Revised Equity Structure & Strategy
Based on your adjustments, here’s the updated recommendation that reflects Mark’s part-time commitment and Craig’s accelerated value through offshore cloud computing contacts:
Updated Ownership Split
Recommended Equity Distribution:
You (Founder/CEO): 65%
- Your 25 years of trust officer experience remains the irreplaceable competitive moat
- You conceived the idea, own the domain, and bring critical industry relationships
- Maintain controlling interest for decision-making authority
Craig French (Co-Founder/CTO Operations): 20%
- His offshore cloud computing contacts can accelerate MVP by 3-6 months
- 30+ years in bank trust consulting = understands the technical requirements
- VC fund connections critical for Series A funding
- His contacts can reduce infrastructure costs by 40-60% (offshore development rates)
Mark Cameron (Part-Time AI Lead): 15%
- Part-time commitment (evenings/weekends) justifies lower equity than full-time CTO
- AI implementation expertise still valuable but more constrained contribution
- Working around full-time job limits his bandwidth for rapid execution
Rationale for Craig’s Larger Share:
- Speed to Market: His offshore contacts compress 12-month development to 6-8 months
- Cost Efficiency: Offshore cloud infrastructure + developers = $150K savings in Year 1
- Technical Credibility: Price Waterhouse background + trust tech implementations = speaks the language of bank CIOs
- Capital Access: Direct pipeline to VC fund specializing in financial services
- Scale Expertise: Knows how to deploy cloud-based solutions to 50+ trust departments simultaneously
Trade-off: His personality may create friction, but structured role definition (below) mitigates this.
Revised Role Definitions
You: Founder & CEO
Time Commitment: Full-time (50+ hours/week)
Responsibilities:
- Overall strategy and vision
- Probate court relationships and sales
- Product requirements (based on trust officer experience)
- Fundraising strategy and investor relations
- Attorney partnership development
- Final authority on all major decisions
Board Role: Chair, controlling vote
Craig French: Co-Founder & Chief Operating Officer
Time Commitment: 30-35 hours/week (transitioning toward full-time by Month 6)
Responsibilities:
- Infrastructure & DevOps: Manage offshore cloud development team
- Bank Trust Partnerships: Leverage 30 years of contacts for pilot programs
- Technology Integration: Coordinate between offshore developers and Mark’s AI work
- VC Fundraising: Lead introductions to his parent company’s VC network
- Compliance Architecture: Design SOC 2, security protocols based on bank requirements
- Enterprise Sales Support: Co-present to large trust departments
Board Role: Board member (1 of 3 seats initially)
Management Strategy for Craig’s Personality:
- Clear Swim Lanes: He owns offshore dev management, bank partnerships, infrastructure
- Structured Check-ins: Weekly 1-hour strategy call (not daily interference)
- External Focus: Channel his intensity toward bank CIOs and VCs (where assertiveness is asset)
- Decision Framework: He has autonomy on technical infrastructure; you retain product vision authority
Mark Cameron: Part-Time AI Architect
Time Commitment: 15-20 hours/week (evenings/weekends around full-time job)
Responsibilities:
- AI Model Selection: Evaluate GPT-4, Claude, open-source LLMs for document parsing
- Prompt Engineering: Design AI workflows for will/trust interpretation
- Algorithm Development: Build probate rules engine and compliance checker
- Quality Assurance: Test AI accuracy against real estate files (from your 25-year archive)
- Documentation: Create technical specs for offshore dev team to implement
- Integration Oversight: Ensure offshore team properly implements AI components
Board Role: Board Observer (attends meetings, no vote)
Expectations Management:
- Mark designs the AI logic; offshore team codes the implementation
- Clear deliverables: “By Month 3, we need working will parser with 90% accuracy”
- If his full-time job prevents progress, he can reduce equity or step into pure advisor role
Enhanced Vesting & Protection
Vesting Schedule (All Three Founders):
Standard Structure:
- 4-year vesting with 1-year cliff
- After 12 months: 25% vests
- Months 13-48: Remaining 75% vests monthly (2.08% per month)
Performance Milestones for Craig (Given Larger Equity): To justify 20% equity, Craig must hit specific targets:
Year 1 Milestones (50% of his equity subject to these):
