[hkhanna]

I've counseled a number of founders on co-founder breakups.

It's hard to tell you what I think without knowing more detail, but based on what you wrote, and assuming you both signed customary IP assignments and RSPAs at incorporation, the simplest way to move on would be for the other founder to resign as an employee and director.

That would enable the company to repurchase his shares and you would own 100% of the company and the IP that belongs to the company.

Since he wants to start what is essentially a different company, he shouldn't have a problem basically walking away and leaving you with the old company.

You can sweeten the deal a little bit by allowing him to retain some small portion of his equity (like 1% to 5%) in exchange for his resignation.

There may be more details here and I'm going only off what you wrote. I'd recommend working with a lawyer if you're going to try to salvage the old company with your co-founder moving on to other things.

[MattyMc]

> When I asked my co-founder for rights to use the existing code in my new venture, he refused, citing concerns over sharing IP.

OP seems to imply that their co-founder intends to use much of the existing code base they've developed over the last 6 months for the proposed pivot. If that's the case, it doesn't seem like co-founder would be open to resigning as an employee and director and creating a new code base from scratch, especially considering that the co-founder seems to have control of the existing company.

[weusedto]

Thank you for these super helpful comments.

This is correct, my co-founder isn't pulling out all of the existing code, he wants to have a "product" at the center of the staffing agency, and is planning to re-use some stuff. He would not be open to resigning, and I think because he wrote the code there is a level of ownership he feels, regardless of the value being limited (or 0 - as many have noted).

[lumost]

If this is a breakup situation, it's also possible to highlight that the OP would not be effective in the new company - and that maintaining the existing corporate structure would be suboptimal for the other founder.

Now, there is a separate question here of why the other founder wants to use this code in their new venture. Are they interested in the branding etc. from the OP? Is the staffing agency truly orthogonal? There might be "interesting" arrangements to be made for a new corporate structure via affiliate marketing etc.