Every CEO on the planet has to ask themselves a really simple question:
What type of CEO do I want to be?
Do you want to be a CEO that acts with integrity and does the right thing, even if it’s going to cost the company a little bit of equity or money? Or…
Do you want to be ruthless, cut people out equity a week before it vests, and strike fear into every employee in the company?
Your decision goes beyond your cofounder.
Don’t think for a second that your employees will not find out how you treated your cofounder. They will. Treating him poorly will only come back to bite you.
Firing him is not the issue. You should fire him if he is worthless like you say he is. That is the right decision.
Handle yourself with class and grace.
You learn that bad behavior is seldom rewarded. Instead, handle yourself with class and grace. Always.
Have the difficult conversation with your cofounder. Be gracious and give him his equity even if it hasn’t vested yet.
You’ll feel good about what you did. He’ll feel good (eventually) about the way you handled things. And, most importantly, your employees will know you are a stand-up guy.
The equity really will not matter.
I know whatever the equity percentage your cofounder has feels like a large amount, but it really isn’t. If your company becomes a huge success, your 60% will be worth a lot regardless of your cofounder’s equity.
In fact your equity will likely be worth more by doing the right thing. You’ll be creating a culture of success. And culture is about the most important indicator of a successful startup.
For more, read: Why Your Startup Culture Is The Key To Your Company’s Success
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