[lief79]

No one is screwed yet. Odds are, if goofygrin goes (his user name non-withstanding), then so does the company, which benefits no one. However, this ought to be rectified as quickly as possible; as greater time leaves everyone with more to lose.

Since the other individual, a friend, is full time; and goofy is still working elsewhere part time, it might make sense to get an agreement to gradually escalate goofy's profit sharing in recognition of what has already been accomplished. (Yes, we all know that this is counter to PG's recommendations on startups.) This will allow the founder to live successfully and make everyone eager to grow the company in the short term, and, as profits increase, then the developer can dedicate more time to the company and get more in return ... possibly abandoning the part time job eventually.

[goofygrin]

Well I'm actually full time on my "day job" and part to full time on the startup (being ADD helps a bit LOL).

But this is basically the plan. Equity doesn't really mean anything unless the business sells, but when the business gets to the point where it can support founders drawing decent salaries then that'll be happening. He knows what I make now and what it would take to shift my focus and it's all within reason.

[drusenko]

i'd highly recommend having "the talk" sooner rather than later. everybody agrees on sharing when the stakes are small, but when things become successful, you'd be surprised how fast people can change their perspectives.

if you are the main technical person who has built the product, you should have at least 20% of the equity, if not split 50/50 with your co-founder (that would be fair). if one of you put more money or time into it, the numbers can be adjusted appropriately.

the best construct for dealing with equity also happens to be vesting. you don't need to "grow" your share as time goes on, it just naturally "grows" the longer you stay, but you've agreed upon the total amount from the beginning and it's committed to you.

i've gone into business with friends several times. it's not that you can't pull it off (i have) or that you don't get into disagreements about compensation/equity (we have) -- it's just not worth the potential strain on the relationship to leave it an open question, as opposed to agreeing early on.

[goofygrin]

We've had "the talk" multiple times and have had paperwork for a while, just nothing signed (so I consider it worth nothing).

I renegotiated more equity with the last round of work.

I talked to him tonight and we're going to get the paperwork updated and get everything squared away now that things are picking up. He also got sold a key man policy, so there's some paperwork there that we have to do.

[drusenko]

perfect, it sounds like you are a lot more far along than you originally sounded to be... there's nothing wrong with being trusting, it's just that the longer things go, the larger potential burden it becomes on the friendship, and by sorting things out, it sounds like you're on the right track :)

[functionoid]

Here everyone is trying to say that it is better to get something in writing, I've seen even best friends turning their back and putting their interests first when it comes to money.

So put things down on paper as others say. You have nothing to lose but everything to gain and do not feel that you partner will not like that.

Good Luck.