The simple, but not easy, option is to take back the shares and let him go. Trying to harangue him to stay is only going to make things even messier down the track.

So the right thing by your investors and employees - keep running the business. Perhaps one of the remaining employees could step up to be the team leader - but only as an employee.

By definition a co-founder should be on equal terms with the other co-founder. As co-founders you share the product/service vision and have compatible attitudes to risk, finances, etc. You just cannot promote an employee to co-founder.

And we did. We launched a private beta, signed a couple small-time clients, and started making money. The product kept evolving, and my co-founder got less and less involved.

I kept pressing him to do the paperwork. We'd made a verbal agreement, which he affirmed many times (I still have the chat logs in Gmail). I trusted him to keep his word for a long time.

After about five years, I found myself suffering through depression, stress, and burnout. I couldn't take it anymore, so I left the company.

As soon as I left, he started to actually work on the business, finding clients and looking for funding and investors, free of the shackles of his promise to me.

The only way you can guarantee your value is to have a formal agreement -- one drafted by a lawyer. I don't know your co-founder, and I certainly hope he's not like mine, but you need to look out for yourself. Even if your co-founder is a stand-up guy, it's not his job to look out for your interests.

You all made the choice to start the business together. You had the opportunity to work out ironclad provision for founders exiting.

You all worked to get it to this point.

Even if you have lost your respect for this persons contribution, it was part of the deal that they get these shares.

I understand totally if you don't like it, but have you considered that in fact this person might actually be in the right?

Lesson learned, give them the shares, live with the consequences of your decisions. If your company is going as well as you say then it is not the end of the world.

The co-founder you are referring to probably describes you guys as scumbag cofounders unfairly and unjustly booting him out.

Alternatively, get rid of the damn lawyers and ask this person what he wants to make a clean exit deal - it may be less than the full share entitlement and if that is the case then maybe you should take the deal.

And for gods sake stop spending money on lawyers - you are destroying your company firstly via time dilution and secondly by wasting money. Part of running a company successfully is to know exactly what it means to win, to compromise and what it means to take a pragmatic outcome that lets you get on with the job.

If you are running the business and he is doing no work on it right now, it is reasonable for you to pay yourself a respectable salary before sending any profits back. Plenty of companies don't pay dividends. But unless you are eager to shoot yourself in the foot you need to send him an email apologizing for your behavior and putting things right.

The only way out is talking to your partners and see what you can come up with together.

Just make sure you don’t make a new deal that you will regret later and want to renegotiate again.

Also, take the time to think if you really want to own a company because, to me, it sounds like you really miss being an employee with a guaranteed salary. This “I’m worth X in the market” is not how you should be thinking as a founder and also not how you approach this with your partners. Your worth as a founder is what you can sell and nothing else.

You can’t have your cake (be a founder) and eat it too (have a guaranteed salary with a company with low income).

My advice:

1) Have an easy but totally clear conversation with your co-founder, exposing your thoughts and opinions to him as you did here, don't be afraid to hurt him, but be respectful;

2) Ask him what he clearly expects the outcome of the company/partnership to be in the near future (12 months) and try to understand if that fits into your expectation; (Unfortunately, sometimes its comum to see co-founders thinking they should have less/lower "commitment" with the company, just because they own the smallest part of it)

3) Try to make some clear action plan out of this conversation and give a last try, but do that with a true open mind and good hart, forget the past and really try to to make it work with him.

3.1) If the conversation was good and you were able to create this clear action plan, but even so after few weeks your co-funder still behave the same way, then I think its time to move on;

4) If you really fell the result of this conversation was bad or the time was completely wasted, kindly start the process to remove him from your company; Don't make the mistake of simply ignoring him and let him stay, as this will possibly be a future cancer for your company (and you).

Important (IMHO): Before and after this conversation I suggest that you try your best to make some internal analysis of ourself too, sometimes the behavior of others are the just reflex or consequence of our own current or past actions/behaviors. No one is perfect or always right. Try to put yourself on his shoes and think with his head on why is he acting/behaving the way you consider to be bad/wrong.

Hope you solve this situation and manage to be really successful together.

He is a business guy and we already worked a few years together as agency (he) and freelancer (me, designer). He still runs his agency full-time while i am working on it 30h/week (while studying and working). I have 2/3 of the shares. He has round about 1/3. But we wrote nothing down and the company is not founded yet. He is round about 10 years older than me (i am 21).

