For Small Businesses Starting Out with Mike Moyer

damottaleonardweb
Sep 30, 2021
3 min read

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 means...by 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 space...it’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.