Cofounder or Not a Cofounder

Is this YOUR company or OUR company?

  1. What’s her best argument?
  2. Should she walk if her boss doesn’t make her a cofounder?

Why the cofounder role can be tricky for any startup

I’ve been building startups for over 20 years, both on my own and with others. At those startups, I’m either:

  • One of the primaries turning an idea from dream into plan into reality, so I should be a cofounder.
  • The primary to execute a fully-baked idea, which means the cofounder question is indeed a question. Sometimes I should be, other times I shouldn’t.
  • Brought in to scale an existing early startup, so cofounder is out of the question.

Julie’s questions are totally legit

Julie is struggling with these questions because it feels selfish, if not greedy, to ask for more at such an early stage. The equity is worth nothing at this point, so why quibble over how much you have?

What cofounder really means

If you had a major role in building out an idea from the beginning to viability to initial version, you’re probably a cofounder. There are two mistakes in how this plays out, both based on vague words in that definition.

The case for Julie being a cofounder

Julie’s best argument to be made a cofounder is that she has singlehandedly turned this founder from a solo into a CEO. If it were any other way, I’d say no cofounder option here.

Founding and equity is different for service vs. product

Service models work differently than product models. I’m dumbing it down a bit, but a service model requires perpetual genius for growth and success. It is constant execution. A product model requires a bunch of genius put into the thing up front, before execution, and the people that “invent” that thing are rewarded for it in terms of cofounder status and equity.

Conclusion

Truth is, all of this is totally up to the founder. There is no rule or law in terms of who gets cofounder status and who gets equity. It’s all ethics, decisions, and agreements.

Solution

Julie loves her job and she likes the founder. They work well together. She’s worried about breaking a good thing to get to a better thing. I get that. But that’s also a concept that actually kills most startups — they get a good thing going, they realize they have to pivot and break the good thing to get to the better thing, and they get fearful and freeze. Then they die.

I’m a multi-exit, multi-failure entrepreneur. Sold ExitEvent. Building TeachingStartup.com & GetSpiffy. Former Automated Insights. More info at joeprocopio.com

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