Thomas Green here with Ethical Marketing Service. On the podcast today, we have Mike Moyer. Mike, welcome.
Thank you very much for having me.
It is my pleasure. Would you like to take a moment and tell the audience a bit about yourself and what you do?
Sure, my name is Mike Moyer. I have a number of different businesses, a technology company and a camping gear company. I teach university at Northwestern University, entrepreneurship and entrepreneur marketing and sales and I write books and I do consulting. I do a bunch of different things like that. And I live in north of Chicago in a town called Lake Forest.
Thank you for the introduction. I said before we started recording, you’ve got a lot of stuff going on but you’re the kind of title if you like, of what your job is or what your preference is – Start-up Equity Split Master. So it’s not actually something that I have come across frequently. So would you like to go into what that is?
Yeah. Then the biggest part, I guess what I’m most sort of well-known for or enjoy the most, is equity split. The startup companies, you know, all entrepreneurs as dark companies that have partners struggle with this concept of how to spit equity. And traditionally it’s based on guesses about future events. So you and I go into business together and say, what are we going to do, which was our projections, what are we going to contribute? How much are we going to be worth? We guess the future and we decide an equity stake based on that. And because no one can tell the future, everyone’s always wrong with this calculation. But I can tell you exactly down to the penny how much ejected as much equity each person deserves based on a model that I developed about 10 years ago called slicing pie, which is what I believe, the only fair way to spit equity on the planet. So I said, you can split things fairly or you can split them in, he’s slicing pie or you can split them unfairly. So that’s what I do. A lot of most of my time doing is helping students, the students and, and cotton entrepreneurs split the equity startup company. Is that always at the company’s creation stage? Uh, it’s turned that bootstrap stage. So during kind of inception, two series A or break, even after a series A or break even, you can set a value for your shares so your stock has value before that is worth zero.
So it’s impossible to divide up zero. So I can give you 1000 shares, give myself 100,000 shares and we’ve given each other this exact same value because it’s worth zero. So there’s no way to tell how much equity we should get because it’s worth zero after the break, even a serious after the boot shop instead. You can tell how much there is of your work. So what’s important in the boot shopping stages, not the absolute value of the shares with the relative value of the shares. And you said it’s frequently or perhaps always incorrect. How close is it to being fair? If you will quote unquote mostly never the best way to understand it is through the analogy of a game of blackjack, you know how to play blackjack. Yes. So let’s pretend that you and I are going to play blackjack as a team, not as opponents, but we’re gonna play together as a team And we’re gonna split the winnings 5050 because we’re friends. So we go to the table and we each get a dollar on the same hand of blackjack or a found if you want and we don’t know if we’re gonna win, we don’t know how much we’re going to win.
We don’t know how long it’s going to take to in the future is unknown. We cannot predict the future. We’re optimistic or confident. We’re excited. We don’t know the future. So the dealer deals two aces so we’re gonna split the aces and double down. Is that cool? I think that’s a regular practice. Is it a good move, yep. So I’m out of money and you’re not so you put two more dollars down now you bet $3 and I’ve only been a dollar. The future is still unknowable. We don’t know what’s gonna happen in the future if we’re gonna win or how much we’re gonna win. How long it’s going to take you in? What we know for certain though, is that you bet $3 and I’ve got $1 If we win. Does the original 5050 split sound fair? I suppose. I mean taking it back over using that analogy. I suppose once the winnings were distributed out then that person would get their stake back and then after that they split the profit. Would that be? No, because you’re putting your steak at risk? You’re betting you bet three times as much as I did. So you should get 75% of that bet and I should get 25% of that bet. Your share of the winnings should reflect your share of the bets.
Imagine if you put $10 million dollars in and I put a dollar in, Would you give your $10 million dollars back in my dollar back? And then you spent the problems after that. After that? It would be unfair. Lien unfair, as you say. But one thing that is important to keep in mind about business, it’s unlike any other part of our lives. You know, politics and religion and criminal justice. Businesses quantifiable. We can count the inputs for business down to the exact penny. Nothing else is like that. So every business in the world buy stuff and sell stuff so you don’t run a business? Right? I do, yeah. Do you pay your bills indeed. Yeah. Did you know how much your bills are down to the penny? Down to the penny. So what’s the last thing, what’s the last bill you paid? you’re looking at them actually because I needed a pair of headphones for this interview, so I bought them. Yeah. So you shop for those headphones, you look to repair that you wanted, you shopped around for pricing and you made a decision about it. You paid the fair market value for that contribution that there’s headphones, right? So if you contribute those two are start-up company and I wasn’t, you weren’t reimbursed for them, then your bet is equal to the fair market value.
