[bradleyland]

We literally lost two founders over the "time value of money" argument. Some founders fell in the "cash is king" camp, while others felt that they were providing great value for the investment.

The best advice I can give is to make sure you have agreement on the terms up front. If someone seems uneasy, don't move ahead. Find a way to agree. In our case, one of the founders who exited:

* Continually brought up the fact that he had loaned the company money as a leverage point

* After some time (over a year) decided to make an issue over the terms he agreed to

We managed to negotiate an amicable exit, but boy was it tough.

[amirmc]

Thanks for sharing. I'm not sure what the lesson here is though. You suggest having an agreement on terms upfront but that the person who exited made an issue over the terms later on.

On balance do you think you (all) did the right thing at the time (for the company) or could you have done something different earlier on?

Also, had you worked with this person before?

[bradleyland]

Happy to share. I'll enumerate some of my views (which I'm sure not everyone will agree with), as well as some direct answers to your questions.

An uneasy consensus is not a consensus. When founding a company, consensus is critical in matters of finance.

I think we could have done something different, but I'm not sure I'd trade our current circumstances on an unknown. I think that ultimately, losing those two founders was the right thing. They probably shouldn't have been a part of the company to begin with. Maybe I should revise my statement of "find a way to agree" to "find a way to agree completely, or don't move ahead". Finding the line between uneasy and unworkable is something you learn with experience.

I worked with the person before, but only in terms of work. My working contractual relationship was with his employer, with me acting as a third-party contractor. I found myself positioned as a moderate between two extreme fiscal viewpoints, one that placed a high value on the time value of money, and one that placed hardly any value there. I did not recognize at the time that this is a "founder smell" (vis-à-vis, a code smell). I thought that the two fiscally conservative members could bring discipline to the group.

What I later realized is that the behavior of a group is not equivalent to an average of the individual members' personalities. This seems obvious, but you'd be amazed how often people act on this very premise.

[brudgers]

Agreement to the terms does not mean that one perceives them as fair or will continue to do so under stress in the future.

The problem with negotiating little details of ownership early is that anyone who believes they did not negotiate well is likely to feel taken advantage of.