1 00:00:00.000 --> 00:00:03.740 Welcome back to the second part of the Startup Teams 2 00:00:03.740 --> 00:00:09.300 In this sub-session, we are going to talk about remaining Rs 3 00:00:09.300 --> 00:00:16.039 from three Rs which they are Roles and Rewards 4 00:00:16.049 --> 00:00:20.799 Are you ready to talk about the Roles and Rewards? 5 00:00:20.799 --> 00:00:23.020 Let's begin with Roles first 6 00:00:24.059 --> 00:00:25.280 What is a Role? 7 00:00:26.040 --> 00:00:27.520 The Role 8 00:00:27.620 --> 00:00:32.000 Role refers to a set of your rights or rules 9 00:00:32.000 --> 00:00:35.880 and generalized behavioral expectations 10 00:00:35.880 --> 00:00:39.500 linked to your position in your company 11 00:00:39.500 --> 00:00:41.380 in your company, social group 12 00:00:41.380 --> 00:00:44.139 In this case, your social group is your startup 13 00:00:44.139 --> 00:00:46.639 Anyways, the Role 14 00:00:46.639 --> 00:00:49.639 Role is your right and responsibility 15 00:00:49.639 --> 00:00:52.639 your right and responsibility 16 00:00:52.639 --> 00:00:55.139 associated with your position in the company 17 00:00:55.139 --> 00:00:56.760 This is the Role 18 00:00:57.379 --> 00:00:59.740 The Founders, think about it 19 00:00:59.740 --> 00:01:03.740 The Founders have many roles at first in the company 20 00:01:04.120 --> 00:01:05.279 For example 21 00:01:05.279 --> 00:01:08.279 founders should become the Sales Managers 22 00:01:08.279 --> 00:01:14.500 Finance Executives, Operation Chief and Investor Relations 23 00:01:14.500 --> 00:01:17.680 Raison and Opportunity Spotter 24 00:01:17.680 --> 00:01:20.419 Investor, Spokesperson, Boss, Negotiator 25 00:01:20.419 --> 00:01:21.939 et cetera, et cetera 26 00:01:21.979 --> 00:01:24.559 And other people say that 27 00:01:24.599 --> 00:01:27.720 you wear many hats at the same time 28 00:01:27.720 --> 00:01:30.680 I asked Chat-GPT to draw this picture 29 00:01:31.860 --> 00:01:34.279 Look at this you are Founder 30 00:01:34.279 --> 00:01:35.940 and you wear many hats 31 00:01:35.940 --> 00:01:38.480 Basically, you wear three hats 32 00:01:38.480 --> 00:01:41.580 You're a Financer, a Marketer and Engineers 33 00:01:41.580 --> 00:01:43.540 And on the top, I don't know what it is 34 00:01:43.540 --> 00:01:45.620 Anyway, like a singer 35 00:01:45.620 --> 00:01:48.779 you wear many hats 36 00:01:49.959 --> 00:01:53.160 If you have co-Founders 37 00:01:54.920 --> 00:02:00.099 distributing the roles in your Founding team 38 00:02:00.099 --> 00:02:01.660 is very important 39 00:02:01.660 --> 00:02:05.980 In order to make it work very effectively and efficiently 40 00:02:07.360 --> 00:02:10.360 But early on, the Founders often wear many hats 41 00:02:10.360 --> 00:02:11.919 as I already mentioned that 42 00:02:11.919 --> 00:02:14.160 But as the teams grow 43 00:02:14.160 --> 00:02:17.080 teams grow, your role should be changed 44 00:02:17.080 --> 00:02:21.380 Your role should become more specialized 45 00:02:24.059 --> 00:02:24.960 Do you understand that? 46 00:02:24.960 --> 00:02:26.320 It's pretty easy 47 00:02:26.320 --> 00:02:27.899 Our question is 48 00:02:27.899 --> 00:02:30.940 How to split the roles across the Founders? 49 00:02:30.940 --> 00:02:32.320 How to split it? 50 00:02:32.320 --> 00:02:34.699 The first stage 51 00:02:35.639 --> 00:02:37.660 scholars suggest you 52 00:02:37.660 --> 00:02:41.419 to discuss this issue, early on 53 00:02:41.419 --> 00:02:43.240 How early? 54 00:02:43.240 --> 00:02:45.360 When you start your businesses 55 00:02:45.360 --> 00:02:49.380 You discuss the role before you start a business 56 00:02:49.380 --> 00:02:53.179 have open a conversation about your responsibility 57 00:02:53.179 --> 00:02:56.259 from the starting point 58 00:02:56.259 --> 00:02:57.899 The sooner, the better 59 00:02:58.899 --> 00:03:00.259 I want to give you examples 60 00:03:00.259 --> 00:03:02.339 Look at these three guys 61 00:03:02.339 --> 00:03:03.600 Three guys, again 62 00:03:03.600 --> 00:03:06.580 Steve Jobs, Steve Wozniak and Mike McCullough 63 00:03:06.580 --> 00:03:11.300 They started Apple Computer in 1977, officially 64 