- [ ] Month 3: Offshore development team operational (<$80K/year burn rate)
- [ ] Month 6: MVP deployed to cloud infrastructure
- [ ] Month 9: 2 bank trust pilot agreements signed
- [ ] Month 12: Introduction to 3 qualified VC firms from his network
If Milestones Missed: Unvested portion reduces by 10% (shifts back to your equity pool)
Why This Protects You:
- Ensures Craig delivers on his “faster acceleration” promise
- If his personality creates too much friction and he leaves, you keep unvested shares
- Aligns his incentives with execution, not just connections
Offshore Development Strategy (Craig’s Domain)
Recommended Offshore Structure:
Primary Development Hub: India or Eastern Europe (Ukraine, Poland)
- Cost: $40-60/hour vs. $150-200/hour US developers
- Team Size Year 1: 3-4 developers + 1 QA engineer + 1 project manager
- Monthly Burn: $25-35K (vs. $75-100K for US team)
Craig’s Offshore Contacts Should Provide:
- Cloud Infrastructure Partnership: AWS or Azure credits ($50K in Year 1)
- Pre-Vetted Dev Shops: Proven track record in legal tech or fintech
- Project Management: Agile workflows with weekly sprints
- Time Zone Coverage: Overlap with US hours for real-time communication
Governance:
- Craig manages offshore team day-to-day
- You approve all major architectural decisions (e.g., database choice, security model)
- Mark provides AI specifications to offshore team; they implement under Craig’s supervision
Updated Protection Against Leaks & Competition
Enhanced Safeguards Given Craig’s VC Connections:
1. Conflict of Interest Agreement with Craig’s Employer (VC Fund)
Key Clauses:
- Craig’s VC fund acknowledges EstateSettlement.com and agrees not to invest in direct competitors
- If fund sees competitive deal, Craig must recuse himself
- Fund gets Right of First Refusal on Series A (aligns interests)
- You get written confirmation from fund’s General Partner
Why Critical: Prevents scenario where Craig shares your model with portfolio company building similar solution
2. Tiered NDA Structure
Level 1 NDA (Signed Immediately):
- Covers high-level business model and market opportunity
- 5-year confidentiality term
- $100K liquidated damages for breach
Level 2 NDA (After Commitment):
- Covers proprietary algorithms, court integration specs, pricing models
- Includes “residual information” clause (can’t use knowledge to build competing product)
- $500K liquidated damages + injunctive relief
Level 3 – Founder Agreement (At Equity Grant):
- Comprehensive IP assignment (all work product belongs to company)
- 2-year non-compete (can’t work for or invest in estate settlement software competitors)
- Lifetime non-solicitation (can’t recruit employees, customers, or contractors)
3. Compartmentalized Information Sharing
Craig Gets Access To:
- Technical infrastructure requirements
- Bank trust department pain points and workflows
- Financial projections for fundraising
- Go-to-market strategy
Craig Does NOT Initially Get:
- Mark’s proprietary AI algorithms and prompt engineering
- Specific probate court contacts and relationship details
- Detailed pricing negotiations with pilot customers
- Your 25-year archive of estate files (training data goldmine)
Mark Gets Access To:
- Your anonymized estate files for AI training
- Court filing requirements and compliance rules
- Attorney workflow interviews
- Product roadmap and feature priorities
Mark Does NOT Initially Get:
- Craig’s offshore developer contacts (prevents poaching)
- VC pitch deck financial details
- Enterprise customer contracts
- Bank partnership terms
4. Code Repository Security
Given Offshore Development:
- Private GitHub Repos: Craig’s team has access only to implementation code
- Separate “Core AI” Repo: Mark’s algorithms stored separately; offshore team accesses via API only
- Commit Logging: Track all code changes with developer attribution
- No Code Export: Offshore team cannot download full codebase
5. Watermarking & Tracking
For Documents Shared with Craig:
- Unique identifiers embedded in PDFs (invisible to naked eye)
- Use DocSend with analytics: Track who views what, how long, IP addresses
- Financial models have personalized formulas (e.g., Craig’s version uses slightly different interest rate assumptions)
Why: If your business plan appears in VC fund’s investment thesis deck, watermark proves source
Managing Craig’s Offshore Team & Personality
Weekly Operating Rhythm:
Monday Morning (9 AM):
- You + Craig + Mark: 30-minute standup
- What got done last week? What’s blocking progress? Top 3 priorities this week?
