4 ms·

This is a strong set of questions. The only one that didn't ring true was #8, ownership. For a two-founder company, I strongly believe that 50/50 is the corre

by jbyers 18y ago

This is a strong set of questions. The only one that didn't ring true was #8, ownership. For a two-founder company, I strongly believe that 50/50 is the correct structure. Anything less breeds long-term ill will. What if, as Gabor notes, contributions are unequal? For early stage startups and minor disparities, I'd say skip it and still go with 50/50. The amount of future contribution (and potential for conflict) by both parties will be huge compared to than what's already been done. If someone really is coming to the table with a vastly larger contribution to the company, and intends to bring on a co-founder, I'd challenge the pair to very carefully consider whether the second person is a founder or a highly compensated key employee.

biohacker42 18y ago
I think 50/50 is the worst structure. Someone must have the last word, and that's actually less stressful.
- jbyers 18y ago
  If two founders can't agree on a critical decision, is the situation any better if they're 70/30 rather than 50/50? The person who "loses" will not feel good about it, and I think that feeling is compounded by the inequality in ownership. 50/50 drives you engage your partner in hard decisions and get to a solution you can both live with.
  - biohacker42 18y ago
    But what if you can't agree on a decision, but you could live with one partner having the last word? Say we agree on you taking the 51% side, then I have to think up front if I can live with you winning every time we can't agree. We'll be agreeing most of the time and if I'm an adult I can live with the occasion when we disagree but you have the last word. The worst case scenario here is that over time I can't take it and refuse to participate. That's pretty bad, but the worst case scenario with a 50/50 split, is paralysis thus guaranteed failure. I am not saying 51/49 is fair, I am saying its wort case failure mode is just a bit better then the 50/50 split worst case failure mode.
kirpekar 18y ago
I would never go with 50/50. At the very least 51/49 or any form of (50+x)/(50-x). When you have 50/50 and problems arise, you get two founder tugging the boat in opposite directions eventually going nowhere.

by jbyers 18y ago

biohacker42 18y ago

I think 50/50 is the worst structure. Someone must have the last word, and that's actually less stressful.

jbyers 18y ago
If two founders can't agree on a critical decision, is the situation any better if they're 70/30 rather than 50/50? The person who "loses" will not feel good about it, and I think that feeling is compounded by the inequality in ownership. 50/50 drives you engage your partner in hard decisions and get to a solution you can both live with.
- biohacker42 18y ago
  But what if you can't agree on a decision, but you could live with one partner having the last word? Say we agree on you taking the 51% side, then I have to think up front if I can live with you winning every time we can't agree. We'll be agreeing most of the time and if I'm an adult I can live with the occasion when we disagree but you have the last word. The worst case scenario here is that over time I can't take it and refuse to participate. That's pretty bad, but the worst case scenario with a 50/50 split, is paralysis thus guaranteed failure. I am not saying 51/49 is fair, I am saying its wort case failure mode is just a bit better then the 50/50 split worst case failure mode.

kirpekar 18y ago

I would never go with 50/50. At the very least 51/49 or any form of (50+x)/(50-x). When you have 50/50 and problems arise, you get two founder tugging the boat in opposite directions eventually going nowhere.