00:03:11.300 --> 00:03:12.820 And Steve Jobs 65 00:03:12.820 --> 00:03:17.820 Steve Jobs was responsible for kind of entire company 66 00:03:18.800 --> 00:03:22.960 Responsible for kind of storytelling 67 00:03:22.960 --> 00:03:26.720 responsible for some kind of entire design of 68 00:03:26.720 --> 00:03:29.499 the product 69 00:03:30.399 --> 00:03:32.399 On the other hand, Steve Wozniak 70 00:03:32.399 --> 00:03:34.880 Steve Wozniak is kind of a tech guy 71 00:03:34.880 --> 00:03:38.279 and he focused much more on kind of technology 72 00:03:38.279 --> 00:03:41.279 or product itself 73 00:03:41.279 --> 00:03:42.119 What about Mike McCullough? 74 00:03:42.119 --> 00:03:46.199 Mike McCullough was originally investors 75 00:03:46.199 --> 00:03:47.979 He was the angel investors 76 00:03:47.979 --> 00:03:50.539 He came from Intel 77 00:03:50.539 --> 00:03:52.300 And he knew the businesses 78 00:03:52.300 --> 00:03:54.159 He knew the strategy 79 00:03:54.159 --> 00:03:59.380 His responsibility was about kind of strategies 80 00:03:59.380 --> 00:04:03.360 or management or businesses 81 00:04:03.360 --> 00:04:06.500 or external relationship with investors 82 00:04:06.500 --> 00:04:07.880 something like that 83 00:04:07.880 --> 00:04:11.339 Steve Jobs, Steve Wozniak and Mike McCullough 84 00:04:12.179 --> 00:04:14.660 Let's look at it 85 00:04:15.559 --> 00:04:18.600 Second one 86 00:04:18.600 --> 00:04:24.080 although you have a clear role split early on 87 00:04:25.119 --> 00:04:28.679 You need to regularly check out your role 88 00:04:28.699 --> 00:04:31.699 And try to update your role 89 00:04:31.699 --> 00:04:34.279 between you and your co-founders 90 00:04:34.279 --> 00:04:36.880 You revisit your roles 91 00:04:36.880 --> 00:04:39.539 and your co-founders' roles regularly 92 00:04:39.539 --> 00:04:41.880 As your startup grow 93 00:04:41.899 --> 00:04:45.659 then probably your priority of the company changes 94 00:04:45.659 --> 00:04:49.059 For example, at the very early stage of the company 95 00:04:49.059 --> 00:04:52.299 and top priority would be kind of preparation 96 00:04:52.299 --> 00:04:55.079 of the new service and product 97 00:04:55.079 --> 00:04:58.380 and attracting the new consumers 98 00:04:58.380 --> 00:05:01.179 or generating external 99 00:05:01.179 --> 00:05:03.459 the investment or something like that 100 00:05:03.459 --> 00:05:05.940 But as startup grow 101 00:05:05.940 --> 00:05:09.059 then probably top priority will be changing 102 00:05:09.880 --> 00:05:14.820 That's why you need to reassess and redefine your role together 103 00:05:16.000 --> 00:05:17.079 I want to give you example 104 00:05:17.079 --> 00:05:18.320 Look at this picture 105 00:05:18.320 --> 00:05:21.480 Look at these, characters 106 00:05:22.679 --> 00:05:24.000 The left guy 107 00:05:24.000 --> 00:05:26.399 left guy is Enric Dubrass 108 00:05:26.399 --> 00:05:30.600 and right guy is the Pedro Franceschi 109 00:05:30.600 --> 00:05:33.079 These two guys met 110 00:05:33.079 --> 00:05:37.920 when they were high school student in Brazil 111 00:05:37.920 --> 00:05:42.279 And then later, they study abroad in America at Stanford University 112 00:05:42.579 --> 00:05:46.220 Then at the Stanford University as they are freshmen 113 00:05:46.220 --> 00:05:51.239 and they entered the Y Combinator which is accelerating program 114 00:05:51.239 --> 00:05:55.500 because they had startup experience before in Brazil 115 00:05:55.500 --> 00:05:59.599 Their expertise is fintech businesses, fintech 116 00:05:59.599 --> 00:06:03.859 They had already the great experience about the fintech 117 00:06:03.859 --> 00:06:08.440 Then they started the fintech business again in America 118 00:06:09.800 --> 00:06:13.359 That's why they applied the Y Combinator programs 119 00:06:13.359 --> 00:06:17.760 And at that time, they were just 19, 20 years old 120 00:06:18.160 --> 00:06:22.119 And Enric Dubrass, the left guy he's a kind of extrovert guy 121 00:06:22.119 --> 00:06:25.440 He's tall and handsome and he talk very well 122 00:06:25.440 --> 00:06:31.079 And the right guy is the Pedro Franceschi 123 00:06:31.079 --> 