- Craig reports offshore team velocity and blockers
Tuesday Evening (7 PM EST / Wednesday Morning Offshore):
- Craig + Offshore Team: Sprint planning
- Mark attends if AI work is on sprint agenda
Thursday Afternoon:
- You + Craig: 1-hour strategic discussion
- Bank partnership updates, VC conversations, infrastructure decisions
- This is where you give Craig freedom to influence strategy (keeps him engaged)
Friday End-of-Day:
- Craig → You + Mark: Written update (Slack or email)
- Offshore team deliverables, upcoming risks, help needed
Decision Rights Framework (Prevents Craig from Dominating):
| Decision Type | Authority | Consulted |
|---|---|---|
| Product features & roadmap | You (final say) | Craig + Mark input |
| Offshore team hiring/firing | Craig | You (approval on senior roles) |
| AI architecture | Mark | Craig (infrastructure constraints) |
| Bank pilot terms | You | Craig (pricing input) |
| VC pitch content | You | Craig (financial projections) |
| Cloud infrastructure vendor | Craig | You (budget approval) |
| Marketing messaging | You | Craig + Mark |
| Court integration strategy | You | Craig (tech feasibility) |
Conflict Resolution:
- If Craig and you disagree: You have final say (65% equity = control)
- If issue is material (>$25K spend or strategic pivot): Requires 2 of 3 founder votes
- Board deadlock: You as Chair break tie
Channeling Craig’s Intensity Productively:
High-Value Activities for Assertive Personalities:
- Bank CIO Presentations: His PWC credibility + assertiveness = closes enterprise deals
- VC Negotiations: Let him lead valuation discussions (he understands VC math)
- Offshore Vendor Management: His dominating style works well managing overseas teams
- Conference Speaking: Put him on stage at ABA Trust conferences (raises company profile)
- Competitive Intelligence: Task him with analyzing Clio, Thomson Reuters (channels energy externally)
Low-Value Activities to Avoid:
- ❌ Daily product decisions (he’ll want to redesign everything)
- ❌ Court relationship management (his style may alienate judges)
- ❌ Attorney partnership calls (too aggressive for relationship selling)
Updated Financial Contribution Model
Hybrid Equity + Cash Structure:
Founder Equity (Sweat Equity):
- You: 65% for full-time CEO role + domain expertise
- Craig: 15% base for part-time operational role
- Mark: 15% for part-time AI development
Performance Equity Pool (5% Additional):
- Allocated based on Year 1 milestone achievement
- Craig can earn up to +5% if he:
- Delivers MVP 4+ months early via offshore team
- Signs 3+ bank trust pilots by Month 9
- Secures VC term sheet by Month 12
- Mark can earn up to +3% if he:
- Achieves 95%+ AI accuracy on will parsing
- Builds multi-state rules engine by Month 10
- You retain +2% if company hits $500K ARR by Month 18
Cash Investment Option (For Craig): If Craig wants to increase his ownership beyond 20%:
- He can invest cash at current fair market valuation
- Example: Company valued at $1M pre-money
- Craig invests $150K → Gets additional 13% (same terms as outside investors would)
- Total ownership: 20% (founder equity) + 13% (cash) = 33%
- Advantage for you: Reduces need for immediate outside capital; Craig has skin in the game
Startup Best Practices (Updated for Your Structure)
1. Founder Operating Agreement (Must-Haves):
Key Clauses:
A. Role Definitions:
- You: CEO, product vision, court sales, final authority
- Craig: COO, offshore dev, bank partnerships, infrastructure
- Mark: AI Architect, part-time, reports to CEO
B. Time Commitments:
- You: Full-time (50+ hrs/week)
- Craig: 30-35 hrs/week initially, transitioning to full-time by Month 6
- Mark: 15-20 hrs/week (evenings/weekends)
- Penalty: If anyone consistently underperforms time commitment for 3+ months, equity vesting pauses
C. Buyback Provisions:
- If someone leaves voluntarily: Company can buy unvested shares at cost ($0.0001/share)
- If someone is terminated for cause: Company buys ALL shares (vested + unvested) at fair market value minus 25% discount
