Best way to deal with co-founder who has second thoughts about equity split a year into the startup?


3

A year into a startup, your product is built and you have some traction. You see signs of growing discontent in your co-founder so you confront him to see what's up. And then he drops an issue I don't know how to address... he doesn't think the equity split we both happily agreed to a year ago isn't fair.

How would you deal with this?

Co-Founder Equity Distribution

asked Feb 21 '14 at 05:02
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Jared B.
16 points
  • It may not really matter, but how do *you* feel about the equity split? And how much of it has already vested? Did you have a cliff or anything? – rbwhitaker 3 years ago
  • We both had a one year cliff and past that point. I felt the equity split was fair since the start (as did my co-founder). I guess seeing that the company can be much bigger than either of us imagined made him reconsider what we had agreed to a year ago. – Jared B. 3 years ago
  • Are you sure that's the real issue, and not just a symptom of something else? – Nick Stevens 3 years ago
  • It sounds like your co-founder's ideas of how much money he should be making are telescoping by the year. You should buy him out. – Daniel Stern 3 years ago
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1 Answer


2

This is a tough situation to deal with. You and your co-founder need to have a heart to heart talk and get everything out in the open. Only then would both of you be able to work something out.

While none of us know the full situation, here are some questions I would ask myself:

  • Is it because he feels he's doing more work and doesn't feel you're contributing on the same level?
  • Does he feel like a co-founder? i.e. Are both of you writing down everyday what you're going to do and holding each other accountable? Are both of you voting on major decisions (even though you have more equity than him)?

I think you can pragmatically handle this situation and avoid ending up with grudges that could potentially tank a good startup.

Most often than not, it's about making the other person feel like they own the company -- even if they have less equity than you. The same goes for employees as well. Make them feel like they own the place and they start to value the vision more than drawing a larger salary.

answered Feb 21 '14 at 11:54
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Nishank Khanna
4,253 points
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Co-Founder Equity Distribution