00:06:32.720 He's kind of a little bit introvert 124 00:06:32.720 --> 00:06:35.140 He's a genius about the technology 125 00:06:35.140 --> 00:06:36.700 He was very famous 126 00:06:36.700 --> 00:06:40.420 for hacking Apple phone in Brazil 127 00:06:40.420 --> 00:06:44.319 That's why he was very famous in his country 128 00:06:44.319 --> 00:06:47.139 Anyway, in early days of Brax 129 00:06:47.139 --> 00:06:50.140 Enric Dubrass and Pedro Franceschi 130 00:06:50.140 --> 00:06:52.700 started as co-CEOs 131 00:06:52.700 --> 00:06:54.500 We are co-CEOs 132 00:06:54.500 --> 00:06:59.160 our duties and our rights are same 133 00:06:59.160 --> 00:07:02.400 because we are all co-CEOs 134 00:07:02.400 --> 00:07:05.100 but informally 135 00:07:05.100 --> 00:07:08.700 Pedro focused more on engineering part 136 00:07:08.700 --> 00:07:12.459 and informally, Enric Dubrass 137 00:07:13.500 --> 00:07:16.339 handled external responsibilities 138 00:07:17.439 --> 00:07:21.220 This is kind of an informal role split, informal 139 00:07:21.220 --> 00:07:23.299 But later what happened 140 00:07:23.299 --> 00:07:27.380 as Brax grew, they need to reassess 141 00:07:27.380 --> 00:07:29.880 and redefine their roles 142 00:07:29.880 --> 00:07:35.620 They decided to divide their labor more formally 143 00:07:35.940 --> 00:07:38.760 The Pedro Franceschi 144 00:07:38.760 --> 00:07:40.720 which is in this case, the left guy 145 00:07:40.720 --> 00:07:43.359 Pedro Franceschi lead the internal organization 146 00:07:43.359 --> 00:07:47.140 On the other hand, Enric Dubrass lead to external duties 147 00:07:47.140 --> 00:07:50.279 Formally, in this case 148 00:07:50.279 --> 00:07:52.519 Then later, the Brax grew 149 00:07:52.519 --> 00:07:55.760 and they get old, then what happened? 150 00:07:55.760 --> 00:08:00.900 In 2024, Brax moved to the single CEO structure 151 00:08:00.980 --> 00:08:04.579 They want to move to the traditional organization structure 152 00:08:04.579 --> 00:08:07.019 which is a single CEO structure 153 00:08:07.019 --> 00:08:09.980 Previously, we adopt co-CEO structure 154 00:08:09.980 --> 00:08:12.320 but it is not effective right now 155 00:08:12.320 --> 00:08:13.940 not efficient right now 156 00:08:13.940 --> 00:08:17.760 Because we become kind of a unicorn company 157 00:08:17.760 --> 00:08:19.899 We become a unicorn company 158 00:08:19.899 --> 00:08:21.980 So, later we should adopt 159 00:08:21.980 --> 00:08:25.839 kind of a formal, traditional organization structure 160 00:08:25.839 --> 00:08:28.160 which is a single CEO structure 161 00:08:28.160 --> 00:08:33.419 In this case, Pedro Franceschi becomes a single CEO 162 00:08:33.720 --> 00:08:37.359 On the other hand, Enric Dubrass 163 00:08:37.359 --> 00:08:41.339 Enric Dubrass became a chairman of the board members 164 00:08:41.699 --> 00:08:43.639 And then he stepped down 165 00:08:43.639 --> 00:08:46.180 stepped back from day-to-day operations 166 00:08:46.180 --> 00:08:51.359 This is a clear example about the revisiting 167 00:08:51.359 --> 00:08:55.559 your role regularly, inside the co-founding team 168 00:08:57.580 --> 00:09:01.820 Enric Dubrass became the chairman of the board 169 00:09:01.820 --> 00:09:06.060 and Pedro Franceschi became the solo CEO 170 00:09:06.580 --> 00:09:08.299 Third step 171 00:09:08.299 --> 00:09:11.340 Third step is when you build up your team 172 00:09:11.340 --> 00:09:15.360 you consider complementary skill set 173 00:09:16.320 --> 00:09:18.340 When you build up your team 174 00:09:18.340 --> 00:09:22.739 and you'd better build a team with a diverse and complementary skills 175 00:09:22.739 --> 00:09:26.459 to cover all core functions inside the company 176 00:09:27.439 --> 00:09:29.479 Think about inside the company 177 00:09:29.479 --> 00:09:31.280 There are many different types of functions 178 00:09:31.280 --> 00:09:33.940 For example, marketing, operations 179 00:09:33.940 --> 00:09:38.940 and technology, of course, finance, accounting 180 00:09:39.419 --> 00:09:41.579 And human resource 181 00:09:42.599 --> 00:09:47.000 And the role or government relationship 182 00:09:47.000 --> 00:09:49.280 or