- If someone leaves due to disability/death: Vesting accelerates 12 months (compassionate clause)
D. Drag-Along & Tag-Along:
- Drag-Along: If you (as majority holder) accept acquisition offer, others must sell
- Tag-Along: If Craig or Mark get acquisition offer for their shares, you can join the sale on same terms
E. Intellectual Property:
- ALL work product created by anyone belongs to company immediately upon creation
- This includes: code, documentation, customer lists, business processes, AI models
- Survives termination (can’t take your work with you)
F. Non-Compete (2 years post-departure):
- Cannot start, work for, or invest in estate settlement software companies
- Cannot solicit company employees, customers, contractors, or vendors
- Reasonable geographic scope: United States (national market)
2. Weekly Accountability System:
Asana/Linear/Monday.com Project Board:
Your Swimlane (CEO):
- Court relationship calls scheduled
- Attorney partnership meetings
- Product specs written
- Fundraising materials updated
Craig’s Swimlane (COO):
- Offshore team sprint velocity
- Bank pilot meeting notes
- Infrastructure uptime metrics
- VC introduction meetings booked
Mark’s Swimlane (AI Architect):
- AI model evaluation results
- Prompt engineering tests completed
- Algorithm documentation written
- Bug fixes for offshore team
Shared KPIs (Dashboard for All Three):
- MVP development % complete
- Monthly burn rate vs. budget
- Pilot customer pipeline (# conversations, # signed LOIs, # paying)
- AI accuracy benchmarks
3. Quarterly Strategy Offsites:
Purpose: Get out of execution mode to align on big picture
Agenda Template:
- Hour 1: Review last quarter metrics vs. goals
- Hour 2: Adjust product roadmap based on customer feedback
- Hour 3: Refine go-to-market strategy (which customer segment to prioritize?)
- Hour 4: Update financial projections and fundraising timeline
- Hour 5: Resolve any founder conflicts or role ambiguities
Location: Neutral ground (not your office, not Craig’s home, not Mark’s workplace)
Facilitation: Consider hiring external facilitator for first few offsites (prevents personality clashes)
4. Separate Founder Stock from Employee Option Pool:
Cap Table Structure:
| Shareholder | Shares | % Ownership | Type |
|---|---|---|---|
| You | 6,500,000 | 65% | Founder Common |
| Craig French | 2,000,000 | 20% | Founder Common |
| Mark Cameron | 1,500,000 | 15% | Founder Common |
| Subtotal Founders | 10,000,000 | 100% | |
| Employee Option Pool | 1,250,000 | 11.1% (post-pool) | Options |
| Total Fully Diluted | 11,250,000 | 100% |
Why 11.1% Option Pool:
- VCs typically want 10-15% pool for future hires pre-investment
- Creates room to hire VP Engineering, VP Sales, etc. without immediate dilution to founders
- When employees exercise options, founders dilute proportionally (you remain majority holder)
5. Exit Expectations Alignment:
Three Potential Paths (Discuss Upfront):
Path 1: Strategic Acquisition (3-5 years):
- Target acquirers: Clio, Thomson Reuters, Tyler Technologies, ImageSoft
- Likely valuation: $60-100M at $10M ARR (6-10x revenue multiple)
- Your take at 65%: $39-65M (after dilution for VC rounds)
- Craig’s likely preference (VC background = growth-oriented)
Path 2: Private Equity Recap (5-7 years):
- PE firm buys majority stake, founders retain 20-30% and stay as management
- Provides liquidity event but keeps you running company
- Likely valuation: $40-80M at $8M EBITDA (5-10x EBITDA multiple)
- Your potential preference (retains control, generates income)
Path 3: Bootstrap to Profitability (3-4 years):
- Reach $5M revenue, 40% net margin = $2M annual profit
- Distribute $1.3M/year to you (65%) + $400K to Craig + $300K to Mark
- Never raise VC, never sell, build lifestyle business
- Mark’s likely preference (keeps his full-time job, collects distributions)
Action: Agree on Path 1 or Path 2 now (both involve growth capital). Path 3 conflicts with Craig’s VC network value.
