Equity & everything split w/ my co-founder down the middle (done deal, already on signed contracts).
What would have to be the situation that would make it worth it for me to fight for an additional %, giving me ‘the upper hand’? how does the relationship dynamic between me, my company, and my co founder change if it was 51-49?
Never split 50-50. The odds of two people having exactly equal contributions are impossible. If nothing else, find a way to give up 1%.
I agree that two people can never have exactly equal contributions, but if he gave up 1% then he'd lose control. Steve Jobs and Steve Wozniak started off 50/50 and that partnership worked well.
Wozniak obviously did more work since he built the first Apple computer and the Apple 2, but Steve Jobs also helped since he was good at selling those computers.
Out of the two though, obviously Wozniak was more important since he built the first personal computer, while salesmen are a dime a dozen.
So the answer to my question seems to be "if you want sole control of the company". It'd make it a dictatorship vs the current psuedo-democratic system.
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Exactly. One person has to be the leader ultimately; there can't be two chiefs in a tribe. Steve Jobs and Steve Wozniak's partnership worked only because even though they were 50/50 partners, Steve Jobs was ultimately the one in control as Wozniak deferred to him on most issues, since he only cared about engineering.
thanks. do you suspect that going after 1% is going to be a big hassle?
It depends on who your partner is. Some people are more reasonable than others. If he or she is the type of person that can see the logic in your position and understands that there needs to be 1 person who can ultimately make decisions, then it will work.
But, if they're hard headed, then you're kind of screwed. I would suggest that you offer them something in return for giving up that 1%, like a slightly higher salary if/when your company starts generating money.
Owning shares in the company is more important than a salary anyways but most people don't realize that in the early stages since the company isn't worth much if anything.
For instance, Facebook gave an artist some shares in the company in return for a painting that he did in their office; this was like the very beginning stages of Facebook when they were just a college social network.
Anyways, those shares ended up getting that artist hundreds of millions of dollars when Facebook IPOed. Clearly, people treat company stock like toilet paper when it's just getting started out.
Do not split 50/50. When there is a dispute that can't be resolved (and there will be eventually) the company will be at risk because a stalemate will stop you in your tracks. People who go to the mat over a "fair and even split" will not be reasonable when a disagreement arises. There are many right answers but only one wrong answer - 50/50.
You make sense. We spent hours with our lawyers on a clause regarding what to do if we ever come across a dispute, and we never really had an answer..
We haven't had any issues yet in regards to coming to a conclusion, one of us generally is persuaded to see the light. That doesnt mean it can't happen in the future...
Oh man. Well there's always renegotiations. This will come to heads sooner than later and I suggest having the convo when you're on good terms.
IMO 50/50 is the WORST possible agreement.
Keep in mind the market rate for CEOs is higher than CTOs, I'm not sure which you are.
50/50 is perfectly OK if you define your roles - eg CEO vs CTO.
That will help you define who has ultimate say in certain areas of the business; write it down and agree; ensure there's no overlap; and stick to it.
It'll work just fine.
Anyone who thinks you need to have 1% more (or less) than your cofounder to avoid losing (or winning) a vote is a fool, as in reality it doesn't make any actual difference. (I.e., if someone is going to be a pain in your arse, they're going to be it anyway.)