media relationship 183 00:09:49.280 --> 00:09:52.200 Wow, there are a lot of functions in it 184 00:09:53.239 --> 00:09:56.239 You cannot cover all the functions 185 00:09:56.239 --> 00:09:58.320 If we have two members as co-founders 186 00:09:58.320 --> 00:10:01.719 then you divide the labor to cover each sessions 187 00:10:02.599 --> 00:10:04.640 It is a complementary skills 188 00:10:04.640 --> 00:10:07.260 That's why diverse team is important 189 00:10:07.260 --> 00:10:09.239 Look at these guys 190 00:10:09.239 --> 00:10:11.679 This company is LetinAR 191 00:10:11.679 --> 00:10:15.359 LetinAR is a startup that provide a solution for the augmented reality 192 00:10:15.359 --> 00:10:17.779 It's a kind of futuristic company 193 00:10:17.779 --> 00:10:21.320 And luckily, one of the co-founders 194 00:10:21.320 --> 00:10:22.859 graduate from Hanyang University 195 00:10:22.859 --> 00:10:26.380 and he is one of the members 196 00:10:26.380 --> 00:10:28.780 one of the co-founders is my student 197 00:10:28.780 --> 00:10:32.179 And I took the interview and I write the scholarly paper 198 00:10:32.179 --> 00:10:36.059 and published the paper to the Korean journals, many years ago 199 00:10:36.059 --> 00:10:40.219 And the Hanyang University student was a left guy 200 00:10:40.219 --> 00:10:42.659 His name was Kim Jae-hyuk 201 00:10:42.659 --> 00:10:46.900 He majored in industry engineering, Hanyang University 202 00:10:46.900 --> 00:10:48.580 He actually lived 203 00:10:48.580 --> 00:10:52.119 in Hanyang University dormitory for two years 204 00:10:52.119 --> 00:10:55.359 And the right guy is Ha Jung-hoon 205 00:10:55.359 --> 00:10:59.939 Ha Jung-hoon and Kim Jae-hyuk were school friends 206 00:10:59.939 --> 00:11:02.640 when they are high school student 207 00:11:02.640 --> 00:11:05.559 And Ha Jung-hoon entered the Hongik University 208 00:11:05.559 --> 00:11:08.039 and he majored in material engineering 209 00:11:08.039 --> 00:11:13.580 And he's very interested in kind of new materials, engineering part 210 00:11:14.479 --> 00:11:16.500 He's an extrovert 211 00:11:17.020 --> 00:11:20.219 but he's really like to make something new 212 00:11:20.219 --> 00:11:22.140 On the other hand, Kim Jae-hyuk 213 00:11:22.140 --> 00:11:25.099 although he's a little bit shy and a little bit introvert 214 00:11:25.099 --> 00:11:29.580 but he's really good at managing the conflict 215 00:11:29.580 --> 00:11:31.500 Managing the conflict and he's really good 216 00:11:31.500 --> 00:11:34.219 at listening to other people's complaint 217 00:11:34.219 --> 00:11:35.859 other people's feedback 218 00:11:35.859 --> 00:11:39.780 He's really good at kind of making relationship 219 00:11:39.780 --> 00:11:42.179 with others out there, although he's shy 220 00:11:42.179 --> 00:11:43.480 although he's introvert 221 00:11:43.500 --> 00:11:47.280 It's, wow, it's surprise 222 00:11:47.280 --> 00:11:48.880 It's not expected 223 00:11:48.880 --> 00:11:50.280 Anyway, that's why 224 00:11:50.280 --> 00:11:53.879 that's why they divided their role two part 225 00:11:53.879 --> 00:11:58.139 the Kim Jae-hyuk, he took CEO position 226 00:11:58.139 --> 00:12:01.500 Because he wanna control for entire company 227 00:12:01.500 --> 00:12:04.919 On the other hand, Ha Jung-hoon 228 00:12:04.919 --> 00:12:08.819 he took CTO part which is technology part 229 00:12:08.819 --> 00:12:12.420 They thought they have two different skillset 230 00:12:12.420 --> 00:12:15.700 Two different personality, two different skillset 231 00:12:15.700 --> 00:12:17.419 two different capabilities 232 00:12:17.419 --> 00:12:21.260 They work together very well 233 00:12:21.260 --> 00:12:24.900 They make LetinAR, it's much bigger company 234 00:12:24.900 --> 00:12:28.179 LetinAR received a lot of money from the Google 235 00:12:28.179 --> 00:12:30.380 from the Naver, from somewhere else 236 00:12:30.380 --> 00:12:34.679 I believe that LetinAR will be next unicorn company in Korea 237 00:12:34.679 --> 00:12:40.419 I wanna introduce one of the relevant and new research to you 238 00:12:41.419 --> 00:12:44.320 Look at this research together 239 00:12:44.320 --> 