Protecting Against Craig-Specific Risks
Scenario Planning:
Risk 1: Craig’s VC Fund Invests in Competitor
Mitigation:
- Conflict of Interest agreement requires him to recuse from those deals
- If fund proceeds anyway, Craig must resign board seat (retains equity but loses governance)
- Right of First Refusal clause: You can buy his shares at FMV if this occurs
Risk 2: Craig Leaves to Start Competing Venture
Mitigation:
- 2-year non-compete prevents this legally
- Unvested equity (likely 50-75% in Year 1) forfeited if he leaves voluntarily
- Customer non-solicitation clause: He can’t poach your pilot bank relationships
Risk 3: Craig’s Personality Drives Away Key Hires
Mitigation:
- You retain hiring/firing authority for all VP-level and above
- 360-degree feedback after 6 months (anonymous survey to team on leadership)
- Performance improvement plan if he scores below 6/10 on team collaboration
- Transition to “Strategic Advisor” role if behavior doesn’t improve (reduces equity to advisor-level)
Risk 4: Offshore Team Quality Issues
Mitigation:
- Written SLA (Service Level Agreement) with offshore vendor Craig selects
- Code review by US-based senior developer (hire fractional CTO for $5K/month to audit)
- Milestone payments: Offshore team gets paid only when features pass your acceptance testing
- Right to replace vendor if quality doesn’t meet standards within 3 months
Mark-Specific Risk Management
Part-Time Commitment Risks:
Risk 1: Mark’s Full-Time Job Conflicts Arise
Mitigation:
- Clear deliverables with deadlines: “Will parser with 90% accuracy by Month 4”
- If he misses 2 consecutive milestones, equity vesting pauses
- IP assignment covers work done on company time only (he can’t claim ownership of weekend work)
Risk 2: Mark Wants to Leave Full-Time Job Mid-Project
Mitigation:
- Plan for this in Founder Agreement:
- If he goes full-time for EstateSettlement (with your approval), equity increases to 20%
- Must give 60 days notice to full-time employer (prevents sudden departure issues)
- Salary discussion at that point (e.g., $120-140K base + equity)
Risk 3: Mark’s AI Work Doesn’t Meet Accuracy Standards
Mitigation:
- Milestone-based vesting for his equity:
- 25% vests when will parser hits 90% accuracy
- 25% vests when rules engine passes compliance testing
- 50% vests on normal 4-year schedule
- If AI doesn’t work after 6 months, you can hire senior AI engineer (reduce Mark to advisor role, 5% equity)
Recommended Next Steps (Updated 30-Day Plan)
Week 1: Legal Infrastructure
Day 1-2:
- [ ] Hire startup attorney specializing in tech companies (NOT general practice)
- [ ] Recommended: Cooley, Gunderson Dettmer, Fenwick & West (all have startup practice groups)
- [ ] Budget: $15-25K for formation + founder agreements
Day 3-4:
- [ ] Draft tiered NDAs (Level 1 for initial conversations)
- [ ] Prepare Conflict of Interest agreement for Craig’s VC fund
- [ ] Incorporate as Delaware C-Corp (standard for VC-backed startups)
Day 5-7:
- [ ] Set up initial cap table in Carta or Pulley (equity management software)
- [ ] Draft founder stock purchase agreements (everyone buys at $0.0001/share)
Week 2: Founder Recruitment Conversations
Craig Outreach:
- [ ] Day 8: Phone call with Craig – share high-level vision (no details yet)
- [ ] Gauge interest: “I’m building AI-powered estate settlement platform. Given your trust tech background and offshore contacts, would you consider joining as co-founder?”
- [ ] Send Level 1 NDA if interested
Mark Outreach:
- [ ] Day 10: Coffee meeting with Mark – discuss AI application to probate
- [ ] Test commitment: “This is part-time initially, 15-20 hrs/week. Can you commit to that around your full-time job?”