The price you paid for those headphones. It’s not magically worth more than that. It’s not worth less than that. Every time we contribute to a startup company, whether it be our time, our money, our resources, our supplies, or equipment, or relationships whenever we contribute and we’re not paid for our time or paid for our ideas or paid for our expenses were essentially betting the fair market value of that contribution on the future outcome of the company. So always your share the winnings tree based on your share of the bets. If we don’t do that, then your share the winnings is not based on your share, the best. I mean, you can bet more than I can and I’ll get more than you get out of the bed? That’s not fair? Everyone understands rationally and logically that your share the winnings to be based on your share the best. Just like in blackjack, it’s not a very ambiguous solution. Now I can add my narrative on top of that, I can say, oh but I’m a professional blackjack player, so I should be paid more. Well if you’re a professional blackjack player, how much are you worth to do consulting? There’s a price for that. Everything has a price. And so just simply knowing that has been keeping track of them gives you the perfect we spent every single time I was about to ask you something which you just kind of answered.
But it would be good to get your thoughts in addition to this. And coming back to your blackjack analogy where one person puts down $3 or one person puts down $1 if it were the case that the person who put down $1 spend, for example, twice as much time at the table in order to get that return back, would you? Is that something quantifiable? Because and the reason I ask that is that often I hear with Joint Ventures quote unquote that if you have a partner with money, then the person who is a partner without money is expected to put more time and effort in. And so I’m interested to know how you quantify that. Good question. Everything is quantifiable. So your time is quantifiable in terms of dollars and cents that would translate into you what salary you would be paid for the same work at a company we could afford to pay you. So if I’m worth $100,000 a year and you don’t pay me $100,000 a year, I’m in effect betting the fair market value, my salary, $100,000 in unpaid salary.
If you are putting cash in and that cash is consumed by the company not investable, it’s consumed. Your bet equals the consumed amount. So what I mean by that is if you put $100,000 in the bank, it’s not really a bet because it’s just sitting in somebody else’s bank account, you can get it back if you wanted. If you spend the money it’s a bet. And so all you gotta do is keep track of what your bets are in terms of cash and non-cash. Non cash doesn’t require cash out of pocket. So your things like time and ideas and relationships and used equipment, things like that, things that don’t require cash out of pocket. Cash contributions are things that do require cash out of pocket. So if I buy this mouse for the company, I spend 10 bucks on it. I’m betting $10 on the future outcome of the company. If you buy internet service and I pay for that out of my pocket and I’m not reimbursed. It’s a cash contribution. So cash contributions are a little different value wise, The non-cash because it’s cash is more scarce and it’s taxed differently. So for instance, if I wanted to By this thing for 10 bucks And I worked for you for $10 an hour, I would have to work more than an hour to earn enough money because when you paid me, you pay employment taxes.
When I received the money, I’d pay income taxes and I bought the thing, I’d pay sales tax. So I’m gonna have to work two hours during enough money. So you put a higher weight on cash, but all things can be tracked and all things can be monitored and all things can be negotiated in terms of fair market value, it’s impossible to not, no fair market value because everything can be bought and sold. If you can’t find something to buy your idea, for instance, it’s either worthless or it’s priceless. Either way, it’s not a good deal for a start-up company. I can see how people would need your help with this in order to get it right. Given the fact that you have expertise. And even in our conversation for the 1st 10 minutes, I can see how you might perhaps pull your hair out, listening to the way that equity is split among start-ups. You know, it’s, I get that sometimes when people think this is a, it’s an overwhelming thing, but most business people in business that are running, they know what their payroll is. They know how to negotiate a job salary and hourly rate.
They know how to shop for supplies. They know how to pay their bills, they can’t attract their expenses. So there’s nothing new here to track, There’s nothing new here to explore. It’s just a matter of knowing how to negotiate things. One thing that often happens with entrepreneurs is they don’t know how to negotiate licensing contract. Well, I’ve never hired a sales team before us. They don’t have to have commissions and set goals when they’re done these things before, which is understandable. It doesn’t mean it’s not, it’s not, it’s not possible to set fair market values. This means you’re not exposed to those. So, you know, people say, you know what, the market value of an idea. Well, that’s what you can license the idea for All I did is come to an idea. Then there could be a licensee out there for us. I used to be the head of marketing and cover them a fishing tackle boxes. And if you had a fishing tackle box idea, I was gonna see if I liked your idea, I’ll give you 2% royalty on revenues. Now you can get a higher royalty somewhere else. But I could sell a lot more for you than somebody else’s good. So the fair market value of a fishing tackle box idea in the United States is 2% on royalty on revenues. I can either pay you the royalty and or even, or I can give you slices in my pie uh, convert tuning them as a bet.