00:12:47.000 And three researchers conducted field experiment 240 00:12:47.000 --> 00:12:48.440 And surprisingly 241 00:12:48.440 --> 00:12:53.420 one of the researchers is my the PhD supervisor 242 00:12:53.420 --> 00:12:55.939 He is a renowned professor in Canada 243 00:12:58.139 --> 00:13:03.899 They basically assigned 573 students 244 00:13:04.039 --> 00:13:08.840 to 49 teams, kind of a random team, 49 team 245 00:13:08.840 --> 00:13:11.800 And then they wanna investigate the effect 246 00:13:11.859 --> 00:13:15.820 of the diversity, effect of the diversity among the team 247 00:13:15.820 --> 00:13:18.159 on the performance of the team 248 00:13:18.159 --> 00:13:21.500 But the interesting thing is, in this study 249 00:13:21.500 --> 00:13:24.500 the diversity is not just diversity 250 00:13:24.500 --> 00:13:28.200 in terms of your major or your knowledge 251 00:13:28.200 --> 00:13:31.539 They try to assess the diversity 252 00:13:31.539 --> 00:13:34.559 in kind of cognitive abilities 253 00:13:34.559 --> 00:13:35.400 Think about it 254 00:13:35.400 --> 00:13:37.340 Different people have different cognitive abilities 255 00:13:37.340 --> 00:13:38.859 Some guys, very smart 256 00:13:38.859 --> 00:13:40.900 Some guy, just middle smart 257 00:13:41.280 --> 00:13:43.000 Some guys, not smart 258 00:13:43.000 --> 00:13:43.919 Something like that 259 00:13:43.919 --> 00:13:47.099 different people have a different level of 260 00:13:47.320 --> 00:13:48.960 the cognitive abilities 261 00:13:48.960 --> 00:13:50.440 We say cognitive abilities 262 00:13:50.440 --> 00:13:52.840 high IQ, low IQ, something like that 263 00:13:53.040 --> 00:13:56.359 Anyway, if we have 49 random team 264 00:13:56.359 --> 00:14:00.719 then some team have the members 265 00:14:00.719 --> 00:14:05.599 whose cognitive abilities are high 266 00:14:05.599 --> 00:14:10.479 In this team, average cognitive abilities is very high 267 00:14:11.059 --> 00:14:15.340 Or all the team was made of the people 268 00:14:15.340 --> 00:14:18.099 whose cognitive abilities are pretty low 269 00:14:18.099 --> 00:14:22.000 In this team, average cognitive ability is kind of low 270 00:14:22.000 --> 00:14:27.260 We just naturally expect that if we have a team 271 00:14:27.299 --> 00:14:30.580 with a high level of cognitive abilities 272 00:14:30.580 --> 00:14:33.619 This team can produce better performance 273 00:14:33.619 --> 00:14:36.339 compared to the other teams 274 00:14:36.339 --> 00:14:38.700 But these guys, these researchers 275 00:14:38.700 --> 00:14:42.679 want to assess the kind of a different concept 276 00:14:42.679 --> 00:14:46.219 which is cognitive ability diversity 277 00:14:46.219 --> 00:14:50.520 It means that some team has kind of a diverse level 278 00:14:50.520 --> 00:14:52.080 of cognitive abilities 279 00:14:52.080 --> 00:14:55.940 Other team has kind of a similar level of cognitive abilities 280 00:14:55.940 --> 00:14:58.440 Everybody high, everybody low 281 00:14:58.440 --> 00:15:00.919 Diversity cognitive ability means 282 00:15:00.919 --> 00:15:05.039 some people has a high level of cognitive abilities 283 00:15:05.039 --> 00:15:07.559 Some people have a low level of cognitive abilities 284 00:15:07.559 --> 00:15:08.620 They are mixed up 285 00:15:08.620 --> 00:15:09.619 You know what I mean? 286 00:15:09.719 --> 00:15:11.820 Smart guy, not smart guy, mixed up 287 00:15:11.820 --> 00:15:16.239 But in this team, all smart or all not smart 288 00:15:16.699 --> 00:15:21.460 They look at this kind of effect, then what happen? 