Entrepreneurship.

Relationships, Roles, Rewards

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The question

If your cofounder stopped showing up next month — a new job, a new city, something at home — how much of this company would they walk away still owning, and could you say that number out loud right now, without opening a document you haven't written?

The idea

Thomas Hellmann, then a finance professor at the University of British Columbia's Sauder School of Business, and Noam Wasserman went at the first deal any founding team ever does — the division of founder equity — in a 2011 working paper for the National Bureau of Economic Research called The First Deal. Their dataset covered 1,476 founders across 511 ventures. Roughly a third of the teams had split the equity equally, and equal splits clustered among the teams that had negotiated in less than a day. Those teams went on to raise at lower pre-money valuations in their first financing round, sharpest among the ones who'd decided fastest — though the authors are careful to say the split is more likely a symptom than a cause, which is arguably worse news, because it means the speed of the handshake is telling you something about the team. What the paper does measure directly is what the stronger founder hands over inside an even split: about ten per cent of the company, a quarter of an average founder's stake, or roughly $450,000 in net present value. The trap is that an even split feels like fairness when it's mostly relief. The hour you skip at the start doesn't disappear; it comes back in year three, when one of you has been full-time for two years and the other still has a job.

The framework

01
Who is in — and what being in is going to mean.
Cofounder isn't a compliment you hand to whoever happened to be in the room early. It's a category with a definition: full-time, unpaid or nearly so, carrying real downside if this fails. Someone enthusiastic, helpful and still drawing a salary elsewhere is an advisor or a first hire, and both are honourable things to be. Write the definition before you assign the label, because the label is what people argue from later — and once somebody's called themselves a founder in public, taking it back costs far more than never granting it did.
02
Roles: skip the org chart, name the tie-breaker.
Day 76 does decision rights properly — one owner per decision, and who advises, who can veto, who is simply told. The founding-team version is narrower and much harder, and it fits on one line: who breaks a tie when the two of you deadlock at eleven at night. You'll put it off, because agreeing a tie-breaker feels like admitting the friendship has limits. You'll find the limit anyway; the only thing in question is whether you meet it with a rule already written or without one.
03
The even split is allowed — once you've done the work to reject the alternative.
Score each founder on the things that actually differ between you: the idea and everything done before today, full-time commitment, cash or assets put in, what each of you gave up to be here, and the role each will carry from here. Zero is a legitimate score on any line. Then hold those totals against the split you were about to agree. If they match, take the even split with a clear conscience and a written reason. If they don't, you have an hour of discomfort ahead of you — and time it, because Hellmann and Wasserman found the valuation gap widest in exactly the teams that settled this fastest.
04
What happens the day one of you leaves?
Vesting is the only part of this that assumes you'll be wrong, which is exactly why it's the part that saves you. The convention exists for a reason: four years, with a one-year cliff, applied to the founders' own shares and not only to the staff's. A cofounder who leaves in month seven takes nothing; one who leaves at two years takes half of what was promised. That's the outcome you can all agree is fair in advance and can't renegotiate afterwards. Put it in before there's anything worth arguing over. Vesting isn't distrust — it's what lets you be generous safely.

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