There are a few things which makes me nervous: i have had a bad gut feeling from the beginning, i do not trust him and it blocks and demotivates me to have him in the team. He is lazy (regarding our startup) and it feels like having a shark on board.

First i tried to get rid of him six month ago. It didn't work out. I told him by phone that i can not do this with him. That i have a really bad feeling and do not want to do this with him. That i like to work with him but that we have two different views on entrepreneurship and how to build a startup. He threatened with a lawyer and said that he promise to "destroy" me when i would do this. He added two persons to the team, tried to create a partnership and wrote round about 20 lines of the business plan. Nothing more, in one year.

Now, six months later i begin to struggle again with the fact to have him in the team. It blocks me mentally. It demotivates. It feels bad. We are two months away from our launch and i really need some advices how to handle this. Should i contact a lawyer? Should i just say "Goodbye" and hang up the phone?

What do you think? The best thing would have been to listen to my gut and havn't let him on board, i know.

We started up w/one cofounder accepting reduced equity for the promise of a salary after 3-4 months.

This cofounder had been very early stage employee in other startups with me. However, now going in as a cofounder and having to accept no pay, was apparently a bridge too far.

His work was uncharacteristically sloppy and low output. Clearly, he was sinking under the stress, almost from day one.

When it got to 3 months, almost to the day, he demanded that he had to start drawing a salary immediately. We weren't making any money, or even ready for VC angel money, so my other partner (there are three of us), said we'd cover it.

Certainly one of the reasons we were not ready for looking for seed money was due to this co-founders non-performance.

When it came time for us to decide whether we would cover partner #3 another month, we declined, it really just wasn't worth it for the reduced output.

As a result, the paid cofounder essentially pushed himself back from the keyboard on the last day of the month. He has been slightly helpful since then, but more along turning over stuff.

Amazingly enough, this has all been relatively amicable - I think my other partner and I both recognize that this guy just couldn't hold up under the strain.

But I'm also feeling a little abused now, as we sort of nursed/mollycoddled him along. And we haven't signed off on incorporation docs yet, although they are all drawn up.

This is a stupid mess. At one point, I want to really dock the guy's equity for non-performance. OTOH, deal's a deal, and over time, assuming all goes well, he'll get increasingly diluted.

What would you guys do? Yes, it was stupid not to have a performance/clawback provision in place, but the three of us had worked together before for several years, and there had never been a blip or complaint.

"currently, 100% of the design AND code was created by me."

You may have done the typing, but you also acknowledge that there was a lot of discussion that led to the current design. I guess that this is an area where your co-founder may see things very differently ('(s)he did the technical stuff, but all the ideas are mine')

As to your question, you should decide what you value more: getting back on your co-founder, or having the product succeed. In the first case, go talk to a lawyer; in the second, I think you should get an agreement that includes you leaving the company ASAP. That ASAP is because of phrases such as 'bullied', 'bosses me around', 'belittling' that make me wonder about the 'is' in 'who is a close friend.'

How much you can get out of it depends on the value you have to the company. That will depend on the technical complexity of the product.

There's no easy way to handle this. It sounds like you are going to move on without him so just tell him that, offer him a small piece of the business and take the rest. If he doesn't want to cooperate, you can always just start a new entity and continue on your own.

Co-founder choice is the hardest and most impactful choice a startup can have. At a minimum, I try to craft an MOU that states what each person's responsibilities are, and that they contribute meaningfully over a 3 year vesting period. That ensures if either partner drops out, they transfer the equity to the partner continuing forward. That said, because of aforementioned reasons, even that is a mine-field.

I'm no expert on these situations, but here's my take. I think you need to give them an ultimatum. Either they make you CEO -- giving you the power to cut their pay or even fire them -- or you'll quit.

I know you don't really want to quit. A profitable bootstrap (as I gather this is) is a rare enough thing that you don't want to abandon it. But you also don't want to be in a situation where your two co-founders are freeloading off your work -- that could get really old really fast. Maybe you can't get their equity back (I'm guessing you didn't set up a vesting schedule for founders' stock), but you could at least stop them from being a drain on the company's cash flow without giving much back.

It's time to review all the emails and papers you signed and figure out what your bargaining position is. You seem to have a weird situation where "share ownership" has been agreed (2/3 vs. 1/3), but nothing was written down. That doesn't sound right.