So everything’s always quantifiable. Just a matter of figuring out what their quantifiable. I’m things are. I’ve actually written a book about this. This, how do you tell which stuff is work? Just came out in May, it’s called Will Work For Pie. It’s on Amazon for 99 cents and pick it up. I haven’t had the time to adjust the price yet, but talks about how do you, how do you pay advisors? How do you pay for ideas? How do you pay for salespeople? All those kinds of things. So it’s, it’s a matter of just knowing what you’re paying for. So it’s usually it’s often a concern like, oh gosh, I’ve got to figure this out. But it’s nothing that most people don’t attract. Anyway, the regular course of doing business. Well, you pre-empted my next question, which was if it is the case that let’s say someone is in that position of the beginning of their company and they are determining who should get one. What are the first few steps that you’d recommend? But I would imagine that that would be one of the first few steps is to get that book for? Under a dollar. Have you got anything that you had there? Well, the first thing that every business does besides start-ups usually is negotiate the job offer the description of the job and the amount of money that person will be paid.
Have you ever taken a job with a regular company where you didn’t know the salary? I probably wouldn’t have accepted the job, but I’ve certainly been disorganised about applying and perhaps negotiating. So most people that have jobs know what they’re getting paid. So and in fact, most people just have jobs, they get paid and don’t get any equity at all because they’re not taking any risks because they’re getting paid. So the first thing to do is say here’s what your job is, here’s the scope and expectations of your job and here’s how much the fair market salary is. And you negotiate that like any other job. And then if you have the cash, you simply pay the salary and there’s no equity. Do, if you can’t pay the salary, then you have to pay in what I call a slice, which is like a poker chip, which tracks your bet. You pay in slices instead of salaries. And at any given time your bet or your slices divided by all the slices is your percentage of the equity. So you always can transfer everything into slices. But the first thing I always to do is to determine what the fair market value salary is. So like if your salesperson, I’d go over what the sales plan is with you and with the commission structure is and how you get paid out and I can pay you cash commission or I can pay you slices in the pie.
So you always have that choice. In fact produces a currency for what you can buy anything. I can buy this water bottle for instance, with slices in my pie instead of cash. If I don’t have cash and anybody can bet your, you can pay your lawyer and slices you can pay your landlord and slices Anyone that would be willing to anyone. Anyone that believes in your company and wants equity can trade their fair market value of the contribution for slices in the pie. And uh, I always have a piece of equity that equals the exact amount that you get relative to the other participants in that company. Have you paid them slices yourself or have you avoided that? No. Well these days I am fortunate enough that I can just pay all my people so I mostly retain my equity and I pay people. But certainly throughout my career I’ve used slicing pie And I’ve also done traditional equity spits. I did about 10 years ago, I did, I started a company with a partner and I got completely burned. We had an exit last year, big exit and I would have made particularly hundreds of thousands if not millions of dollars because I got essentially screwed by the deal because I signed the wrong piece of paper He made out like a bandit and I made nothing.
And then, you know, one thing I realised over the years is just because you agreed to something just because it’s legal because your lawyers reviewed it and you understood it and you signed it doesn’t mean it’s fair. Like in Blackjack, we had a 5050 deal. I could sue you and probably win. That doesn’t make it 15 minutes fair. What’s fair is that you, you bet more than me for unforeseen circumstances. We didn’t know we’re gonna get to aces. We didn’t know we’re gonna need more money. We didn’t know we’re gonna need those things. You couldn’t predict the future, but because you did place those bets in good faith I should adjust myself to be fair. It’s not in my best interest to screw you because you’ll get a bad reputation and you’ll lose your interest in the company and all kinds of things. So, you know, one thing that I’ve learned over years is there aren’t multiple versions of fairness. It’s either fair or it’s not fair. If you think something is fair and I think something’s fair one or both of us has got to be wrong. So the logic of fairness or applies to every situation and indeed slicing pie has been used all over the world and different languages and different cultures and different economies and as far as I know it’s always worked? I’ve never heard a situation where it hasn’t worked.