289 00:15:22.159 --> 00:15:26.419 Startup team performance is maximized 290 00:15:26.419 --> 00:15:31.079 maximized at the kind of moderate level of cognitive ability diversity 291 00:15:33.720 --> 00:15:37.539 Kind of a little bit 292 00:15:37.539 --> 00:15:40.800 Kind of a little bit blend of cognitive abilities 293 00:15:40.800 --> 00:15:43.799 It's better for the startup 294 00:15:43.799 --> 00:15:44.640 You know what I mean? 295 00:15:44.640 --> 00:15:46.479 Neither at the highest level 296 00:15:46.479 --> 00:15:49.080 Highest average, abilities 297 00:15:49.080 --> 00:15:51.259 or no greatest diversity 298 00:15:51.259 --> 00:15:53.599 Everybody different 299 00:15:53.599 --> 00:15:55.760 Everybody different is not good 300 00:15:55.760 --> 00:15:57.400 Everyone high, not good 301 00:15:57.400 --> 00:16:00.159 The best team 302 00:16:00.159 --> 00:16:05.080 Best team is the blend 303 00:16:05.220 --> 00:16:08.040 The blend of cognitive ability diversity 304 00:16:08.040 --> 00:16:11.460 The conclusion is the balanced team 305 00:16:11.460 --> 00:16:15.159 with a mix of the cognitive abilities is the best 306 00:16:15.159 --> 00:16:18.099 Your team leader, very smart 307 00:16:18.099 --> 00:16:20.179 Middle manager, a little bit smart 308 00:16:20.179 --> 00:16:22.380 And staff member, not smart 309 00:16:22.380 --> 00:16:24.500 Middle smart, not smart, everything 310 00:16:24.500 --> 00:16:28.079 Everybody different in terms of cognitive abilities 311 00:16:28.079 --> 00:16:32.579 In this case, we can perform much better than the other teams 312 00:16:34.439 --> 00:16:36.159 Please take 313 00:16:36.159 --> 00:16:40.060 Please look at this research very carefully 314 00:16:40.380 --> 00:16:43.000 When you build up your team members 315 00:16:43.000 --> 00:16:44.520 When you build up team 316 00:16:44.520 --> 00:16:46.500 When you recruit your team members 317 00:16:46.500 --> 00:16:49.059 just look at the cognitive abilities too 318 00:16:49.059 --> 00:16:50.760 It will be very helpful 319 00:16:52.240 --> 00:16:57.340 Let's move on to the last R, which is reward 320 00:16:57.719 --> 00:17:02.359 Reward is associated with how to split your equity 321 00:17:02.580 --> 00:17:05.339 There are the common methods 322 00:17:05.339 --> 00:17:07.459 for splitting your equity 323 00:17:07.459 --> 00:17:12.459 The first one, we can split equity equally 324 00:17:12.500 --> 00:17:13.420 It's pretty easy 325 00:17:13.420 --> 00:17:16.920 Each co-founders receive the same percentage of the equity 326 00:17:17.859 --> 00:17:20.260 If you have two, 50-50 327 00:17:20.260 --> 00:17:22.900 if you have three, 30-30, 30-30, 30-30 328 00:17:22.900 --> 00:17:23.900 It's pretty easy 329 00:17:24.859 --> 00:17:29.180 This method has a benefit 330 00:17:29.180 --> 00:17:32.680 which is it's pretty simple, fast and fair 331 00:17:32.680 --> 00:17:34.119 looks fair 332 00:17:34.119 --> 00:17:36.479 And there is a disadvantages 333 00:17:36.479 --> 00:17:40.199 maybe viewed less favorably by investors 334 00:17:40.199 --> 00:17:43.160 Investors do not like it this way 335 00:17:43.160 --> 00:17:44.739 Do you remember 336 00:17:44.739 --> 00:17:48.439 the investor's point of view 337 00:17:48.439 --> 00:17:52.800 Investors really love dominated company 338 00:17:54.679 --> 00:17:56.160 Look at this 339 00:17:56.800 --> 00:18:01.199 This is early day of the Google 340 00:18:01.199 --> 00:18:04.079 and two guys started this company 341 00:18:04.079 --> 00:18:06.500 Larry Page and Sergey Brin 342 00:18:06.500 --> 00:18:10.159 And they split their equity 50-50 343 00:18:10.159 --> 00:18:12.040 You know that? 344 00:18:12.040 --> 00:18:15.899 Wow, it's a kind of equal based equity 345 00:18:17.079 --> 00:18:19.479 It's Airbnb again 346 00:18:19.479 --> 00:18:23.119 Nathan, Brian Chesky, Joe Gavia 347 00:18:23.119 --> 00:18:25.319 And those three people started this company 348 00:18:25.319 --> 00:18:29.140 and they split the equity kind of equally 349 00:18:29.140 --> 00:18:32.060 33-33-33, it's pretty easy 350 00:18:32.380 --> 00:18:36.339 This is the common method for splitting equity 351 00:18:36.339 --> 00:18:40.300 These days, many co-founded company adopted this way 352 00:18:41.219 --> 00:18:42.099 Let's move on 353 00:18:42.099 --> 00:18:47.099 Second method is a value-based split 354 00:18:47.180 --> 00:18:50.540 Value-based split means the equity 355 00:18:50.540 --> 00:18:56.079 Equity is allocated based on each founder's contributions 356 00:18:57.479 --> 00:19:02.239 For example, if you put tons of time, tons of money 357 00:19:02.239 --> 00:19:05.719 tons of expertise 358 00:19:05.719 --> 00:19:10.359 and if you have a prior experience and if you developed some kind of new