I like that approach - very interesting. Have you actually tried it though? I'm just wondering if this is one of those great ideas in theory things or whether real, actual, high-quality folks are saying, "Yes" to this type of deal.
I have yet to do this, but if I end up working with my friend, it will likely only be under such a structure. Although it requires a more detailed and explicit contract up front, so long as the benchmarks, time frame, and price are reasonable and agreed upon, neither person should have any reason to complain.
The point is that both I and my friend/co-founder will know what we own and what we have to do, and we should both feel reasonably good about it. I won't feel like I've given anything away, and he will probably feel like he got a fair deal.
If he agrees at the outset and meets all the (negotiated) benchmarks, he will have a legal right to enforce the transfer to the joint company. If he refuses to structure the deal that way, then I will probably interpret his refusal as a sign that he is unfit for the job and possibly even untrustworthy.
That's very interesting.
A friend also had a similar idea. My friend/cofounder would be working as freelance under my company and get a percentange of the revenues he generates (maybe 30%). If a certain goal is met, he would have the option to exchange it to a certain amount of share (exponentially increasing maybe even to 49%).