Your options are, from worse to best:

. quit the "partnership" and give up on the idea . quit, keep the IP you developed, and continue the project on your own . take control of the project, fire your co-founder and keep everything

Turns out, he had already been interviewing and wasn't keen on staying. Start-ups weren't his thing, he wanted more stability.

The best thing you can do. Talk. If he's going to be your co-founder, you want to be able to have frank conversations.

I have seen this multiple times. This isn’t going to work out. If he like this idea, suggest to him that he be a seed investor and not a cofounder. Explain to him that no one would invest in a startup with a cofounder that isn’t there most of the time. If you haven’t signed any papers, then you don’t owe him anything. Start recording how often he is at the office.

He is a classic case of I will do it if there is money. He is using you as a call option. If it makes money, he goes full time. If not, well, he has nothing to lose. I mean he still has his job. It’s a good bet for him. Not so much for you.

If he won’t leave and your shares are not vested, then you are going to have a hard time getting rid of him. Next time, be smarter.

If you havent incorporated and dont have a legal agreement, just kick him out and continue yourself.

Initial startup phase is like the honeymoon phase, if he’s not a do-er even in this phase, it’s unlikely he’ll work consistently on it all, once you’re gaining traction and have to put more effort to grow.

Once startup gains traction, there’s so many things to work on, deepening product market fit, improving conversion rate at various stages, user tests, setting up teams, hiring good folks, growth hacking, etc. It’s a ton of work, if he cant do things now, there is very little chance he’ll be able to do things then.

I think he lacks self-decision skills and reasoning through his every action to improve upon his tasks, he also seems to lack commitment. It’s typically also a sign of you not being able to 100% sell your vision of the company to him. This is a hard thing to do that you’ll encounter again once you start hiring. But eitherway its best to remove him. People like this who fail to deliver at such an early stage, become worse later. It’s not your job to sell the vision to him. He chose to be a co-founder instead of an employee and he’s not pulling his weight.

I had a co-founder like this once, removed him after giving him 6 months to improve. Best decision I ever took. We are still on friendly terms, and he was a good person. Fire him nicely, and avoid bringing to many emotions into it, I hope your co-founder understands.

Good luck, this is an important matter to settle before things start gaining more traction and then it’ll be harder to remove him.

(And remove all his contributed work, name logo, etc, he can claim % of company or an outrageous price figure, and show it as stolen work later, depending on your jurisdiction, remove all of his work, that you didnt pay for via a legal invoice from him)

Next time when you permanently give shares upfront (no vesting period) be very sure what you are getting into and even consider formalizing the nature of the relationship and the level of expectation in exchange for those shares in writing (very least in email)

I think the best you can do is have a constructive but frank discusaion with the co-founder.

Asking him if he would be willing to come to arrangement to part ways but reconsider (at least part) of his shareholding since he will no longer be participating and you will need to replace him.

You could also try to get at the bottom of his lack of motivation (though is motivation is missing its not something that you can give to someone else)-

Rather try to figure out of this is a temporary slump, or a long term "new normal".

Also find out if something has changed in his life circumstances making it harder or less ideal to make time for the startup.

Once you have the facts, then at least you guys have a basis for an honest discussion.

Partnerships are NEVER easy.

1. Even though I'd already spent 2 years on the startup, the first co-founder I bought on had the same equity as me. He wanted it, and I wanted someone fully committed.

2. I was off fundraising for 2 months, and my mistake was not communicating that really well with them. I wasn't a great leader at that time. However, I did notice something was off but I just thought it was post-yc depression (which is actually a thing, apparently). I asked them outright if everything was ok, and they said sure, that it would all be fine when we got back to Australia and moved on. I trusted them, and they lied to my face.

3. I think they were very naive, not malicious, in how they left. They thought everything would be fine if they just left, but thats not how startups work.

4. One of them refused to talk to me or give me an explanation after he left. I had to practically force him to meet me for some closure. Its like getting a divorce with no explanation.

I made mistakes too so its not all on them, but at the end of the day a co-founder is supposed to be your partner through thick and thin, and they bailed without talking through the issues at all which equates to stabbing me in the back. And they made sure to tell me this after I'd reimbursed them for thousands of dollars in expenses for their YC adventure.

The purpose of this is NOT to discredit them. I'm not a huge fan of them, but they dont deserve to be villified. I'm just trying to be a bit more transparent about what happened so that its helpful to some readers. I'm sure they've learned from the experience and will treat their next cofounders differently if they do start something else.