[webwright]

I would suggest letting go of the idea that you've created much value.

One way to look at it is this:

If he came on TOMORROW and both of you busted ass for 12 months, how much of the value at the end of that 12 months would have been built before he came on? How about in 4 years (your standard vesting plan)?

The thing to key on is VESTING. Make damn sure that he gets ownership in a trickle (starting after a few months maybe as a trial period)... But make sure they he can eventually get really close to being an equal partner (maybe a touch less than 50% due to the fact that you got started a touch early).

[iamelgringo]

Giving a person 50% of a company that's vested over 4-5 years is much different than giving a person 50% of a company the day the come in.

If you come up with a decent vesting schedule, I think that you can probably avoid a lot of the pitfalls that you've described: What if he screws it up?

If he screws it up, fire him, and let him walk with the 3-5% he's earned in the 3-6 months that he's been working on the product.

[edw519]

This is excellent advice. Funny it comes from the same person I disagreed with above. Oh well.