on the topic, called “The Founders’ Dilemmas:  Anticipating the Pitfalls that Can Sink a Startup“.  When I first heard this back in 2012, it was the very early days of Electric Fertilizer, and while I was thinking that I could use this information someday – I just filed it in the back of my mind and forgot about it.  What a coincidence – it’s a great feeling to have something so valuable come back full circle, just when I needed it most!  So how does it work?

Slicing Pie – The Basics

In it’s essence, slicing pie, or dynamic equity allocation, is based on the idea of being ‘fair’  – how do you give away equity in a way that’s fair for everyone involved?  It turns out, that the best way may to do it in a dynamic manner – so it changes over time.  So if you end up with a person on your team who is a star performer, but life happens and they get married, have kids, and need real source of income, then this type of arrangement would allow them to build up company equity, and in their spare time, assuming that they still want to contribute, can continue to build it up.  The same thing goes the other way – if the employee wants to feel things out by going slowly.  As the company builds traction, they can increase their contribution and be compensated accordingly.

In it’s essence, it comes down to having everyone keep track of their hourly rate.  Everyone’s rate is multiplied by a common risk factor of 2x.  If there is a cash contribution, the investor gains equity at a rate of 4x the amount spent (not given) – which I think is great because it gives the founding team the ability to control the equity that is given away through frugal use of funds.  Lastly, there is the event where everything is locked in stone, where everything becomes official – and he outlines 3 scenarios where that event should occur.

Summary

I am sold on this concept and think that it’s a fantastic yet simple system that should be included in one’s investment or hiring considerations.  It is truly a flexible system in that it makes bringing on new people or investors formulaic.  Taking the emotions out of it makes a huge difference.

To those reading this… have you ever heard of this?  Ever tried it out?  I would love to hear your comments or stories!

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Natural Electricity and its Beneficial Effects on Plants

I just finished creating a new slideshow… See below.

http://www.haikudeck.com/e/45fmUwmve8
Created with Haiku Deck, presentation software that inspires

What do you think? Let me know in the comments!

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Local Harvest

While it’s quite late in the season – in fact, the season is long over now, we just harvested our last crop of the season – Loofa!  Actually, we harvested it much earlier – back in August when we noticed a few huge cucumber-like vegetables growing along our garden fence.  Since we lost the identification tags, we didn’t know what they were.  In fact, we assumed that because the tags were lost that the seeds didn’t take.  Back to the harvest – when we cut them open, we didn’t know what they were since they were hard on the inside – they didn’t seem edible, nor did they have any strong taste to them.   So, we took them and threw them away into our garden.  Interestingly, just last week we were in the garden looking around and noticed loofa-looking things in there.  check out the pictures (to be added soon).

Also, since learning about the local food movement, we’ve made a lot of progress in creating our own products!  Here’s a list:

  • Comb honey from our 5 hives (mostly top-bar style) via 2 Tanzanian TBHs and 3 Langstroth hives.
  • Daily egg production from our flock of hens (varies between 6 and 20).  The high variability is due to possums, raccoons, and foxes.
  • Organic fruit and vegetable harvests
  • Home-brewing dandelion wine in both filtered and unfiltered varieties.

Next year we plan on doing more of the same, expanding the scale and changing a few things.  I want to shift to more traditional frame-based beekeeping to increase our honey yields, make a 5x increase in the dandelion wine production while experimenting with different recipes, grow more loofa, and start growing a few varieties of bamboo both as a privacy fence, but also for construction materials and edible bamboo shoots.

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LETS Create the Our Own Weath

In these days & times we seem to be surrounded by news of company layoffs, stock market tumbles, and continuing economic hardships from a declining economy.   Yet despite all of the bad news surrounding our collective finances, perhaps there can be another way to live our lives in a productive, fulfilling, and satisfying manner which can provide all of the basics that we need, plus some gravy on top of it all…

Consider an alternative, i.e. complementary currencies – a number of systems are presently in existence with members offering a wide range of goods and services that could help you with meeting your daily needs, and making your life easier.  One such system is called the Saint Louis Community Exchange, http://stlcommunityexchange.appspot.com/ founded by David Wechsler.  While talking to various people and hearing about all of the interesting trades that people were doing individually, he pondered the possibility of creating a system where people could trade with each other using an intermediate system that would keep track of credits that people used when bartering with each other.   This would allow more complex trades to take place, i.e. If you want some used sports equipment, and the seller wants a video game system that you do not have, but your friend does – this type of system would help facilitate trades like that, but in a much simpler way than you would expect:

The St. Louis Community Exchange, also called a LETS or Local Energy Trading System, is a world-wide system that encourages members to trade for something generally called ‘Community Credit’, meaning that if you take from the system, you are obligated to give back to the system in some way or form at some point in the future.

If we open our minds to the limitless possibilities of abundance in our lives, then we can see that before our eyes we have options before us that can limit or even remove the discomfort from the ‘economic downturn’ that’s occuring all around us.  By staying positive and offering some of the wonderful skills that you all have to your community, together we can create a vibrant & sustainable complementary economy to keep our lives running with grace and ease.

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Smart Grid Re-Education: Part I

In my search for other employment opportunities, I have decided that I can’t just ride on the heels of my past work experiences at Aclara.  I need to dig my heels in a bit more to get a broader perspective on the industry in general, and step away from the narrow TWACS-based industry viewpoint.  In saying this, I’m not sending a jab to Aclara/DCSI, but rather stating that I am recognizing my need for looking at the bigger picture.  What does smart-grid mean anyway?  In my previous world, it only covered “Field Area Network”, i.e. AMI/AMR in the distribution network.  In the brief amount of time I’ve spent researching the big picture, I see that it’s alot bigger than I expected!

The Smart Grid space can be divided into multiple segments by various domain standards (i.e. protocol standards):

While this is a very technical standards-body based list, for me, it shows all the areas where I need to start looking to learn more.  Presently, my understanding is in the Field Area Network Domain as well as the consumer domain, in my working with ANSI C12.19 and C12.22 in relation to mapping meter data to our transponders and making the data available for use by the master station software.    Here’s an observation:  there are a whole lot of standards at play here!  Wow.  Talk about complex!

Furthermore, I was recently talking to a friend at Cisco who was telling me that there is a big movement going on in their organization to take a leading role in the Smart Grid space.  Now that I see things from a bigger picture with so many different network control systems from the field, to inter-grid control systems, to billing systems, substation automation, not to mention an umbrella of security, I can definitely see how they plan on making inroads into this market space.

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Welcome to my New Blog

Thanks for visiting.  The purpose of this new blog of mine is to document some of the things I’ve learned about and will continue to learn about.  I want to have a place where I can refer to regarding a wide range of topics that interest me, in addition to my presence on multiple services such as facebook, twitter, and LinkedIn.

Additionally, I hope to use this as an experimental platform where I can mash-in some of the technical things I’m learning about it useful and interesting ways.

Thanks for visiting and feel free to leave a comment.

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