With whom was the arrangement that you get 20%? Austin, Michael, and the Angel? Some subset?
If Austin agreed you would have 20%, but now wants some of that back, some options other than shifting the full 4% from you to him include:
- be firm: tell Austin to stick to his agreement; dare him to leave. (If he quit another job, and is fighting for an extra 4%, he thinks the company is valuable. And even if they're great guys, does the company need two non-coders at this pre-incorporation stage?)
- acquiesce but in an equitable fashion: agree that as a beautiful and unique snowflake, Austin deserves 4% more... but take it pro-rata from all other partners (including the angel if at all possible)
- seek compromise: while asserting that the original 20% agreements for you and he should stand, also say you respect his unique value, his longer tenure as a contributor, other opportunities he gave up, whatever in his mind justifies 24%. (Also, perhaps, that you've drawn a small stipend from invested funds while he may not have.) So offer to cede to him a little of what he wants. At the smallest, this is 1% more for Austin taken pro-rata from everyone; at its largest this might be 2-3% from you given to him. If his real psychological need is just acknowledgment of his slightly-higher founder status, even a slight 1% bump may be enough to put the renegotiation behind everyone.
Also consider whether the level he's seeking, in combination with other owners, changes the possible majority-interest (50%+epsilon) coalitions. That may be the real agenda.
Sticking up for yourself is important so you are respected and fairly treated in the future. (It's also a signal that you highly value and are dedicated to the company, and can discuss difficult issues involving founder tradeoffs.) On the other hand, seeking a mutual compromise, if Austin does have any plausible claim to greater value/sacrifice/seniority, shows a willingness to be flexible in aligning interests. Just make sure if you compromise you earn some kudos for a being a team player who is owed some slack in the next dispute.
If negotiations get stuck, and the Angel is truly locked at their share, perhaps they can be a neutral mediator. Or maybe there's another person everyone trusts.
Usually, someone in particular is the de facto leader/prime-instigator/CEO. Whoever this is should nudge everyone towards a fair resolution (which might be 'live with the original split' if the original split was a firm and well-understood arrangement). Otherwise, this leader is abdicating their responsibility for establishing an environment of trust and predictability.
I've given Austin some benefit-of-doubt in the above options -- there legitimately may have been some tentativeness about the original split discussions, or some reason he has greater value and deserves greater equity. But if in fact Austin is the 'de facto CEO', I'd be more worried. This sets a precedent of him renegotiating to his own benefit, which could turn toxic down the road.
If Austin agreed you would have 20%, but now wants some of that back, some options other than shifting the full 4% from you to him include:
- be firm: tell Austin to stick to his agreement; dare him to leave. (If he quit another job, and is fighting for an extra 4%, he thinks the company is valuable. And even if they're great guys, does the company need two non-coders at this pre-incorporation stage?)
- acquiesce but in an equitable fashion: agree that as a beautiful and unique snowflake, Austin deserves 4% more... but take it pro-rata from all other partners (including the angel if at all possible)
- seek compromise: while asserting that the original 20% agreements for you and he should stand, also say you respect his unique value, his longer tenure as a contributor, other opportunities he gave up, whatever in his mind justifies 24%. (Also, perhaps, that you've drawn a small stipend from invested funds while he may not have.) So offer to cede to him a little of what he wants. At the smallest, this is 1% more for Austin taken pro-rata from everyone; at its largest this might be 2-3% from you given to him. If his real psychological need is just acknowledgment of his slightly-higher founder status, even a slight 1% bump may be enough to put the renegotiation behind everyone.
Also consider whether the level he's seeking, in combination with other owners, changes the possible majority-interest (50%+epsilon) coalitions. That may be the real agenda.
Sticking up for yourself is important so you are respected and fairly treated in the future. (It's also a signal that you highly value and are dedicated to the company, and can discuss difficult issues involving founder tradeoffs.) On the other hand, seeking a mutual compromise, if Austin does have any plausible claim to greater value/sacrifice/seniority, shows a willingness to be flexible in aligning interests. Just make sure if you compromise you earn some kudos for a being a team player who is owed some slack in the next dispute.
If negotiations get stuck, and the Angel is truly locked at their share, perhaps they can be a neutral mediator. Or maybe there's another person everyone trusts.
Usually, someone in particular is the de facto leader/prime-instigator/CEO. Whoever this is should nudge everyone towards a fair resolution (which might be 'live with the original split' if the original split was a firm and well-understood arrangement). Otherwise, this leader is abdicating their responsibility for establishing an environment of trust and predictability.
I've given Austin some benefit-of-doubt in the above options -- there legitimately may have been some tentativeness about the original split discussions, or some reason he has greater value and deserves greater equity. But if in fact Austin is the 'de facto CEO', I'd be more worried. This sets a precedent of him renegotiating to his own benefit, which could turn toxic down the road.