Do you think that your expertise in this area come as a result of that deal that you referred to where you were short changed if you like. That was sort of the catalyst that made me commit to paper what my feelings were about this concept. And before I started the company, I started a number of different businesses with the slicing pie concept sort of in mind. but before that, you know, I started a company in college, I had partners who wanted to work with me and I just couldn’t get my head around how to do the equity. When I got to business school I asked my professors and they would give me answers that were really vague and based on future predictions. I never could find a good answer to this. So uh, the next and then the company I started, I used a version of slicing pine. It wasn’t quite the same thing, but it was based on the contributions people made and I actually had a guy come and work for two weeks and then just vanish And then a few months later he sued me for $8,000 and being on page on and have $1000 no one, you know, we’re all out of money and we went to arbitration if the state of Illinois and the arbitrator looked at the deal I had with him, which is sort of like slice of pie and immediately said this is perfectly fair and I won that I won the suit because it’s just because it’s based on logic, but that experience with my ex-partner really wanted me to commit to paper what my thoughts were about this and I originally intended slicing pie, two people kind of kind of a hacker’s model to getting equity sort of right what I realised over time because we can know the contributions exactly, we can no fairness.
Exactly. And today I promote the model and the logic of the model without any changes, so people change the model or make tweaks to it, it’s no under fair. so it always worked as long as you apply the logic as it’s been described. I don’t I don’t consider myself the inventor of slicing by, I consider myself the interpreter or discoverer slicing by and that it’s, it’s basically based on rational logic, just like a game was So how did you go about discovering it? Well, I knew that my contributions were on no, you know, I I didn’t always know what I was getting into with the startup, you know, let me start up, I went to, I had one startup where I thought we were gonna get funding and by February, I said to my wife, we’re gonna get funding by February and we did get funded by February, but a year later February. So it took a year longer than I thought it would and I can continue to consume my cash and consume my time for no additional equity. And it was frustrating because here I was working harder and harder and harder and every time I took on a partner I’d give him shares out of my pocket and just didn’t seem logical because I didn’t know what that person was going to produce and I saw people get more equity and deserve.
It’s always a stressful conversation because you never know what’s gonna happen. I read a book years ago when I was in high school, it’s called No Prisoners and where this was not the company who started Microsoft, front page were made websites And there they sold for $100 million CEO who came in just months before a 10% chunk of the equity got $10 million. He didn’t do anything. He literally did nothing. He came in from record like a month later, but they gave him an allocation of 10 million 10% just because he was the CEO, they needed a CEO and he got paid $10 million for doing nothing. So You know it’s great that he came in and he took the bonus but he really didn’t deserve $10 million. I don’t think, you know, he didn’t create value because he showed up so that you know those lessons over the years. I think most contours that experience the equity spit conversation experiences angst and this is nine that something’s not right. One of the biggest comments I get from people is I wish I know about this 10 years ago or five years ago before I started my last company because they know that they’re getting burned.
It’s usually the founders themselves, the main founders who wind up getting burned the hardest. Sounds like with your example that it doesn’t just happen in smaller companies, but in quite large ones as well. So are you aware of anyone else doing this? Did you see anyone else doing what talking about this topic? Lots of people talk about this topic. There’s lots of people online. because it’s always something people bump into and there’s a lot of companies that do, you know, tracking of your equity splits over time. This software programs out there. The problem with them is that you have to determine your split in advance before you can plug the numbers into this calculator has. I’m the only person on the planet that has a calculator that will give you a fair agree split everyone else is based on guessing about what your assumptions and they are calculated out there that say, you know what your job who had the idea who has the most experience. You know, these, these sort of objective responses that lead up to another, you know fixed lit, you can be a really good guesser, but you’re still gonna get it wrong, we’ll slice of pie.
You don’t have to guess. You just have to observe what actually happens And once you reach break even or series your split freezes and the shares become valuable and then you can use a trading value the share price to trade your shares in the future. So if you want to buy something from me for the cost 10 bucks, you can theoretically give me $10 and shares. There’s some problems with that but in theory that we work out, work out you do that. Have you got any thoughts on the type of conversation that happens after you put your, should we say, details into the calculator? Because I can imagine you know, I mean as you say, it’s a logical approach to it which in my opinion is better than ideological approach, but at the same time if there’s a social norm which people are used to, there might be kind of a should we say push back on that. Have you given that any thought at all? Yeah, there’s basically three reasons why you would push back on the slice of pie model that I’ve experienced. The first reason is you just don’t get it. It’s been explained to you. It seems like there might be something fishy or there’s some tricky or maybe I can game it once you dig into the coverage and see this, there’s really no way to game it, there’s no way to get it wrong as long as you negotiate in good faith, fair market values and understand the model.
