Hey guys, how are you? I’m a co-founder of a pre-revenue startup while also fully employed in a demanding day job. Although I am working Mon - Friday, I am fortunate to have a boss / the autonomy that allows me to spend significant time on the start-up as well.
My cousin and I started the Company and have been working on it for around 2 years with an anticipated launch date of t-minus 2 months.
Originally, my cousin and I contributed 60% and 40% of all capital calls to the business, respectively. Within our first few months, we received a “small loan” (sarcasm) from his father of $140k to get us going, and split the equity 60/40 between the two of us. This equity is contractual and defined legally in the operating agreement which was signed by the both of us and encumbers our LLC.
To frame, my cousin is a trust fund kid while I am a self-made, working class grunt, which is one of the reasons I need to work a side job / career (albeit a well paying side job) while starting this company. Additionally, he is not business savvy, and would not be near where we are today without my decisions and guidance.
Fast forward, I bring a graphic designer / creative director into the company. At first we started paying her, but we loved her work and offered her 15% equity to provide us with significant work and commitment in lieu of cash comp. She countered with 5% equity and $800 / month, which I agreed despite my clear recommendation to her that 15% equity is a better choice.
Fast forward 10-12 months, my cousin and creative director have hit it off to the point where my cousin is willing to give her anything to stay in the company and believes she is an invaluable, irreplaceable asset. I believe he believed she is equally important, or more important than me at this point, regardless of whether or not I hired her and have made majority of executive level decisions.
Knowing this, the creative director has now, 2 months before launch, requested that she not receive the original equity that we agreed upon - but 20% equity in ADDITION to voting rights because she wants to feel like a partner.
To date, the graphic designer does not have any contractual ownership of the company (her doing - has been sitting on operating agreement for 5 months)
Because I work a high powered job, she says she’s more committed than I am to the business and is starting to question my authority and why I have “more” equity than her, even though I started the damn company.
I’m not sure what to do. My cousin wants to give her anything she wants, and without his fathers money the company would not be where it is. I also do realize the creative director is a massive asset.
However, I have an issue with 1) her disrespect towards me and 2) her near criminal (in my mind) change of negotiations in terms of what we agreed on her equity.
She has indicated that she would walk if we do not meet her full demands (which I believe to be BS) but my cousin seems to be in firm belief that she would.
In a pickle here and would really appreciate some advice as I feel like I am slightly being usurped and slightly taken advantage of.