For Small Businesses Starting Out with Mike Moyer

Our new guest Mike Moyer brings a different perspective to the Prosperity Perspective Podcast, particularly for small businesses that are just starting out. Mike and host Liam Leonard talk about equity and why your company may be “rewarding” it incorrectly and unfairly to some of its employees.

They will also delve into Mike’s key indicators that an idea isn’t going to work or is already failing and how to determine if the fair market value of business ownership--particularly when involving partnership--is going to be worth your time and efforts in the end. Join them and hear Mike’s advice to anyone listening who is looking for an informed perspective for their small business share company.

3 Key Takeaways:

  • Why startups are a lot like playing Black Jack.

  • Why you should realign your understanding that businesses are always quantifiable.

  • Why equity projections are always a recipe for disaster.

Show Notes:

[0:39] Mike introduces himself

  • His college experience’s influence on his national T-shirt company

  • Trying out different real jobs following grad school

  • Choosing “stressful entrepreneurship” over “stressful real jobs”

[3:57] Mike’s philosophy about multiple streams and hedging bets

  • The value of saving money

  • Multiple businesses with different product lines so if one goes away, it doesn’t matter

  • The trick of knowing things are failing

[6:01] Mike’s key indicators that things are failing and need to be moved past

  • The ease at which you can access the market

  • “One of the first steps of starting a business is to find people who will buy it...I always try to focus on the market”-Mike Moyer

[8:14] How mike found the idea that there was a market for slicing pie

  • The “handshake deal” as a recipe for disaster

  • You can’t predict the future

  • “Equity splits are the root cause of so many disputes in companies...about 10 years ago I sort of sat down and tried to solve this problem by rethinking what equity rethinking what equity is...and I realized that equity is not a matter of opinions. It's a matter of facts...There’s only one version of fairness.” -Mike Moyer

[10:55] setting up a foundation when starting your company

  • Successful people think they’re magical leprechauns

  • Mike’s Black Jack analogy

  • Everything is quantifiable in business

[15:00] Buy outs and exits under the Slicing Pie model

  • Negotiating values

  • Looking at the cash bets

  • Using relative values over absolute values

[17:00] Dealing with emotionally-charged businesspeople

  • The facts typically work best

  • Bringing in the rational argument

  • Do the math yourself, and then have a conversation

  • Take out what you wish would happen and talk about what you’re willing to pay for the contribution

[20:00] How Mike quantifies the abstract (an idea)

  • You can distill the idea to a fair market value

  • If you can’t find a buyer, it’s either worthless or it’s priceless

  • “An idea that’s worth something is fixed in’s somehow solidified in a format that can be used to create value. It’s not just ‘hey, I’ve got an idea’”-Mike Moyer

[24:40] How to deal with this issue in your own company

  • Defining contribution & market values

  • Not having to pay equity

  • Coach your business from the rationale of a business owner

  • Keep track of your costs

  • Use the Slicing Pie model on his website/media

[27:50] What to change when you’re trying to exit a partner

  • The four reasons why someone can leave a company

  • Just quit, resign for good reason, be fired or terminated for good reason

  • The way to move somebody out is to give them warning or just give them their equity

[30:40] Dealing with difference of opinion at founder-level

  • It’s really not different

  • Have a conversation about what they aren’t doing and give each other warnings

  • The importance of defining what that fair market value is up front

  • The two kinds of contributions: cash vs. non-cash

[34:10] Equity doesn’t replace good managing skills

  • Ownership in a business causes motivation

[35:40] Mike’s advice to small-share businesses

  • Businesses are quantifiable

  • Understand that what we want to happen and what happen are different thing

  • Having goals, conversations to align yourself with employees, and being clear about expectations and accountability

About Mike Moyer:

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 ten books with a focus on business and entrepreneurship including The Slicing Pie Handbook: Perfect Equity Splits for Bootstrapped Startups and Will Work for Pie: Building Your Company With Equity Instead of Cash.

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