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Sweat equity is created when you or others contribute work to a business in the hopes that it will pay off in terms of an interest in the company as opposed to hourly or salaried wages.

You may hear a web designer saying that they took a 2% interest in a company that they paid for in sweat equity. They traded the value of their time for a stake in the company.

Trading time for equity is a time-honored tradition among startup companies and is used very aggressively. While at first it may seem like you’ve printed a whole bunch of Monopoly money that you can start using to pay people with, you’ll soon find out that there is a real cost to offering up stock early on.

Valuing Input

With sweat equity, it is critical that you translate effort into...

Working as a leader for a start-up is not for the weak. It requires a “rare unicorn” type of leader to see it through to stable profitability. The success of a business is how many unicorns you have on your team and how well they sparkle. What traits do I look for when seeking out the most sparkly unicorns of them all?

Trait #1: They’re a Hustler

Hustling unicorns run long and fast, they work with a sense of urgency, and they do it with a smile. They have an extra comb in their pocket and come prepared with water and snacks for the ride. Unicorns are prepared, work hard and look GOOD doing it. 🙂 There is no complaining of long weeks or long hours….in fact, they enjoy the hustle.

Sparkle Indicator: Horses act “put out” by a workload. Unicor...

Question

Is it OK to define high-level startup roles and responsibilities of Co-Founders at an early stage of a tech startup to avoid conflicts?

We are a team of 4 Founders and friends: two business people and two techies. I need help to clearly define the role of my other business co-Founder. I came up with the idea and convinced him to join me. Has anyone launched a startup with a similar kind of team? Your experience will be helpful.

ANSWER

Answer by Jason Lengstorf

“I think it would be vital to the company’s survival that startup roles and responsibilities are clearly defined. If there’s grey area, I’ve found that work tends to gravitate toward the more motivated party, and the social/power structure gets weird.

I star...

Building a vibrant workplace requires a foundation of trust, respect, and honest communication. It also requires employee appreciation.

Over 200,000 global employees were studied by the Boston Consulting Group, and the top reason they reported enjoying their work was, “feeling appreciated”. Number 2 was having a good relationship with their supervisor, and number 4 was that they had a good relationship with their colleagues. Financial compensation didn’t appear until number 8!

Four out of five employees (81%) say they are motivated to work harder when their boss shows appreciation for their work. Unfortunately, many managers don’t respond to this need and those who do, choose employee recognition programs.

Traditional recognition programs...

One of the most common recruiting tactics over the past few years has been to entice young, hungry talent by highlighting some unique company perks like nap rooms, unlimited paid time off, and ping-pong tables. While those benefits will certainly turn some heads, are they really the heads you want working for you?

The point of any recruitment effort is to find talented, qualified individuals to help your company grow and move forward. Talking about ping-pong tables won’t help you find them — unless, of course, you manufacture or sell ping-pong balls, paddles, or tables.

Instead, you should be thinking about your core values, your company’s mission, and the aspects of it that you and your current team are passionate about. Shifti...

Matt Mullenweg is one of the most influential people in the tech world—if not in the world at large. In 2005 he founded Automattic, the company that laid the foundation for websites including Akismet, Gravatar, VaultPress, IntenseDebate, Polldaddy and, of course, WordPress, which he also founded. Today WordPress powers nearly a quarter of the Internet. (Yeah, take a moment to let that sink in.)

Matt took the time to sit down with us and discuss how Automattic and WordPress became so successful. Check out the video below to hear him explain firsthand what inspires him as a founder; or, if you’re short on time, keep reading—we’ve summarized the main points for your reference.

Automattic has garnered much acclaim, including the reputation for...

Cybersecurity has become a priority for policymakers at every level of government and a major point of emphasis for businesses in nearly every sector. Not surprisingly, some think it will be the biggest issue companies will face in 2017.

So, Why is Cybersecurity important?

While major security breaches at large corporations like Yahoo receive the most attention, small business owners should be just as concerned with implementing appropriate cybersecurity measures as their more established counterparts.

Young businesses have a lot at stake — you’re just starting to build trust with new customers and establish relationships in your network — and the financial costs and damage to your reputation caused by a data breach can often turn into a se...

Question: What is one critical thing I should consider before starting my first business?

The answers below are provided by members of FounderSociety, an invitation-only organization comprised of ambitious startup founders and business owners.

Marketing Plan

You should have a written marketing plan in place before starting your business. This is the most overlooked puzzle piece in modern business. You outsource your accounting and your legal, but most companies think they can do their own marketing without experience. While your business will evolve, why not get there quicker with a strategic marketing plan by a professional?

— Steven Newlon
SYN3RGY Creative Group

Unique Factor

Make sure your business concept can stand out in the crowd. If ...

It’s hard to think of an innovation that has had a more transformative impact on the business landscape than the rise of crowdfunding.

Once upon a time, the only people who could bring new products to market were the ones who already had the capital and connections to make it happen. Now, thanks to crowdfunding, anyone with an idea and an Internet connection can mount the next big crowdfunding campaign – and the next must-have product can come from anywhere.

Crowdfunding is a great way to raise the funds you need to make your vision a reality. It can also be an awesome way to test a pricing strategy or validate demand for your product.

But crowdfunding campaigns aren’t (just) a fast track to capital or product validation. A successfu...

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We are 3 co-founders in ideation phase of our SaaS product. How do we split equity fairly? When do we incorporate the company: now or later?

Alessandro Daliana, Leadership Coach and Consultant, answered:

Personally, I am a big fan of the consortium, or contractual joint venture, to get projects moving. In your case, the three co-founders write a contract setting out who is responsible for what work, who much they should be paid, estimate the hours, and so on, like any project. They nominate a lead, decide how to contribute any funds that are necessary, and anything else they may need. And, you conclude with a simple—or complex—way of converting all the resources al...