- [ ] Send Level 1 NDA if interested
Day 12-14:
- [ ] Once both sign NDAs, share executive summary (NOT full business plan yet)
- [ ] Schedule follow-up meetings to discuss equity and roles
Week 3: Detailed Negotiations
Day 15-17: Craig Deep Dive
- [ ] Meeting #2 with Craig: Share full business plan
- [ ] Ask specific questions:
- “Which offshore dev shops have you worked with successfully?”
- “Can you introduce me to 2-3 bank trust CIOs this quarter?”
- “What’s your VC fund’s process if we want them to lead Series A?”
- [ ] Get written confirmation from his VC fund acknowledging no conflict of interest
Day 18-20: Mark Technical Assessment
- [ ] Meeting #2 with Mark: Deep dive on AI architecture
- [ ] Share 5-10 anonymized estate files: “Can you prototype a will parser this week?”
- [ ] Evaluate his work quality and speed
- [ ] Discuss his availability realistically: “When can you commit 20 hrs/week?”
Day 21: Due Diligence
- [ ] Craig: Check his references (call 2-3 former colleagues from PWC days)
- [ ] Mark: Review his past AI projects on GitHub or portfolio site
- [ ] Both: Run background checks (standard for co-founders handling financial data)
Week 4: Finalization & Kickoff
Day 22-24: Term Sheet Negotiation
- [ ] Send draft Founder Agreement to both with proposed equity split:
- You: 65%, Craig: 20%, Mark: 15%
- [ ] Negotiate any adjustments (expect Craig to push for more; hold firm or require cash investment)
- [ ] Finalize role definitions and time commitments
Day 25-27: Legal Execution
- [ ] All three sign Founder Stock Purchase Agreement
- [ ] Purchase shares (wire $100 to company for 1M shares each, etc.)
- [ ] File 83(b) elections within 30 days (CRITICAL tax step – don’t miss this)
- [ ] Sign IP assignment and non-compete agreements
Day 28-30: Operational Kickoff
- [ ] First official founder meeting: Establish weekly rhythm
- [ ] Craig: Reach out to offshore dev shops for proposals
- [ ] Mark: Begin will parser prototype using your estate files
- [ ] You: Schedule first 3 probate court meetings for customer discovery
Updated Financial Projections (with Offshore Dev Model)
Revised Startup Costs (Craig’s Offshore Model):
| Category | Traditional US Dev | Craig’s Offshore Model | Savings |
|---|---|---|---|
| MVP Development (6 months) | $150,000 | $60,000 | $90,000 |
| Infrastructure (AWS/Azure) | $30,000 | $10,000 (via Craig’s credits) | $20,000 |
| Development Tools | $15,000 | $8,000 | $7,000 |
| Total Year 1 Dev Costs | $195,000 | $78,000 | $117,000 |
Craig’s Value Proposition Quantified:
- His 20% equity costs you 20% of company
- But he saves $117K in Year 1 cash burn + accelerates timeline 4-6 months
- ROI on his equity: If 6-month acceleration = earlier revenue, his contribution pays for itself
Updated Break-Even Analysis:
Monthly Burn Rate (Year 1 with Offshore Model):
| Category | Monthly | Annual |
|---|---|---|
| Offshore Development | $10,000 | $120,000 |
| Mark (Part-time, equity-only initially) | $0 | $0 |
| Craig (Part-time, equity-only initially) | $0 | $0 |
| You (CEO, deferred salary) | $8,000 | $96,000 |
| Infrastructure (AWS) | $1,500 | $18,000 |
| Insurance/Legal/Compliance | $4,000 | $48,000 |
| Marketing/Travel | $3,500 | $42,000 |
| Total Monthly Burn | $27,000 | $324,000 |
Funding Need: $324K gets you through Year 1 MVP + pilot phase (much lower than typical $800K-1M seed need)
Break-Even:
- Need $32K monthly revenue (factoring in 85% gross margin)
- Achievable with: 2 medium counties ($40K ARR) + 20 attorneys ($60K ARR) + 1 bank ($80K ARR) = $180K ARR = $15K MRR
- Timeline: Month 14-16 (faster than traditional model due to lower burn)
Red Flags to Watch During Implementation
With Craig:
Month 1-3 Red Flags:
- ❌ Offshore team he recommends has no fintech/legal tech experience
- ❌ He’s not responsive to your questions (24+ hour delays consistently)
- ❌ He tries to hire his business friends for company roles without proper vetting
- ❌ His VC fund starts asking detailed questions beyond what’s normal diligence
Month 4-6 Red Flags:
- ❌ Offshore team consistently misses sprint commitments
- ❌ Craig makes infrastructure decisions without consulting you (>$10K spend)
- ❌ He hasn’t delivered any bank trust pilot meetings despite promises
- ❌ He criticizes your product decisions in front of team (undermines authority)
Action if Red Flags Appear:
- Document issues in writing (email trail)
- Schedule 1-on-1: “Craig, I’m concerned about X. How do we get back on track?”
