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Reward for new ideas?

Imagine our startup company works on 2 ideas currently.

The founders and the employees in different layers work for the company, get their salary (in cash or IOU), and have respective amount of shares.

Now, one person (either founder or employee), suggest a nice idea to add to the company. The R&D department evaluates the idea, and the board decides to add this nice idea to the company’s line of regular works (production, sales, …).

Now the question is:

  1. How shall the company reward that person who brought that nice idea? Cash or shares, or both? And how much % !?
  2. How shall the company treat these idea-holders so that they get motivated to bring more perfect ideas to the company?

Thanks a lot.

Answer 8907

This is nothing close to what would happen in reality, tbh… If it’s a startup:

  1. No sane startup would ever work on two ideas concurrently.
  2. There is no R&D department (or any department) - the whole startup is a single department.
  3. Work contracts usually stipulate that ideas you come up with will belong to your employer.
  4. Ideas are worthless without execution anyway.

So really, the only sensible thing to reply in my opinion is: expect a tap on the back and a bone at best - delivering such ideas is your job. If you’d like to reap the real rewards (and take the real risks that come with it) you’ll want to create a company.

Answer 8909

Expanding on @DennisDeBergandy’s answer:

The employment agreement should cover this.

Many startup employment agreements:

  1. Restrict employees from competing with the company.
  2. Transfer intellectual property ownership from employee to company.
  3. Compensate employee with company stock.

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