Ask HN: How should I re-negotiate equity with my co-founder?

2 points by machz 10 years ago | 3 comments

Started this project together, split the equity equally.

Idea was my co-founders', development work is mine. We still work great together, but he just can't put enough time on the project due to family, other work commitments etc., while my engagement continues to rise.

It's only been 3 months, but I would have worked 3x more and I'm full time on this now. I can clearly see that in future I would probably be handling 90% of the company work while he pitches in <10% of the time, as we keep on adding new features. The problem aggravates if we grow in numbers: it won't be fair to new people that someone who is working much lesser on the project has all the equity.

So this seems like a situation many would have been in. How do you suggest I handle this?

Axsuul 10 years ago |

If you've been on Hacker News long enough, it should have been pounded into your head by now that idea means jack squat in the long run. I've been in this situation now a few times to know now that a vesting agreement is key. Do you have that?

Having cofounders is a touchy subject and any problems arising between you two now is pretty much a guarantee that it will destroy the company in the future. If everything has already been signed and there are no vesting agreements in place, the only way to do this is to buy out your co-founder to avoid any future legal issues. Or you could dilute your co-founder as you bring on outside investment (e.g. Facebook). Either way, there will be some emotion involved. I would shoot for buying out your co-founder in some way, perhaps with a loan of some sort. It's the cleanest and most quickfire solution, especially with you so invested in it. Of course, this is highly dependent on the assumption that you are passionate about what the company is doing and that there is still a great opportunity here.

Props to you though on choosing to deal with the situation now rather than later. Good luck!

sharemywin 10 years ago |

You probably need to work out a lot more than just this. Are you going to take outside funding? How does that dilute your equity? Are you going to take a salary first? before profits come out? are you going to give equity to early first employees? when do they become vested?

sharemywin 10 years ago |

Also remember as soon as you add an employee and give them a little equity you both become minority owners. This means you and the other person control the company, but that also means if they decide to gang up on you your screwed instead.