So once you learn it it’ll click for you and I’ll see it’ll be very logical, just like in black jackets, very logical. so the first reason is they don’t get it. And I always try to teach people the most I can, I do podcasts like this, I do videos and webinars and I wrote, I’ve written three or four books on this topic and I I have videos online and resources even slicing by game you can download and play. So I have as many free resources to learn something by as possible. The second reason someone would not want to use this is they’re not willing to learn it. I don’t want to bother learning something new. I’ve experienced doing this this way on my 5% because I’m your advisor and I run across those people from time to time and I always advise you to steer clear those people because if you have someone who is not willing to learn new things, they may not be a very good entrepreneur and co-founder with you. And the third reason is which I also come across is they do understand it, but it’s their intention to take advantage of. And I see that a lot and like just like my ex-partner, he did know what he was doing when he wrote that contract. He did realise that he would give him an unfair advantage, but it was his intention take advantage of us.
And that’s what makes him a bad person. That makes people kind of not nice people. Now, in a traditional split, we feel like whatever we negotiate is what we get, so it’s perfect. So you know, I’m justified in doing this because mike signed and agreed to it. His lawyer looked at it just because you get again because you agreed to, it doesn’t make it fair. But if I understand how slicing fireworks and I still don’t want to use it, that means it’s my intention to take advantage of you. And sometimes entrepreneurs are desperate and they want to raise money and they don’t see any other options. So they’re willing to be taken advantage of. So you always want to go carefully. You know, people like that, sometimes there’s a hail Mary approach where I got, you know, I gotta, I gotta do this neurons survive. But what I tell people is if you have a good investment opportunity, you’ll find other investors don’t have to take a bad investment. and that’s one thing that, especially early entrepreneurs don’t get is they think that you don’t have one shot. But good investments to attract investors, interesting. You mentioned litigation a couple of times. what advice would you give? Someone who let’s say they are in the position where they’ve given away too much.
And they use the calculator, for example, or read the book and let’s say they have gotten a bad deal. Is it too late by the time they’ve sold, uh, signed all of the contracts? No. most people who use slicing pie, as in my experience have already done a fixed agree split and they want to unwind it and there’s a chapter in my book to slice it by handbook. You can also access the chapter online on my blog and a spreadsheet, which is called the retrofit spreadsheet, which basically takes you back in time to go over your contributions, what you put in what you’ve taken out and I’ll give you a starting number of slices, usually when someone is faced with that information and it’s done properly, they can see that they have too much and in most cases that I’ve experienced, that person says, oh, let’s make the adjustment. It’s not in your best interest to have too much because you’re taking a good edge of your partners and they’re gonna lose motivation working with you as long as you want, you want to expose if you have someone, however who sees the reality in the logic of slicing pie, they do get it, but they don’t want to budge in the equity split, all they really have is a legal right to be a dick.
And if they are that kind of person and they’ll enforce that legal right and they’ll take advantage of you. But even then there are ways of unwinding it. You can, you can push that person out for instance and then switch to slicing pie model and dilute them appropriately using this logic. And if you just dilute people randomly by adding more shares to your, to your, your ownership, just to do artificially dilute someone that may not be fair, but using slice of pie reflects fairness and well, well dilute them fairly. So if you are ever faced with the lawsuit or arbitration and you can present them a logical way to that you deluded chairs, most people would, I think I’d be willing to accept it. I haven’t seen this tested very much because it hasn’t gotten that far because it usually works, but you can certainly unwind and unfair split. You might have some legal problems with the persons injured, but most people aren’t jerks, they want to do what’s right, right. I’m very interested to go away and have a look at the calculator. So thanks for sharing. You mentioned that you teach entrepreneurship, but also you are an entrepreneur during multiple businesses.
Is there anything which I guess you’ve learned from experience in your businesses that you particularly like to share with students? Yeah. One thing that I’ve learned over the years is that you want to do marketing your product first before you produce your products. And what I see so many entrepreneurs doing is like insulting as they go and they produce their products first and then they go and try to sell it and it seems strange to most of them, like how would I market the product if I didn’t have it? but the way you market a product before you have it is you see if you can attract the audience that’s interested in the product, so slice of pie is a good example. I wanted to create a calculator that did this for you, but I knew that I had to find people that were incident at first. So the first thing I did is create a basic blog on the concept. Then I created a white paper on it and then I created a spreadsheet for it and then I created a book on the topic and then I created a more elaborate spreadsheet in the retrofits, created the content first, and then I was getting, I was attracting the audience for it. So when I built my software three or four years later it was a built in audience for it and that’s the most successful.
