[brudgers]

Suppose Ben has $1,000,000 to invest in a startup and Patrick has zero dollars to invest.

If Ben goes it alone, he believes he stands a 40% chance of a $3,000,000 exit.

If Ben cofounds with Patrick he believes he stands a 10% chance of a $50,000,000 exit.

Why is Ben better off economically just giving Patrick half the equity despite his lack of cash?

Forget the math, if one founder takes issue with another founder's getting rich off the company, then there's a problem that may be deep enough to prevent both of you from becoming rich.

[tptacek]

The nightmare of having to first value 1MM worth of shares on day one of a company, and then have to value Patrick's immediately intangible contribution to the company, both of which involve absurdly difficult predictions, is why you're better off not trying to resolve things between founders with shares. Or, at any rate, this is I think the point Joel Spolsky is trying to make. Reasonable people can &c &c &c.

The $1MM in vs. $0 in situation sounds like a nightmare all its own, though. Has anyone here been in a situation like that? How did it work out?

[brudgers]

Wasn't there a significant disparity in capital investment between Clark and Andreessen at NetScape?