10/05/2006

Questions Founders Should Ask Each Other

"The following are some of the most important questions that should be resolved as early in the [startup] process as possible. In most cases, these issues only get more difficult over time...

1... Who gets what percentage of the company?...(and the right answer is rarely “divide them equally amongst the co-founders”).

2. How will decisions get made?...Common areas to address are decisions around capitalization, executive hiring/firing, share issuance (dilution) and M&A...

3. What happens if one of us leaves the company?...The last thing the company needs is a co-founder that is no longer engaged but is hanging around out of guilt or ambiguity.

4. Can any of us be fired? By whom? For what reasons?...

5. What are our personal goals for the startup?...

6. Will this be the primary activity for each of us?...

7. What part of our plan are we each unwilling to change?...

8. What contractual terms will each of us sign with the company?...

9. Will any of us be investing cash in the company? If so, how is this treated?...

10. What will we pay ourselves? Who gets to change this in the future?..."

Read more in this excellent post from onstartups.com.