Executive recruiting, take 2 continued

September 28, 2006

Check out the beginning of this story at Executive Recruiting, take 2

We extended the offer to Mr. Banker for him to join us as a third partner and founder. He was a big surprised given we had really gotten in touch with him as a banker to help us raise money. However, we explained the issues we had with the old agreement and how this offer was meant to capture all the upside of bringing him on-board without any of the legal mess. He was excited at the prospect of joining us as an entrepreneur and accepted the offer on the spot. We all agreed that the terms of the agreement would have to be worked out, but that we would take care of that over the next few months. We began discussing all the exciting partnership ideas we had in the hopper. We also spoke a bit about compensation, and Mr. Banker expressed interest in being an equal third, meaning he wanted the opportunity to earn into a full 1/3 of the founder’s equity. While we thought this was pretty rich, we realized we were not giving him a 1/3 outright. He would have to earn it over a period of time. If things didn’t “work out” before the end of his contract (probably 3 years), he would not get the remainder of his equity. We thought this was a pretty good compromise and a price worth paying to get a guy on-board who would hopefully grow the business exponentially. Seth and I agreed that it was better to have less of something big (if not something at all) than to have half of nothing.

Mr. Banker was excited to get right down to our business plan and fully understand what our vision was for the company. He also wanted to fully understand the financial model I had built and how we planned on making money. He admitted that as a partner, we was excited to get his hands dirty and learn the “nitty-gritty,” something that neither he, nor any other banker, typically did when working with a “client” to raise money. He admitted that a banker typically makes the introductions and understands the business on a high-level, leaving it to the entrepreneurs to answer the hard questions from investors. Seth and I left that meeting very optimistic. We liked Mr. Banker a lot and thought that the new partnership relationship was going to be much more beneficial for OnCard and force Mr. Banker to work harder than he would have if he were just our banker. We’ll see how this pans out…

JT

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