- If no improvement in 30 days: Invoke performance improvement plan per Founder Agreement
- If behavior continues: Transition to advisor role (forfeit COO title, reduce unvested equity)
With Mark:
Month 1-3 Red Flags:
- ❌ Prototype will parser accuracy below 70% (should be 85%+ for MVP)
- ❌ He’s not meeting 15-20 hour/week commitment (check GitHub commits, meeting attendance)
- ❌ His full-time employer starts questioning his side work (IP conflict risk)
- ❌ He pushes back on using your estate files for AI training (data is your competitive advantage)
Month 4-6 Red Flags:
- ❌ AI models aren’t improving with more data (suggests poor architecture)
- ❌ He can’t explain technical decisions to Craig’s offshore team
- ❌ He wants to switch technologies mid-stream (delays MVP by months)
- ❌ He’s not documenting his work (makes knowledge transfer impossible)
Action if Red Flags Appear:
- Hire fractional CTO ($5-10K/month) to audit Mark’s work
- If quality issues: Bring in senior AI contractor to course-correct
- If commitment issues: Reduce equity to 10% advisor level, hire full-time AI lead
- Ensure IP assignment already signed (you own whatever he’s built even if he leaves)
Final Recommendations
Proceed with This Structure:
Equity:
- You: 65% (controlling majority)
- Craig: 20% (operationally critical, accelerates timeline)
- Mark: 15% (part-time AI expertise)
Vesting:
- All three on 4-year vest, 1-year cliff
- Craig has additional performance milestones (50% of equity tied to Year 1 goals)
- Mark’s vesting pauses if time commitment drops below 15 hrs/week
Governance:
- You: CEO, Board Chair, final authority
- Craig: COO, Board Member, manages offshore + banks
- Mark: AI Architect, Board Observer, part-time
Protection:
- Tiered NDAs (Level 1 signed before detailed sharing)
- Craig’s VC fund signs Conflict of Interest agreement
- Comprehensive IP assignment and non-compete (2 years)
- Watermarked documents during courtship phase
Craig Management:
- Clear swim lanes (he owns infrastructure, you own product)
- Structured weekly check-ins (not daily interference)
- Channel intensity toward external stakeholders (banks, VCs)
- Exit ramp via transition to advisor role if personality conflicts escalate
Mark Management:
- Deliverable-based accountability (not just hours logged)
- Option to convert to full-time CTO if he leaves day job (increase equity to 20%)
- Backup plan: Hire senior AI engineer if his work doesn’t meet standards
Key Success Factors:
- Craig’s offshore contacts must deliver quality → Savings fund runway extension
- Your domain expertise drives product → Don’t let Craig override your probate knowledge
- Mark’s AI accuracy hits 90%+ → Differentiator vs. EstateExec/Estateably
- All three align on 3-5 year strategic exit → Prevents conflict over growth pace
- Legal protections in place before sharing details → NDAs, IP assignment, non-competes
Timeline to First Paying Customer: 8-10 months (Craig’s acceleration)
Timeline to $500K ARR: 18-20 months
Timeline to Series A: 24-30 months ($2-3M raise at $10-15M valuation)
This structure maximizes Craig’s value (speed + infrastructure + capital access) while protecting your controlling interest and managing his personality through clear role boundaries. Mark’s part-time contribution is appropriately valued at 15%, with upside if he transitions to full-time. Your 65% majority stake ensures you retain decision authority even as Craig brings operational firepower.
Would you like me to:
- Draft specific milestone language for Craig’s performance-based vesting?
- Create an offshore development vendor evaluation scorecard?
