Should I drop my co-founder?

You already know the answer. You're just asking fot a safe way to do it.

It seems your friend is really after the "status" of being a "co-founder", but along the way he forgot that co-founders, need to actually work to get a startup up from scratch, and work hard. The ideal scenario is that co-founders are in the same room, office, garage or whatever - feeding off of each others' energy. He' not there? well, the question should be asked is whether he's a great communicator. The answer to that as I understand it, is no.

No Brainer. He has to go- the only question now is HOW. To answer the HOW i'd consult a good lawyer that'll take into account everything that the guy did, if any, and determine if by letting him go now, you're facing a lawsuit in the future if you become successful.

Good luck with your venture.

I can tell you from experience that getting rid of him sooner is better than later. It took me 6 months and the endurance of attacks, insults, and threats of lawsuits to part with a cofounder from whom I needed to separate.

One thing you need to be clear on is what he has actually contributed. If you minimize his contributions, it could be the basis for a later problem. If he truly has not contributed anything, then what you need to deal with is your own guilt about kicking him to the curb after you offered him something. Remember that you offered him something in exchange for something else. If that something else has not been forthcoming, the agreement never really began.

A friend of mine, a very successful businessman offered a CEO position to someone at one time. When the person failed to actually get started, he sent him a letter rescinding the offer and it was over. If you decide to get rid of your "co-founder", a rescind letter is a good idea for a paper trail.

I think there is a communication gap on both ends and your co-founder is not totally aware of his duties. So instead of getting rid from him in a pretty straight way, I would prefer you to have a free chat with him and share your concerns. At first, you both should define your duties and then also debate about managing some time for discussing on-going issues on daily or emergent basis. This way, you both will be able to better utilize your energies and keep yourself focused on defined tasks. After all this, if he does not prove himself, you will have a fair opportunity to fire him straight away.

You need to have a frank discussion with him and get him out asap. He knows he hasn't done anything and he knows he isn't earning his 'co-founder' status.

In the future, guard your equity and don't deal with friends.

I had to drop a cofounder last year that was also a good friend. He was responsible for developing and maintaining partnerships that were critical to our success. He did ok at it, but was very unfocused and distracted by a few other personal issues. Basically a lot of important stuff was slipping through the cracks.

The conversation was difficult, however, being friends actually helped. I sat him down and said basically:

"look, you are clearly distracted and unable to devote all your efforts to this project. I understand completely, and I'm not upset. But I think it makes sense for you to devote all your time to figuring out your other stuff. What do you think?"

His response, "I'm glad you're coming to me. I've been feeling so guilty because you guys are relying on me and I've been dropping the ball."

He signed over his shares back to the company and that was that.

The key, I think, was that I came to him from a place of legitimate caring and BEFORE the resentments and anger overwhelmed everything. If you want to keep the friendship, then you have to deal with this now, and don't wait. For your company's sake and your friendship's sake, don't wait.