You are starting a business, and in many ways this guy has the ability to positively or negative affect the outcome of your business. You need to assess, wheth

You are starting a business, and in many ways this guy has the ability to positively or negative affect the outcome of your business. You need to assess, whether on your own or through conversations with him, where he fits into the grand scheme of things. Employees carry out orders and implement code to a product spec Co-Founders contribute business and product knowledge and opinion, on top of their "employee" duties. Anything and everything is possible. Successful startups (like the previous fuckedcompany.com) have been built with just 1 guy acting as CEO, Janitor and Chief Coder. Others have been built with 1 founder and a few employees, and others with 2,3,4 or more co-founders. At some point you'll probably want a co-founder. Both to bounce ideas off of and to give credibility to the overall business. While you're in the garage/basement phase this is not usually your prime concern. It's good to let things just "happen" for a little while until you find your ultimate direction. For your specific case, given the limited details here, I would probably pay your friend a fair rate to act as a consultant advisor/coder. See what develops and if you feel he is of co-founder quality for this specific project. Like anything there is a tradeoff, and the tradeoff here is that if you later decide to make him an official co-founder, it will have come at the expense of his consulting salary.