I’ve been with this kind of thing. You want to sell your product, you want to make sure that you can attract the market first before you build your product. And that’s a big, big mistake I see a lot of companies make. I saw it, I see it constantly, people spend, you know, thousands, hundreds of thousands of dollars creating their app or their software and they get out to the market, nobody wants it. And it’s a real heartbreaker. So I always tell people, you know, try to build a blog about that topic to see if you can attract the market first or provide some kind of content or some kind of tools that are really basic that can help you attract the market. If you can attract the market, there’s no business. Well, I’m interested to know whether you’ve, you’ve implemented that yourself and also whether the startup split the book, is that as a result of you know, doing a business for your consulting or to some degree, is that something that you do These days? I try to do the marketing 1st. My camping gear company is a product for boy scouts of America that’s them. And they were one of the largest suppliers to them.
And the main product is a pop up mosquito net tent. And I knew how to get to the market. I knew that my son was a boy scout and I knew the Boy scout leadership and I was a boy scout leader. So I knew the people at the, at the local shop. So I knew that I could get to the market. So I created a basic prototype. And I told the guy at the shop in town, I said take 20 of these things they don’t sell. I’ll buy them back. So I removed the risk for them and he sold 250 that year. So I knew I could get to the market. I knew that that was a possibility. So then I could invest in more development for the product. but you always want to, my experience, invest in the marketing first because otherwise you just don’t know if you have something. We also do. My son and I over Covid developed a civil across targets for for lacrosse players. We did it because it was fun. We were playing across together. But I didn’t assess the market first and it’s celled horribly because I didn’t, I don’t know how to reach that market and masks for product. That’s that, that low cost. So, uh, I don’t know, it’s across people. I don’t know the players and the buyers and I just don’t know who they are. So I’ve been not much less successful with that product.
Well, I’ll reiterate, you certainly seem busy and writer’s block doesn’t seem to be an issue for you. eight books. Any, anything that you would share on, correct me if I’m wrong about that. But anything that you would share on the concept of being able to write eight books. Well, I, I actually lost count hunting books I have, I think it’s more than that now. I just released will to work for pie and I have, uh, two more books or three more books coming out soon. I wanted to develop across and I actually have a know how to get to that channel now, but not for the product for the book. you know, writing a book, it seems like a big deal when you first consider it, but once you have an interest in the topic, it turns out to not be that big of a deal. There’s a guy that I met a few years ago, I’ve been like I said 8889, maybe 10 books and have been translated into 10 different languages. I consider myself sort of an expert in writing books. Now, there’s a guy that I met at George Washington University who teaches a book writing course for first time authors And 95% of people who take his class come up, come out with a book a year later.
So he’s got extremely, extremely high results on getting that book out of your head and onto paper and edited and formatted and paid for. and that of course is actually free and I actually went through it right. My latest book and it was a wonderful way to kind of take yourself to the process if there’s someone who is not a self-starter or has a hard time keeping on track. Of course, like that is a wonderful way to do it and if anybody wants to know more about, I’d be happy to share the details with them. But for me I just sit down and write and I format my book pages on word to be the size that I want, so I can see how many pages I’m creating and I create the cover first, so I can kinda get inspired. A few tricks I used to kind of keep myself motivated. But you know, someone running is one thing I really enjoy. and I find it’s a good way to drum up a market. I’m not very good at writing short things, so things well, yeah, not not so difficult if you enjoy it, right? So yeah, but there are some people who have spoken to previously on the topic of for example productivity. and particularly like to ask you about it because you appear to be so productive.
So have you got any thoughts on this particular area productive for me or for teams, a general principle that you use, that other people could apply? Well, that’s a good question. I I I don’t people think that I’m really productive, like you’re observing my productivity. I don’t think I’m as productive as I’d like to be. You know, I say I go through days some days are not productive at all. I think that one thing I do well as I pick things that I’m lucky enough in my career that I’ve been successful enough, I can pick things I really like now, so I constantly things I really enjoy and concentrate on things that I can see the future and I can see this to the final outcome. So I mentioned in the cross book before I could, I can envision how that book is going to look and what it’s gonna, what it’s gonna feel like when it’s done. And so I start creating the final, there’s some things that show me where it’s going to look like. And so I told you before I looked at the market, so I’ve already started exploring the market and going down that path and working with partners as I write the book, I start bringing together and show more and more of it. So as I can see momentum gaining on that project, I get more and more committed to it.
