Tim Tutt is the co-founder of Nightshift Development. They bootstrapped themselves up to 160% year-on-year growth — this year they’re estimated to do $15 million turnover. 

And today, Tim takes us to booth 203 at his local restaurant, Earl’s. 

He’s about to bring up the equity split with his co-founder and how they should move forward. 

His co-founder is a very good friend. So much so, he was the officiant at Tim’s wedding. 

At the time, it was just them in the business. 

Tim was nervous. It had taken him 6 months just to have this conversation. He didn’t want to hurt their friendship, or impact what was looking like a fruitful business. 

A Little Background on How They Got to This Point

When they first started out, 2 years prior to this moment — they had agreed a 50-50 equity split. 

They had been working together for years. 

Tim, an analyst, and his co-founder, an engineer. 

They met working for the same company and quickly became very good friends. But they were fixing the same problems over and over again. So they started their own project, building their own product that would automate these repetitive problems. 

When they realised this could be a business, they agreed to bootstrap it. 

Although Tim had read so much advice against a 50-50 split. Because it was his friend, that’s what they wanted. 

Both Tim and his co-founder had wives and families. So they kept working full-time and worked on the project at night. This is what brought the name Nightshift. 

As time went on, Tim found himself working more and more on the project. He was building out revenue, delivering professional services — and quickly quit his job to go full-time with the nest egg they had built. 

But his co-founder stayed working full time. And the role and responsibilities they had were not as 50-50 as they had started out. 

The more Tim went out on sales and was pushing the business forward, the more he was getting frustrated that his co-founder wasn’t doing the same. The split wasn’t fair. 

And he was starting to see the frustrations with the business show up in his personal relationships. 

Tim wanted a better situation for both of them, and he knew he needed to have the conversation, even if he wasn’t ready for it.

How can he make things fair and equitable based on the work they are doing?

When they released their product, and got their first paid customers. Tim knew the dynamic needed to change before they moved forward. 

How the 50-50 Equity Split Conversation Went

Tim didn’t want to be part of yet another story about a co-founder break up. 

This was his close friend. 

A few months before the conversation, he’d read a book on having difficult conversations and had prepared a few techniques to use if need be. 

He wanted to make it fair and equitable for everyone. But he also knew that, if this conversation didn’t go well, he was ready to step down. 

Tim and his cofounder were in the booth. They had admin topics covered and had a few drinks to ease the conversation.

They were talking about their personal lives and business at the same time — as all their meetings went. 

At the end of the meeting — Tim brought up the 50-50 equity split. 

He offered background on where this was coming from, and explained what he was contributing. 

And much to his surprise — his co-founder agreed. 

The conversation was a lot simpler than he thought it was going to be. 

For Tim, this was a testament to both the strength of their friendship and his co-founder as a person. 

Because as he had spent 6 months questioning in his head — he had made the situation worse than it was ever going to be.

He forgot just how reasonable his co-founder was.

Tim learned a lot after going through what was a really painful process. And in this episode we discuss, 

  • The importance of having a co-founder
  • What happened after that conversation
  • The impact putting off this conversation had on Tim’s life

Tune in, as Tim reflects on how he would deal with the situation, if it happened again, and insights on whether a 50-50 equity split can ever work.