When we started, I went full time with no pay first for about 6 months building. My cofounder then joined at about 9 months and worked as much as they could. It went well and I never had any feelings of animosity. We each have our roles to play in our mission.
Recently, their spouse has been more involved. Generally in a positive way. Early on, their spouse contributed some to marketing (paid as a contractor). Now the spouse wants more of a role in the company. Now employees are confused about the spouse’s role. Now, the cofounders spouse wants equity.
To me, this is a risky thing for us to be considering. How it is perceived by board and employees. Am I wrong on this? They were paid. They have contributed. But, where were they before the money started showing up?
Is that the question you are going to ask future hires who ask about equity as part of compensation? Equity is typically awarded to a broader base than solely pre-revenue founders - not for what have they done, but what will they do in the future, and at what compensation level and risk level. Equity is a tool to balance bad answers to other aspects of one's employment agreement, not (just) a reward for founders.
So before you come at this negatively, consider the best intentions - maybe they are sincerely interested in helping, and want equity to balance doubling down on their family risk by both partners being involved in a startup. If it fails, the whole family is in trouble, so some compensation for that risk is not unreasonable. At the same time, that needs to be balanced with the question of whether their talents are such that the company gets value back for that equity, and whether you'd make a similar offer to anyone else of similar talent.
If you can say yes -- that they have the correct talent currently needed by the company and anyone else with the same talent would get a comparable offer, then the board and employees should have no problem with the situation. But if you are awarding a nice position on the org chart and equity solely because of a family situation, it will likely cause concerns.
You have to treat your business as a business. If you need the role, are paying a fair rate (salary, bonus, equity) and she's the best candidate, hire her. Then, you have a process that you can be transparent about and is fair.
Don't be bullied into something like this - it could be the beginning of the end.
Assuming you do need the full-time services of the cofounder's spouse, make her two offers, 1) at the going rate for that role and zero equity; and 2) at a discounted salary and with a small amount of equity, taken from the cofounder's share of equity.
If you don't retain majority of equity, then your company can be easily stolen from you.
those two knows the ins and outs, they can get rid of you and rebuild everything from scratch and also question what you bring on the table aside from being the idea guy or the visionary or the first mover.
id say be generous because if you three are well compensated, the only problem is increasing the size of the pie. make bold bets, you only got one shot to do this right. you and your cofounder already fucked up by involving family and friends, better go all in instead of planting seeds that can ruin your friendship with your cofounder or the relationship with the spouse.
watch michael and dalton vids on this, the product and the market can turn shit anytime, what matters is you all are working on your best because you trust each other and yall are well compensated enough in equity and money.
also have clear boundaries on each other roles so you dont overlap. review the airbnb guys.
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Would you offer this deal to all employees spouses?
Were they paid a fair and equitable rate?
I can see your concern in the last line that the fear is they just waited for you at the finish line and want to get a piece of the prize money.
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