technologies 359 00:19:10.359 --> 00:19:14.979 and you have a patent, you contribute a lot to this company 360 00:19:14.979 --> 00:19:17.500 That's why you took more equity 361 00:19:17.500 --> 00:19:21.479 This is a benefit, more nuanced and fair 362 00:19:21.479 --> 00:19:26.179 It looks more fair than just equal split 363 00:19:27.020 --> 00:19:30.959 And then, there's disadvantages, a little bit difficult 364 00:19:30.959 --> 00:19:34.339 In order to decide your equity position 365 00:19:34.339 --> 00:19:37.459 you need to discuss a lot 366 00:19:37.459 --> 00:19:41.300 You should reach out the agreement to each other 367 00:19:42.800 --> 00:19:47.020 I want to give you example of the real startup situation 368 00:19:47.020 --> 00:19:48.219 Look at the picture 369 00:19:48.219 --> 00:19:50.420 Left guy is Paul Allen 370 00:19:50.439 --> 00:19:53.659 and right guy is Bill Gates 371 00:19:53.659 --> 00:19:57.160 They are high school friends 372 00:19:57.160 --> 00:20:00.199 but Paul Allen is older than Bill Gates 373 00:20:00.199 --> 00:20:01.319 And Bill Gates, at that time 374 00:20:01.319 --> 00:20:03.979 dropped out of the Harvard University 375 00:20:03.979 --> 00:20:07.579 They decided, they discussed about their equity split 376 00:20:07.579 --> 00:20:13.119 Initially, Bill Gates and Paul Allen had 60 to 40 equity split 377 00:20:13.259 --> 00:20:18.439 Yes, of course, Bill Gates has 60% and Paul Allen had 40% 378 00:20:18.659 --> 00:20:21.780 They discussed about their equity split 379 00:20:21.780 --> 00:20:24.939 and they reached out this different equity 380 00:20:25.159 --> 00:20:26.680 Then later, what happened? 381 00:20:26.680 --> 00:20:28.880 Bill Gates 382 00:20:28.880 --> 00:20:34.660 tried to push for the renegotiation 383 00:20:34.660 --> 00:20:36.500 about the equity split 384 00:20:36.500 --> 00:20:39.540 Bill Gates asked a lot 385 00:20:39.540 --> 00:20:43.839 they decided to 64% to 386 00:20:43.839 --> 00:20:47.880 36% of the equity 387 00:20:47.880 --> 00:20:54.320 Bill Gates got 4% more and Paul Allen lost 4% 388 00:20:55.280 --> 00:21:00.280 Paul Allen was very disappointed with this decision 389 00:21:00.359 --> 00:21:02.959 Then later, he left the company 390 00:21:02.959 --> 00:21:06.359 This is a kind of value-based split 391 00:21:06.359 --> 00:21:10.579 At that time, Bill Gates argued that he contributed a lot to this 392 00:21:11.179 --> 00:21:14.979 Microsoft, because he developed a basic program 393 00:21:14.979 --> 00:21:17.839 and alhe quit his study 394 00:21:17.839 --> 00:21:21.699 and he basically put tons of effort 395 00:21:21.699 --> 00:21:24.020 and energy to develop the software 396 00:21:24.020 --> 00:21:27.640 That's why he deserved more equity 397 00:21:27.640 --> 00:21:29.000 This is the argument 398 00:21:31.120 --> 00:21:32.260 Let's move on 399 00:21:32.260 --> 00:21:35.340 Third method is a role-based split 400 00:21:35.340 --> 00:21:38.099 What it is, a role-based split is 401 00:21:38.099 --> 00:21:43.680 your equity is divided according to the role and the responsibility 402 00:21:44.280 --> 00:21:45.339 What is that? 403 00:21:45.339 --> 00:21:49.140 If you are CEO, then you got more 404 00:21:49.140 --> 00:21:52.579 If you're CTO, then you got more than CMO 405 00:21:52.579 --> 00:21:55.979 CMO meaning chief marketing manager, marketing officer 406 00:21:56.239 --> 00:21:58.619 There's advantages 407 00:21:58.619 --> 00:22:01.739 It aligned very well with your key position 408 00:22:01.739 --> 00:22:04.339 Yes, of course, CEO got more equity 409 00:22:04.339 --> 00:22:08.459 CEO's salary should be better than the other position 410 00:22:08.459 --> 00:22:10.000 It's kind of obvious 411 00:22:10.000 --> 00:22:12.660 There's disadvantages 412 00:22:12.660 --> 00:22:15.640 Your role may evolve, may change it 413 00:22:15.640 --> 00:22:18.340 If your role changes, then what happens? 