Definition
Earn-out
A deal structure where part of the sale price is paid later, contingent on the founder staying and hitting targets.
From the episode “The $50 Million Exit Trap Nobody Warns Founders About”Hear it on the podcast1 episode
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Related terms in Startups & Fundraising
DilutionThe reduction in existing shareholders' ownership percentage that occurs when a company issues new shares, typically during a funding round.Direct Public Offering (DPO)Listing existing shares on an exchange without raising new capital. Shareholder to shareholder trading, no IPO roadshow.Distribution on Cap TableGiving equity — not just commissions — to people who already have relationships, access, and trust inside your target market. Not hiring salespeople after the product is built, but recruiting co-builders who are already known inside the networks you need to reach. Josh Furstoss's first checkbox before starting any new company.Dual-Sided MarketplaceA platform that must simultaneously attract and serve two distinct user groups whose participation depends on the other side being present. In Luxxera's case: patients and clinics.Execution PremiumThe principle that execution accounts for 99% of startup outcomes and the initial idea for 1%. Ideas are the starting point — what makes them founders — but validation, iteration, delivery quality, and market timing determine whether anything becomes a business. A great idea with poor execution fails; an ordinary idea executed with relentless customer focus and iteration can succeed. The implication: invest disproportionately in execution infrastructure, not idea protection.Fast Follower AdvantageThe competitive benefit of entering a validated market after initial product-market fit is demonstrated, using better tools, models, or distribution than were available to the pioneer. Distinct from being late: a fast follower enters early enough that the market is still forming, but after the founding pioneers have absorbed the discovery risk. Cal.ai is the canonical example: launched before vision AI was accurate enough to reliably identify food, it grew distribution while the models improved — and was positioned to capture compounding gains from model improvements that arrived after launch. The lesson: being in market is a prerequisite for benefiting from technology progress you don't control.Feasibility studyThe engineering and economic study that determines whether a mining project can proceed to construction.Freedom to Operate (FTO)An analysis that determines whether a product, service, or process can be commercialized without infringing on valid patent rights held by third parties. An FTO clearance does not mean the inventor's idea is patentable — it means the inventor can build and sell without risk of infringement litigation. Ophir frames FTO as the first question every founder should answer before raising money, hiring engineers, or talking to customers: if someone else owns the rights to your core mechanism, finding out on day zero costs almost nothing; finding out at Series A or after a lawsuit is potentially company-ending.