My co-founder simply comes to the office whenever he wants, some days he "prefer working from home" and such. I just can't stand the fact I am there 12+ hours and him less then 8. There is a lot to be done, and I clearly see how his hours out delaying our work.
I need him and want him, but can't let this continue. The advice I am looking for is how to talk this issue without bossing the person.
I've been in your EXACT same situation : started a company with someone who just wasn't up to the task. In the end the co-founder will end up being the biggest burden you'll have to overcome.
It's not an easy situation to manage because even if you talk about the problem, agree on having a more evenly split workload, and even start to see some short-term improvements, in the end, things will get back to their natural state, which is the situation you're in now.
Some people just aren't entrepreneurs and have a hard time doing things, or even thinking about what needs to get done to succeed. I think at most 1% of the people are true entrepreneurs who build scalable businesses, and most people who do call themselves entrepreneurs aren't really entrepreneurs and end up building small businesses, failing or bringing others down.
So my advice to solve your dilemma is the advice I wish I had followed when I realized what you're realizing now. Get your co-founder off the project because you're not going to be able to change a person's nature at runtime. So it might mean you'll have to re-incorporate the company if you're already incorporated, may be you'll need to find some agreement to part ways, but no matter what, get him off the project while you still can because things will only get worse as the business evolves. And part ways for good: no open-ended equity deal or anything of that matter; a clear and clean break.
And that's why people say that entrepreneurship is all about execution and the people. Now that you've experienced this aspect of entrepreneurship yourself, now you know. And since you mentioned you need a co-founder, now you can look for another one knowing what to look for: people who are doers. He may not even need to be an entrepreneur himself, but for sure he must be part of the 20%-25% of people who are doers!
You should consider how to get rid of him. Regardless of what 'talk' you have with him, it's quite unlikely to turn him around for very long -- you may get a few weeks of good hours out of him, but it's quite likely that he will return to his old ways.
Nevertheless, if you really want to talk with him: "Chuck; it seems like we're not sharing the work load evenly and that has delayed our work. I worked 60 hours last week, and I think you might have worked half of that. I like you and respect your skills, but if we can't figure out some way to even out the effort, I'm going to have to find something different to do."
I completely agree with Frenchie's comment. It isn't 25%, or 40. It's 1%, really. It's a small handful of folks that are skilled in eliciting the impactful, and getting themselves to relentlessly execute on it.
Entrepreneurship, at least if you want a company to succeed, has no room for subpar execution and operation. Hell, you can't even be average and make it. And you shouldn't just be a bit above average either.
YOU NEED TO BE A MONSTER, that eats everything in its path, with an unflinchingly forward projecting attitude through it all. - So yea, your lazy CoFounder will not change, at least not for a while. That needs to be embedded in one's mental programming permanently for it to stick.
Find a way out of the venture ASAP. Find a way to make money to survive in the meantime. Don't continue and set yourself up for another year or two, or more, of dealing with ineptitude from someone who obviously isn't an entrepreneur, and who will probably do what Frenchie said: bring people down or contribute to failure.
I think you ultimately need to be as direct as possible. Don't shortcut the issue. As others have said but I would suggest more directness. This will be one of the tougher issues you run into.
Kevin Rose says "Shoot it in the head". I've used this philosphy to very sound success. If something isn't working and you know it, get rid of it. The slightest dead weight can be the difference between success and failure.