This is a broken record, but it’s true and it bears repeating: the team you assemble is the most important thing you’ll ever do as a founder. This is especially true with connected hardware products.

How about some Apple examples to start? We all know these two fellas.

Starting a company with a single founder is difficult. Starting a hardware company with a single founder is insane. Jobs was good but Woz was exceptional. Apple would have undoubtedly failed if Jobs was flying solo. We find 2 distinct personalities are optimal: a ‘hacker’ and a ‘dealmaker/hustler’. Roughly speaking this is a tech person and someone who’s willing to focus on everything else.

Scaling is a different story; it really only becomes possible with 8 or so people for a typical consumer hardware product.

Getting started with 2+ is great but shipping a solid product (even at small scale) is next to impossible with only 2 people. We’ve found ~8 to be the magic number of employees for getting a basic consumer electronic product into the hands of customers. This usually breaks down to ~4 on the hardware team, ~2 on the software team, and ~2 on operations/marketing/business development. Some companies run leaner and outsource large parts of product development but this is usually sub-optimal for startups (more on that later).

This is often debated but truly “equal” cofounders rarely exist.

With founders, dividing equity “equally” is usually anything but equal. This isn’t always wrong, but it’s often a sign that co-founders haven’t had hard conversations yet. Usually, one founder has something more useful to add and the equity should reflect that. If you decide that 50:50 (or 33:33:33 or whatever) makes sense for your founding team, be able to defend why.

Craig Silverstein was Google’s first hire and is hailed as a pillar of the company.

When it comes to hiring your first employee, be prepared to shell out 2–5% of your company to get that employee on board. Then a fair but generous division of equity might be: 10% to the next 10 employees, 5% for the next 20 employees, and another 5% to the next 50 employees. This sets your first 80 employees up to be highly focused on long-term upside.

Without question, Jony Ive was a “must have” hire for Apple.

But sometimes that exceptional person comes along that you simply can’t live without hiring (Jony Ive in the case of Apple). These “must have hires” can be the difference between an okay team and a superstar one. It’s okay to give them a large piece of equity: 3–10%.

Whether it was a smart move or not, John Scully took a decent chunk of Apple when he joined in 1983.

Keep in mind that a hired CEO will often retain somewhere between 7–10% of the company after a Series A financing. If your company needs this, be prepared for a big chunk of equity to go their way. Obviously, few founders plan for this and many VCs think it needs to be done at some point. Talk about this with your investors before signing paperwork!

This is the best image I can find for vesting.

Young founders sometimes fail to institute a vesting policy for their employees. This is a huge mistake. Vesting is good for everyone, including the founders, the advisors, and the employees. A 4 year vesting period with a 1 year cliff is standard for employees and founders.

Talk to a lawyer about an 83(b) election if you haven’t yet.

This one kills me. If you’ve already formed your corporate entity and haven’t filed an 83(b) election, fire your lawyer. NOW. This simple document means you pay taxes on all of your equity immediately upon it being granted, rather than as it vests. This is particularly important as the value of your equity will dramatically increase over time (hopefully) and if you fail to file an 83(b) election, you will be required to pay taxes each year as the value increases.

Option pools are as good as swimming pools.

Another classic rookie mistake: failure to setup a stock option pool for new employees prior to financing. This one won’t kill you like the 83(b) but it’s the smart thing to do. Two reasons for this:

Having an established option pool (minimum of 10%) set aside helps you manage hiring new employees without complex equity recalculations. More importantly, it signals to investors that you know what you’re doing and are preparing for growth.

This is extra important for a hardware company as you’ll likely need more employees earlier in the lifecycle of the company.

A small board can be indispensable for a small company with an endless list of to-dos.

The startup community is littered with horror stories of founders being fired by the “big bad powerful VC board.” This is almost always untrue or incomplete. A board of 3 or 5 people with at least 1 outside (non investor, non employee) member can be one of the most efficient ways to leverage your time and network as a CEO. Even if it’s just an informal monthly meeting of mentors, these groups will help keep the management team on-track, organized, and accountable. But be extremely careful who you put on your board!