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Comment by laglad | Hacker News Reader

What about "I've tested the market with a prototype over the last year that has generated revenue (not much but some) and now I'm recruiting a cofounder?" Still 50/50? Or should the earlier founder be compensated for earlier work with future work being earned evenly b/w the two cofounders on a vesting schedule?

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I would still go 50/50 because at that point, after one year of the prototype who generated revenue, you could go the "solo founder" let's hire employee route.

The thing is.. look at the stats, most startups fail. Having an equility split really make both co-founders committed and started in the right direction, which goes a long way about making the startup succeed. How would you feel about starting a startup where you don't have equal split with the person who'll spend all your days with?

If you ask that question, I think it's because you haven't found the right co-founder. I.e. Let's say you have a selling book website for a year with some revenue, and then you can have Stephen King joins you as co-founder. Would you hesitate to give him 50 if he fits the role? Now, obviously you don't have a book business and this is not Stephen King.. but still, the idea applies. If you think it's not worth 50, it probably isn't and you should try to find someone else. Otherwise both party will be unhappy. Your co-founder won't feel equal and you'll find that you gave too much.

That's my 2c (and to explain a bit the lesson from OP)

You might find Mark Suster's opinions helpful. The podcast of his Stanford talk(s?) are also pretty good.

http://www.bothsidesofthetable.com/2011/05/09/the-co-founder...

Mark's advice on these topics is some of the best ever.

Marc, you and Mark seem to disagree on at least one thing:

You:

if you're considering a cofounder who you don't want to give equal stock to, do you really have the right cofounder?

Mark:

I meet far more second or third time entrepreneurs who wouldn’t do a 50/50 (or 33/33/33) partnership ever again than you would image.

I am one of them.

Based on my experience, I'd recommend finding a co-founder you want to split equity evenly with before you start up as you recommend.

Fairly clear cut that the original person should take a bigger share. One thing I would preface that with is that with is that if the cofounder comes in and fundamentally changes the business into something much bigger/ better than it was they are entitled to equal or close to equal.

I think the hard case is when you start off with equal and then down the track one founder has a different level of enthusiasm and expectation on level of time involved. If down the track you are working long ours and just about every day and your cofounder is treating it as a 9-5 there is bound to be friction.

That's why he also recommended a vesting schedule. Your case is a hard one, but it works for the case where someone gets 50% and then decides to bow out.

For 9-5 vs. long hours -- you need to have this conversation up-front. If there's any doubt that you aren't on the same page or just agree with differences (and compensate fairly), then this is not a good match.

Yes. This is why it is often a good idea to restart founder vesting when you raise a funding round -- it is EXTREMELY rare for a founding team to actually hold together all the way through to success. Generally at least one founder feels that at least one other founder didn't pull their weight, and without vesting there's no way to fix this.

I'm trying to wrap my head around your idea of "restarting" a vesting period. Do you mean that all unvested shares are reset to a 4-year vesting period after a round of funding?

I'm probably just confused. Would you mind elaborating?

Excuse my complete ignorance on this - but have you or Mark written about it? (And yes I did google it and came up with a bunch of articles about founders and vesting, however nothing popped out about restarting founder vesting when raising a new funding round.)

Come to an agreement where both parties are equally unhappy.

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