414 00:22:18.340 --> 00:22:23.300 We should renegotiate your equity again and again 415 00:22:24.020 --> 00:22:26.359 Kind of, this is an endless story 416 00:22:26.419 --> 00:22:28.260 There's disadvantages 417 00:22:28.460 --> 00:22:30.859 Regarding the reward 418 00:22:30.900 --> 00:22:34.339 I want to introduce kind of a new research about that 419 00:22:34.339 --> 00:22:36.219 Look at this 420 00:22:36.219 --> 00:22:39.800 These researchers conducted kind of experiments 421 00:22:39.940 --> 00:22:42.579 Basically, they made 422 00:22:42.579 --> 00:22:48.059 two-person teams with 340, 54 students 423 00:22:48.420 --> 00:22:53.839 It's kind of a random teams and then they asked the teams to decide 424 00:22:54.099 --> 00:22:57.180 how to split their equity 425 00:22:57.180 --> 00:23:02.739 then, the researchers tried to analyze the impact of the contract form 426 00:23:02.739 --> 00:23:04.339 regarding equity split 427 00:23:04.339 --> 00:23:09.879 For example, it's an equal split form 428 00:23:09.900 --> 00:23:12.300 or a contribution-based split form 429 00:23:12.300 --> 00:23:14.380 There are two different types of form 430 00:23:14.380 --> 00:23:15.380 And, of course 431 00:23:15.380 --> 00:23:19.719 the teams can choose their own contract form 432 00:23:19.719 --> 00:23:22.300 Right now, we are a team 433 00:23:22.300 --> 00:23:25.420 How to split our equity? 434 00:23:25.420 --> 00:23:26.939 What about equal-based? 435 00:23:26.939 --> 00:23:28.540 What about contribution-based? 436 00:23:28.540 --> 00:23:30.459 They can decide 437 00:23:30.459 --> 00:23:35.140 They can decide their form, contract form 438 00:23:35.140 --> 00:23:36.339 What happened? 439 00:23:36.339 --> 00:23:37.400 What is the result? 440 00:23:37.400 --> 00:23:40.260 Which teams perform better? 441 00:23:40.260 --> 00:23:42.339 This is kind of a question 442 00:23:42.639 --> 00:23:45.080 What about the conclusion? 443 00:23:45.080 --> 00:23:48.100 Non-equal contracts 444 00:23:48.100 --> 00:23:52.979 Non-equal contracts outperform equal contracts, equal split 445 00:23:53.979 --> 00:23:57.420 In other words, contribution-based contract 446 00:23:57.420 --> 00:24:01.579 contribution-based split of the equity 447 00:24:01.579 --> 00:24:04.599 perform better than equal split 448 00:24:05.219 --> 00:24:07.599 Equal split of the equity 449 00:24:07.959 --> 00:24:10.159 The Google adopted equal split 450 00:24:10.159 --> 00:24:12.239 Airbnb adopted equal split 451 00:24:12.419 --> 00:24:13.699 What are they? 452 00:24:13.699 --> 00:24:16.819 Yes, they are exceptional case 453 00:24:16.819 --> 00:24:18.540 They are outlier 454 00:24:18.540 --> 00:24:20.900 But on average 455 00:24:20.900 --> 00:24:23.699 non-equal contracts better than equal contracts 456 00:24:23.699 --> 00:24:25.500 Please remember that 457 00:24:26.339 --> 00:24:28.380 The Bill Gates is smart 458 00:24:28.380 --> 00:24:30.400 Bill Gates is smart 459 00:24:30.400 --> 00:24:34.179 The equal split, why is this happening? 460 00:24:34.199 --> 00:24:35.859 Because if you have equal split 461 00:24:35.859 --> 00:24:40.639 then equal split itself attract lower contributors 462 00:24:40.940 --> 00:24:45.239 Lower contributors prefer equal split 463 00:24:45.399 --> 00:24:47.339 It's obvious 464 00:24:47.339 --> 00:24:51.219 Because although he or she does not 465 00:24:51.219 --> 00:24:53.439 contribute a lot to the company 466 00:24:53.739 --> 00:24:56.080 They receive the same equity 467 00:24:57.220 --> 00:25:03.739 That's why there's a kind of a disadvantages of the equal split 468 00:25:04.459 --> 00:25:08.959 The person who selected each contracts determine the performance 469 00:25:08.959 --> 00:25:13.760 The person determine the performance, not just incentive structure itself 470 00:25:13.760 --> 00:25:15.300 Why is this happening? 471 00:25:15.300 --> 00:25:18.840 Person who need equal split 472 00:25:19.280 --> 00:25:23.140 They are ready not to contribute to the company 473 00:25:23.140 --> 00:25:27.199 That's why the company's performance is decreased 474 00:25:27.519 --> 00:25:28.660 What do you think? 475 00:25:28.660 --> 00:25:29.900 Is it interesting? 476 00:25:29.900 --> 00:25:32.939 Please remember this story 477 00:25:32.939 --> 00:25:35.900 It will be very helpful for you to determine 478 00:25:35.900 --> 00:25:39.519 your equity split between your co-founders