If I work on projects that don’t seem to get someone’s moment, I bail out fairly quickly. So I started writing a book about the cotton candy business, this might seem random, but it was actually based on some research that I did and I started writing the book and I started finding some partners and I started exploring the market and I kind of lost its steam. So I like the topic, but I’m backing off because I don’t see myself as being able to connect the market as well. so once I see that I connected the market, I know this demand for it, it makes it much more interesting cause I know I’m gonna get a payout. Payouts seem worth it, it sounds like testing, so definitely testing different industries, informal testing, informal testing is good too, but you know, you really got to make sure that the market gives me moment this thing I’ve learned over the years to not concentrate on project that waste my time. Now I waste lots of time chasing my tail, but I do enough hits that I can be successful. Make a living, is the, the exit that you referred to previously, is that the only exit that you’ve had or have you had others and I’ve sold other companies before.
Have I got anything to note on that particular topic? Nothing people would have heard of. I sold the business out of college to a, to a competitor. I was part of a transaction a few years ago to international truck and engine corporation, Navas Star, we sold a, the chassis building company. so as I’ve had some exits, more failures than exits, but usually the exits are nice enough that I can, I can be happy with them, you know what I tell my students is as much as we all like hitting home runs and we love our billionaires in this world. If you can make a living as an entrepreneur that, that is, that meets or exceeds what you can make somewhere else, then you’re, you’re successful entrepreneur, you know, being entrepreneur is about making a living, not about hitting home runs all the time. So I’ve had some nice exits, but mostly I figured I, I consider myself someone has made a nice living as an entrepreneur. So the question, and my, my fault for not being clear was about like, say if for example, if someone else was attempting an exit, what is some advice that you would give that person as a general principle, but would you say that you are a successful entrepreneur based on your definition, definitely successful and as far as exiting, I’m someone who, when I get an exit offer, I go for it Because I like to move on to other things.
I’m not, I’m not someone who likes to grow company for 25 years or I don’t see myself as that kind of person. So I go for the exit as much as I can and don’t underestimate how much you can squeeze value out of things, the exits that I’ve made in my opinions, we’ve sold them probably for more money than we should have. I have a friend who stole the business a few years ago and he sold it to a big competitor and they went into the meeting And he was hoping to get $15,000, $15 million says, he was hoping to get And before he can put his mouth, the buyer took out a white board and explained why, he the buyer thought they were only worth 150 million Feeding over his mouth. He got 10 times we thought I was gonna get to the company and they thought they were getting a bargain. So don’t go into seeing too many preconceptions, you know, let the buyer, you know, make some offers and, and uh, and kind of go from there because when you get to some big money, people kind of get done with it.
And a good one good exit can set you set you up for a long time. Give you plenty of runway to start other companies and do other things. But I’ll tell you for life. But it gives you some nice runway, which is so, it’s nice to have a little money in the bank when you’re an entrepreneur definitely. How did you get into your first business? My first business. I was not doing very well in college. My parents told me they were going to pay for any more. I should come home and get a job and I didn’t want to do that. So I started making t shirts for sororities at college. And I grew that business, created a catalogue and I was kind of kind of doing it on a national basis. And I’m salespeople all over the place. And I put myself through college and graduate school. This is in the mid-90s and I sold that to a competitor after I graduated from graduate school. That was a really interesting experience, paid for all my college. And I remember at the time thinking that if I had $2500 in the bank, I could pay for a semester’s tuition at the University of Kansas and room and board. I was paying 100 and 35 bucks a month For rent plus food.
That was all I needed for semester. So I could say that I would have 4-5 months of runaway to do anything else. So I always concentrating putting that stuff that money in the bank and uh, and then not worrying about it so much and businesses going ups and downs and ups and downs. So having that set aside, gave me the safety net that I needed to, to take risks. It’s all too often I see you, you know, go all in on businesses and it’s a big mistake I think a few years ago, right after I got married, I, recently after I got married when I got married, I was, I sold my business, I invested in the stock market. I had a nice job and then I quit my job, started graduate school, took on student debt, lost my job, had a baby, bought a house and started a business and I lost all of my money in the business all of it. So as you can imagine, my wife was in a pretty precarious position, having married a guy, she thought was successful and having, you know, all the burdens, all these, all these, uh, the expenses. But I joined a new company and in less than a year I made all my money back.
