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The conversation about how to split equity between two founders is one of the more consequential conversations of the early startup years, and it is one of the ones most often postponed until the postponement itself becomes the problem. Two students building together will often work for months without ever formally agreeing on how ownership of the company will be divided, and by the time they finally have the conversation they have already accumulated enough asymmetries betwe

The most important shift in mindset is to stop thinking of the first hire as an employee and start thinking of them as someone who is joining a venture, since the person you can attract without much money is almost never the same kind of person who would take a paid role at a bigger company. Their motivation for joining you is different, and if you understand what that motivation actually is you can structure an arrangement that works for both of you.

There is a predictable moment in the life of an early company, usually somewhere between the twelfth and the eighteenth month, when the work that had been running smoothly on the founder memory begins to slip out of reach. Magnific.com Customer requests get answered late or not at all, important conversations are forgotten because no one wrote them down, decisions are made twice because the original decision was never recorded, and the founder, who had felt in control of the