Co-founder questions.

#1

Post by tahir » Fri, Nov 07, 2008, 10:55 PM UTC

After reading PG's articles, and similar advice on the OnStartups blog, I am convinced of the value of a co-founder. But having a co-founder raises some questions, and I am wondering how other people have dealt with these issues.

1) I came up with the initial idea for my startup, and even did some ground work. Should I still give my co-founder a 50% share of the company? If not, what's a good way to think about allocating shares to a co-founder?

2) With two co-founders, should all decisions related to product development, funding, exit strategy etc., be consensus decisions, or can I assert a special decision-making privilege, by virtue of being the 'first' co-founder.

Re: Co-founder questions.

#2

Post by qhoxie » Fri, Nov 07, 2008, 11:13 PM UTC

To me these both address the same issue. I have heard a lot of different takes on this situation, and I myself have dealt with it.

1) You should both get 50%. This is just my opinion, but it applies well to most scenarios. Having an unequal allotment causes lots of motivational and mentality issues for founders. This is the last thing a venture needs in the turbulent early stages. It generally leads to better dedication and like minded decisions between to two people.

A positive way to look at it would be this: by giving up, say 10% more than you wanted to, the company has a better shot at success through two absolutely driven founders.

2) This draws from the same motivation as the first. Cofounders lose value quickly if one person always has the final word. You want them there to even things out. Disagreements are to be expected and the process of compromise is what makes the best decisions in many cases. Two minds working toward the same goal are usually helpful, even if they are not always striking a chord.

Re: Co-founder questions.

#3

Post by alex_c » Sat, Nov 08, 2008, 12:13 AM UTC

I think it boils down to: do you want an employee for "your" (singular) start-up, whom you will pay (at first) in shares, or do you want a co-founder for "your" (plural) start-up?

I think either choice is valid, if you can find the right person. But you should decide how much control you want to keep for yourself, and what that implies for the other person's motivation and initiative.