My co-founder works in the IT department of an oil company and earns a fat salary. In all fairness, he wrote most of the code when we initially started developing the software for our product although he was always behind schedule. Nowadays, he rarely shows up for meetings and does very little work. He always says he is committed to our startup though and promises to resign soon. We’ve seen significant customer and investor interest and we now want to incorporate a company. When we started out we agreed to split our shares 50:50 but I don’t think that is fair as I do most of the work. I am also not sure of his commitment to the company .
Dear Confused Co-founder,
Your situation is not unique. Quit whining and put some legal processes in place. Have you ever heard of the word “Vesting”?
I see both of you started out as idealists but looks like you are transitioning to the darker side being a realist. Some co-founders like to split shares equally, that only works so long as all is rosy. What happens when there is a deadlock in voting? How will a decision be made? Even if just a by a single share, I like to think it is better for someone to hold a majority.
Have you ever heard of the word “Vesting”?. Vesting is how both of you protect yourselves from each other and show commitment to the company. You both will have to earn your shares over a period of time (usually 4 years) so long as you remain committed to the company. If any of you leaves the company before your shares are fully vested, you leave the company with whatever shares you have earned and forfeit the remaining. If you leave before earning any shares, well, that’s your headache, you leave with no shares. You can learn more about vesting here.
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