So being able to ride out those ups and downs emotionally and stay ahead of the game is a big part of an entrepreneur. but I don’t let that happen anymore. I don’t go down to zero anymore. I put my money away and I tried to save it. So I have, you know, more years of runaway I can get in me more comfortable in my whole family life is, well, I’m glad that I got to talk to you about equity splits at the same time. I do kind of want to do a whole new episode and what your story is because I’m sure there’s some, some more interesting sort of learnings we could get from that bruises. Yeah, exactly. And don’t you learn the best from the bruises than you do from the victories, right? Yeah, a lot of lessons what your goals. Well, I like to make slicing pie the de facto standard for equities putting the guy on the planet, You know, these days, most places I go, people have at least heard of slicing pie, which is nice, but they still have questions about it, still are sceptical of that.
It could be where to deliver what it delivers and it breaks my heart to see people going to fix splits and I see it all over Reddit and all over Korea and people asking about, you know, how to get all these equity deals. So my goal in the next 5, 10 years to make this the standard. and of course to sell books to sell software, but I really want people to get what they deserve and we live in a culture where the money takes advantage of people without the money and it’s so common. We think it’s normal, we think it’s fair, but it’s not always fair. there’s lots of things people have to offer all over the world that isn’t, that aren’t financial. You have relationships and ideas and things that can be accounted for if you just knew how to account for them. So I want people to get exposed to slice it by and see the logic of how it works and say this is a logical way to approach this problem. This is and everything else is illogical. This is an area of business that’s just plain wrong for most people. So I want you to correct this because it’s a correctable problem that can be solved with a little bit of math that’s not too too outrageous. I don’t know why, but something just popped into my head, which I have to ask you about based on this and it is when you watch a program, like shark tank, if you ever do, how do you feel about those types of deals that go down?
Well, there’s two reasons, I don’t like shark tank. The first reason is the deals are insane. They’re just off the cuff royalties on revenues and it’s just, they’re stupid deals and they’re good examples of people that have funds thinking they know the answers and some of them do these, you know, I just cringe when I see it is desperation sometimes in the, in the founders like pitch and they take these deals that are just ridiculous. The second reason I don’t watch it very much is one of the other things I do is I do presentation skills coaching and uh, I cringe sometimes watching the shark, shark tanks are pretty good presentations, but other kinds of shark tank is things, the presentations are so boring. I get it. I get uh, I get too bored with them. So, but some of the deals are just horrible. So I don’t know why sharking very often and I wouldn’t be a good contestant on shark tank because I could, I could, I could call their call their logic to easily I think, yeah, they don’t like that very much. Is there anything that you’d like to add, which I haven’t asked you about regarding equity spits?
Well, there’s, we talked a lot about allocation of equity, how to get using this bedding concept to make sure that the allocation is fair. One of the biggest friction points in equity splits is what happens when someone leaves the business. And there are four reasons why someone can leave a business. They can be fired for cause, which means they weren’t doing their job. They can be fired for. No, cause maybe you just fired them out of the blue, they can resign for cause meaning you change the deal on them so they had a good reason to resign or they can resign for no cause meaning they just up and quit one day and those are different circumstances and do they deserve different treatment if you’re a solo entrepreneur and you don’t do your job, What happens to your business and on the systems I would say, but you lose it. All right. If you don’t do your job as a social entrepreneur, you lose everything unless you have it automated. But most people are starting a company, they quit before the, before the automation is created for the businesses created, they lose their entire investment. They wear all the hats.
Yeah, yeah. So if your solar entrepreneur, you walk away, you lose just like a partnership. If you walk away or get fired, you should lose your equities place. It’s not fair to just kind of half-hearted and then expect everyone to pay you later. And uh, so the logic of fairness says that if someone walks away or gets fired for reason, they should lose their equity on the flip side, if they resign for good reason or they’re fired for no good reason. Their bets should stay on the table because it’s not fair for me to push you out and take your value that you created so on the way out the door, there’s logic and slicing pilot explains how to make sure it stays fair and this is all too much. There’s a lot of friction there and so keep in mind that classifies about allocating equity fairly and recovering equity fairly when the time comes.
Good stuff Mike, thank you very much for all of the value today. Where is the best place for people to find you?
slicingpie.com is the domain name that casualties content. Of course, mikemoyer.com has more information about me and you can reach me at firstname.lastname@example.org and I usually respond to my emails as quick as I can. But coming on your question, I’m always happy to help people as much as I can.
Thank you very much for being a great guest.
Thank you. I appreciate it.