It's tempting to think in terms of right and wrong, or whether or not -- to simplify decisions for the sake of moving forward. The question is not whether to f

It's tempting to think in terms of right and wrong, or whether or not -- to simplify decisions for the sake of moving forward. The question is not whether to fire, but how to manage this person, whether present or former employee/founder. As a founder, you're creating something with at least as many dimensions and perspectives as you have stakeholders -- not a graphic but a sculpture. Worse, as the founder/creator you actually can't see things from stakeholders' perspectives, because you don't have their concerns or knowledge gaps or insights. Even worse, you're building a live thing: you start something and it keeps going, becomes precedent or expectation or concern. So it's a multi-dimensional seed. To avoid getting lost in situations like this, get in the habit of putting on everyone's hat for a minute, and then think about the dynamics, and then ask what's the distinguishing feature of this situation. (Ideally you develop a team doing the same thinking, and then they can do this without you as the business grows.) Other commenters have mentioned some of the perspectives, particularly about people's sense of fairness. But I think the distinguishing factor here is the safety of closeness with deciders. If you as the decider fire this person for not putting out, and then it comes out they were struggling with something they couldn't share (e.g., an addicted spouse or sibling?), aside from piling havoc on horror, you look like you don't understand those working closely with you and don't appreciate their (earlier) sacrifice. You want people to tell you the truth -- about their situation, the business, and you as a person. If you don't know, that's your problem. You don't have to agree with them, or even understand how it all fits together, but you should know. So, all thing considered, in this case I would recommend doing something that will ensure observers will be more inclined to come to you with the truth, not less. Sooner, softer, smoother...