How famous tech founders split their initial equity

How Famous Tech Founders Split Their Initial Equity

Alexandra Isenegger Startup Advice & Tips

New founders are often curious about how successful tech companies split their equity when they were in their startup days. Of course, every company is different, so the process for splitting equity will differ from one company to another. However, it’s a good source of reference to see how the founders of some of the most famous companies around the world made this decision when they had just started.

We researched how 18 founders from 7 famous companies split their initial equity—take a look below:

Apple’s initial equity split between its three co-founders, Steve Jobs, Steve Wozniak, and Ron Wayne, was 45/45/10. As CEO, Steve Jobs received 45%, as did Steve Wozniak, the programmer of the company. Ron Wayne, who was in charge of administration and documentation and designed their unique and recognisable logo, received 10%.

Microsoft’s initial equity split between co-founders Bill Gates and Paul Allen was 60/40. According to Bill Gates’s autobiography, Bill proposed the 60/40 split to Paul because he had done more work on the company, and Paul accepted the proposal.

The exact initial equity split between Google co-founders Larry Page and Sergey Brin is not publicly known. However, as they each owned 15% of the company at the time of its IPO, many speculate that their initial equity split was close to equal. It’s likely that the initial split was around 49/51, as it’s common to give slightly more equity to one founder (usually the CEO) in order to avoid deadlocks.

Oracle’s initial equity split between its three co-founders, Larry Ellison, Bob Miner, and Ed Oates, was 60/20/20. Larry Ellison, CEO and originator of the business idea, was awarded 60%. Bob Miner and Ed Oates, producers of Oracle’s relational database management system, each received 20% initially, but the co-founders agreed that Bob and Ed would get a larger proportion if they met certain targets. Bob’s ownership increased to 30% while Ed eventually left Oracle.

Finally, when Paul Graham, co-founder of the accelerator and seed capital firm Y Combinator, was asked about the initial equity splits of the firm’s most successful companies such as Dropbox, Airbnb or Reddit, he responded that none of them have a significantly disproportionate equity split. Dropbox, founded by co-founders Drew Houston and Arash Ferdowsi, likely had around a 49/51 split, for the reasons we described earlier. Airbnb’s three co-founders, Brian Chesky, Joe Gebbia and Nathan Blecharczyk, likely had a close to equal split, around 33/33/33. Reddit was initially accepted into Y Combinator with two co-founders, Steve Huffman and Alexis Ohanian, but quickly merged with Aaron Swartz, giving him an equal proportion of the resulting company.

Looking at these examples, we can see that there’s no one way to create a fair equity split for a long-lasting founder relationship. Each set of co-founders evaluated each individual’s contribution to the company to arrive at a fair value.

If you’re not sure what criteria to evaluate or how to weigh the value of different co-founders’ skill sets, try using Spliquity, the Startup Equity Calculator. Our smart calculator uses an algorithm to weigh each co-founders skills and experiences and provide an automated, non-biased equity split suggestion. With a transparent breakdown of the output, co-founders can compare results and start an honest dialogue.

initial equity - Spliquity

Comments

comments