The "Ki" scenario. Remember in Startup.com (http://en.wikipedia.org/wiki/Startup.com) where a founder put an estimated 4 months + 20K then didn't quit his job. After negotiation he walked with 200K+ USD but this time paid for by his co-founders. There must be a better way.
Maybe increasing to total equity as progress is made, because you can bet with a group of four there is always going to be a chance of one founder for some reason or another bailing. But the way it's panned all, are paid. Maybe not as much as they theoretically could have. But money in hand (and a job), now is worthy objective.
They didn't push hard enough. This would have been the chance to negotiate ~ "What were some of the most flexible decisions you made?", http://tinyurl.com/39yobc
I don't think I meant to say there would be a problem in taking on a new founder. The fact is someone joining at later time is more vulnerable and therefore you have a greater leverage. Joining later in terms of negotiating is a weakness that could have been exploited.
'... I'd say that you shouldn't blame the people who made that reasonable of a decision for what happened since. ...'
It's not blame, simply 20/20 hindsight. I say the founders in this case have done an exceptional job executing especially with this their first business. I'm just making an observation.
I actually talked with Steve about this exact topic a few months ago. The point he made was, in general, if you give a partner all the equity up front, kicking him out later doesn't make sense. Even if he's extremely unproductive, your only choice is to try to work things out.
Otherwise, he's just walking away with a huge chunk of the company.