I had four co-founders, the last of whom joined 1.5 years after we started the company. Do you know who got the most equity amongst the co-founders?
That’s right, the one that joined 1.5 years after we started.
You want to make your equity decisions looking forward, not backwards.
I had a pretty simple rule regarding who was and wasn’t a co-founder: If you join the company before external funding, then you are a co-founder.
And I decided, right or wrong, to treat co-founders based on the value they would bring to the company, not their start date.
The reality is if you can bring in an excellent late co-founder then you will increase the odds of success, and thus increase the value of everyone’s equity.
None of the co-founders minded that the late co-founder got the most equity. He was more senior than the others, and he brought more value than the others. He deserved the most equity.
Just be transparent and honest with your other co-founders.
If you are fair with everyone you work with, then you likely will not have any problems giving a large chunk of equity to a late co-founder. Just be transparent.
It’s when people find out through the grapevine they feel like you've been dishonest. And that’s when the problems start.
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