Sacrifice. Each of us has sacrificed to build hubpages on a tiny budget. I left my wife and kids in San Luis Obispo and Jay and Paul left fiances in Seattle. We pay $700 a month in rent and live frugally. None of us take a salary.
Since we live together, we wake up about 8am and work until about 12 or 1am. We get a lot done in the garage and few decisions take more than a couple of minutes.
Legal stuff. We interviewed law firms and chose Don Keller at Orrick to represent us. If you don't know this, many law firms will help you with your incorporation and filings. They will let you acrue some fees that you pay when you are funded. It's best to get a referal to increase your chances of getting this type of arrangement. If you get funding, you pay them if you don't, you don't. It's good to get incorporated and set up properly from the beginning. This makes everything clear between founders. If you wait too long, there could be potential problems. When you setup there are a few key decisions.
- Vesting Period - We chose to vest monthly with no cliff since none of us are taking a salary. We thought that was fair. We also chose for our founders stock to vest over 3.5 years. Somewhere between 3 and 4 years is typical.
- In the event that one of us is fired, we agreed on 6 months of additional vesting. We have trust in eachother and this is more of protection if we raise money and the board gets rid of one of us.
- Double trigger vesting and percentage. We setup with a double trigger. Meaning we have to be acquired and then fired to get the vesting. We also agreed on 100% vesting in this case. Some people feel that it shouldn't be 100%, but we agreed that it was best for the companies protection.
- Board seats. We put 2 of us on the board in anticipation of adding people to the board in the future. We hope to maintain 2 board seats through the life of the company. We didn't put all 3 of us on the board because it is a likely scenario that we wouldn't retain all 3 spots in the future and it might be more difficult to have to remove 1 of us, vs. taking care of it now.
- We are a Delaware Corp.
We are less than 30 days until the beta.