Structuring Your Startup: Lessons from Naming, Equity, and Legal Foundations

This week in my Harvard course, Technology Ventures: from Idea to Exit, we dove into the essential building blocks of structuring a startup. We discussed everything from naming your company to managing equity, co-founder relationships, and navigating legal considerations. With insights from guest speakers David Willbrand , Chief Legal Officer at Pacaso and Professor of Startups & Venture Capital at University of Michigan Law School , and Ali Partovi , CEO of Neo and co-founder of Code.org , we explored the practical and strategic aspects of early-stage startup decisions.

Building a Startup and Knowing When to Pivot

One of the key takeaways this week was the importance of reflecting on your passions and the problems you want to solve. As we discussed, sometimes a startup’s original idea doesn’t pan out, and that’s okay—it’s a natural part of the entrepreneurial journey. We highlighted an example of a German entrepreneur who pivoted after realizing that their game wasn't gaining traction. What made the difference was their ability to ask the tough questions: What do I care about? What excites me? This reflection often leads to more viable directions.

A major point was maintaining a “spark list” of ideas, mentors, and allies—connections that can foster creativity and support your vision. One of my guest speakers mentioned how reviewing 35-40 ideas over time can be instrumental in helping you find your next move. Community and mentorship play pivotal roles in this process.

Equity Splits

We discussed how to split the equity for new startups among co-founders, then the first few employees, and finally the next 5-10 employees. Getting equity splits right is tricky business and there is no one answer. But it is important to abide by the "printer test" meaning that if everyone's compensation (stock and salary) were accidentally left on the printer, you would have nothing to be embarrassed about. This article by Sam Altman is a good resource on the topic. https://blog.samaltman.com/employee-equity

Legal and Business Formation Insights

David Willbrand gave us a deep dive into the critical aspects of startup formation. One of the top pieces of advice was for high-growth startups to form a Delaware C Corporation. While other structures, like LLCs or S Corporations, may work for smaller businesses, they’re often unsuitable for startups that plan to raise venture capital.

We also covered equity and cap tables—the foundation of startup ownership. David explained that while shares track ownership, what matters most is the percentage ownership divided among founders, employees, and investors. A memorable analogy compared this process to a triathlon: as you progress through stages like hiring and raising capital, your original stake will naturally dilute. But that’s part of building a company, and founders should embrace it.

Implementing vesting schedules for both founders and employees is also a must, with a standard vesting period of four years. This ensures that equity is earned over time, reducing the risk of “free riders” who leave early but still hold large stakes in the company. A key legal consideration here is the 83(b) election, which can save founders and employees significant taxes down the road by locking in the stock’s value at the time of issuance.

The Art of Naming Your Startup

Ali Partovi led a fascinating brainstorming session on startup naming. He outlined different approaches, from descriptive names (like General Electric) to creative ones (like Amazon). One of the most exciting parts of this process was hearing about naming tactics like concatenation (combining words, e.g., Dropbox), tweaking spellings (Lyft), and using verbal resonance—names that roll off the tongue.

I shared the story of how we named Zillow by combining "zillions" (as in countless data points) with "pillow" (representing homes), aiming to create a name that felt both approachable and authoritative in the real estate space.

The ultimate goal is memorability. Ali emphasized that a name doesn’t need to be perfect—it just needs to stick. Factors like rhyme, rhythm, or using high-value Scrabble letters (“X” and “Z”) can enhance this effect. The class was particularly inspired by his idea of hosting “naming parties” with diverse groups to encourage creativity and fresh perspectives.

Next Week

In Week 1, we brainstormed startup ideas. This week, we focused on structuring a startup, selecting co-founders, and naming your company. Next week, we'll dive into raising pre-seed and seed rounds of venture capital. Excited to have David Frankel , Kent Bennett , and Tuan Ho —three accomplished venture capitalists—joining us for a three-hour class and private office hours with students.

Office Hours

In addition to class today, I met with 10 students one-on-one privately in Office Hours meetings which is always a highlight for me. The students were interested in pitching me their startup idea, getting career advice, and learning more about my startup experiences. Later in the semester, I'll post some thoughts from all of my student meetings.