A friend of mine came to me with a dilemma recently. She left her job in a high-paying, cushy job, to co-found a startup. It’s a big leap.
In the course of an impromptu conversation her co-founder, a friend suggested that the two split equity 70/30. His VC friends suggested this arrangement, he says. The mobile app they’re developing was his idea, and he invited her to be his co-founder. While her expertise in revenue modeling and go-to-market strategy is crucial to the success of their endeavor, it’s still worth 20 percent less of the company, the argument goes.
This isn’t fair. If it was a deal I was offered I would probably walk away from the whole project. An idea without customers is nothing. A prototype app without a team is not a business.
Fairness in business is of paramount importance, even if it’s an ideal that can never be fully realized.
Life isn’t fair. Business certainly isn’t where you go to look for fairness. It still matters.
While Silicon Valley prides itself on being a true meritocracy, it’s an open secret that founders with a connection Stanford, Harvard or MIT are significantly more likely to attract early stage funding, and grow profitable businesses. Is this because the most talented entrepreneurs are gradautes, dropouts or affiliates of these institutions? Hardly.
There’s a lot of injustice in the world because people are born poor, have dark or grew up in the wrong neighborhood. Fairness isn’t the natural state of being.
Life just works better when people are fair to one another. The golden rule is violated all the time., but the idea of fairness is what holds society together. If everyone acted like rouge police officers, Wall Street bankers or sociopathic CEOs, the world would be a terrible place.
Mutual self-interest is the glue that binds us. There’s nothing implicitly wrong with satisfying your desire for food, shelter and material wealth. It’s only when it happens at the expense of others that it becomes problematic. Each of us has a moral compass that determines when achieving self interest is in harmony with the needs of others, or is out of sync with the norm. We don’t need to be taught, but the occasional reminder isn’t a bad thing.
By all means, get what you need. There’s enough for everyone. Just remember that life works better when people are fair to one another, even when it’s a lofty ideal.
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