My new co-founder is threatening to leave after we previously agreed to an equity split one month ago. We did not formally sign documents it was just something we had hashed out before to have a mutual understanding.
I need your advice Reddit! Here are the details:
I started the company two years ago. During this time, I did not take a salary, I worked with many different people, secured a small $15k seed investment, and tested, iterated and refined the initial idea. No code was developed. Every person that I worked with before couldn't commit so they left on their own, no equity was taken (we were on a vesting schedule) and no hard feelings. I then decided to pivot on the idea and started working in a new market. I found John, my new co-founder and brought him on.
John is great to work with. I have a business background and he understood I was the CEO since he joined me and he is currently learning how to code and will be the CTO. [We both know we will eventually have to bring on someone who is more experienced with coding in the near future.]
John and I are both working on solidfying the business model together and pretty much doing everything with one another, other than the coding. (I'll be taking care of design for now too)
After working with each other for one month, we agreed on a 70(me) / 30 split (him). (I have advisors in Silicon Valley and acceptance into a reputable tech incubator which both advised me that this was a fair split and that typically, equity refreshes happen every 2-4 years so this initial agreement isnt set in stone).
One month later and now John is asking for 51(me) / 49(him). His reasoning is that he spoke to his buddies in the industry and they all told him this wasnt a fair split and that 2 years of my effort is not worth more than double the amount of equity since 99% of the work with this new pivot is still ahead of us.
As CEO, I'm offering 60/40 on the premise that those 2 years helped me get to this pivot (it's not a completely new idea!) and that once we raise a round of funding, we will be diluted significantly and may lose control of the company faster than we think. Also, I still have $12k of that $15k left in the business bank account that we'll be using now. AND John and I both know that we'll have to hire on a more experienced developer in the near future since John wont be at an all-star level since he's just learning.
John wont budge and says even if he started a new company with someone tomorrow, he would have the same work ahead of him with significantly more equity. Thus, he feels 51/49 is fair.
What are your thoughts/advice? Is there merit to John's argument? Am I really being that unfair?
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