[badclient]

If I talk with my boards on his misbehaviour it will get them stressed and stop believing on the company

Sorry dude, looks like that is precisely what you are going to have to do. Don't worry about the board stressing; they can handle it. That's their job.

Focus on YOUR job: the success of the company. The board will stop believing you when you prolong this longer than you should have, actually making the situation much worse.

When you go to the board, GO PREPARED. Assume the board does not know anything. And treat it almost like a trial where you will get to present your side, and at some point, your co-founder will get to present his. In these cases, I like to open up a document and put down the facts in bullet points. When presenting, remain calm and stick to the facts, which when evaluated by a sensible party(your board), should have them arrive at the same conclusion as you.

[sbarre]

I was in a slightly similar situation (without a board), and I did wait too long to act, and by then it was too late and the only option was to break up the company.

It sucked, and I felt like I had wasted 3 years of my life, and while my co-founder definitely did his own damage by not holding up his end, my biggest personal mistake was to not immediately, and aggressively, deal with the problem when I saw it arise (and after initial cooperative attempts at resolution went nowhere).

If you are putting everything you have into your startup, then you have everything to lose if you let someone else fuck it up for you.

[andrewfong]

You may in fact be legally obligated to discuss this with the board. I would also give a heads-up to your lawyer about this. If this gets messy, you'll want some ironclad legal protection for the company.

[Nord20]

He most assuredly is legally obliged to tell the board. His first duty is to do what is in the best interest of the company.

[mesogamer]

Thanks for the advice. I might go with this one after holiday ends. The only problem I see here is that he has more rapport with them (since I'm more product oriented and he's money oriented).

It's going to get real messy, especially since he holds all money, bank, passwords info (now I understand why he wanted to take control of those stuff in the beginning). Firing him will be so messy, and the 3 employees we have today respect him a lot especially since he's an expert following those rules in the article I stated in the original post (he's even deceived me lot's of times!)

shit.. Sometimes I think I need a new startup problem to solve to leave the company because this is not letting me sleep at night (and it's no longer the first thought when waking up in the morning).

[badclient]

You should enlist a friend or a mentor to help you prepare with this situation. They can come up with tough questions that the board might ask you and make sure that you have a coherent, clear answer. That has helped me tremendously in clarifying my own thoughts.

You should also roleplay with this person as if he is your cofounder. Have him be a dick and make any argument you can see you cofounder make at any point. I've learned that winning arguments and being right are two different things. This way, if your cofounder is good with the former, you need to be prepared and roleplaying will give you a great edge!

Also, write down all possible scenarios. So if the board asks you "what will happen if the employees quit?" you need to have already thought through that use-case. They will probably be very impressed if you have a document that has these use-cases and possible plans.

[blazespin]

"the 3 employees we have today respect him a lot"

This is a big red flag. Who hired those people? Why did you agree to hire them if you don't respect their judgement? Or is your co-founder also doing all the hiring as well as taking care of everything else?

Starting to sound like you should be asking yourself what you contribute.

[splintercell]

I am seeing this red flag here too. This is sounding a bit ridiculous. It seems to me if the other guy is the money guy and OP is the product guy, and the employees, board, logistics are all in the hand of the money guy, then he is doing precisely his job.

What does OP really want his cofounder to do, maybe its time he explains why is he an 'overrated' person.

[taude]

In reading that he's the money guy, is he really not holding up his side of things? What's he specifically not doing, that he should be?

It's hard to read between the lines to know if he's really not keeping up his end. Employees like him, he sounds like he's the field expert, he's got the money, he assembled the board, etc...

[badclient]

One thing that helped me in my situation is that I made a document just describing my situation, written from the perspective that it is a business school case study. Then have some friends close to you read it and tell you who they think is at fault. The biggest key is that when writing the story, replace your company name and other names with made up names so people who you ask for feedback aren't biased.

This will give you first line of objective feedback even about your own positions.

[JoshTriplett]

> It's going to get real messy, especially since he holds all money, bank, passwords info (now I understand why he wanted to take control of those stuff in the beginning).

You're not kidding. I hope you just mean logistical access (as in, currently holds the details to), as opposed to actually having them in his name. If the latter, you're pretty much screwed. In any case, when you discuss this with the board, once you get them on board with this decision in the first place, you're going to need to make a clear plan for getting access to all of those resources transferred. Hopefully you can do so quickly and without legal action required. Fortunately, if they're in the company name, there are steps you can take to get that access.

[reeses]

I would recommend that anyone else reading this take note: you need someone on the board who is your ally. You can't let your partner fill it with his own people.

[adventured]

It's not going to get real messy unless he wants to go to jail for fraud / theft / embezzlement.

You need to present your case to the board, there is no other good way to go. If they side with you, your co-founder will have no choice but to turn over control of the money, and in fact you should encourage the board to force the point on the money / passwords / etc controls anyway.

[damm]

I imagine this will get ugly if you just change the passwords and revoke his access. He owns a decent share of the company so my suggestion would be if you want this company. Buy his share and give him the money.

During this period of time you can hire a team (or someone) to secure your companies credentials. Hiring a team to review your assets both physical and virtual; code base and otherwise would be wise.