The founders of some of the most visionary and successful companies in history are towering figures in our collective imagination: Steve Jobs, Mark Zuckerberg and Jeff Bezos to name a few. Yet, interestingly the term “founder” has no legal meaning. Zip. Zero. Nada. Founders of companies often start with nothing, and suffer many lean years before they can pay themselves a salary comparable to what they would have earned if they had just listened to their parents and taken an office job.
But at least the founder can claim founding a company, right? Well, that may be true, but it is cold comfort telling friends that you are a founder of a yet-to-be successful company, especially because those friends are too polite to tell you that a not-yet successful company is a euphemism for an unsuccessful company.
But vexingly, no rule or law mandates who can call themselves a founder. While some individuals have pushed hard to be recognized as co-founders (as Aaron Sorkin’s The Social Network so vividly portrayed), what matters more than the title of founder is who will serve as officers and directors of the company, how the equity will be allocated and what vesting will apply (for more information on vesting see Why is Vesting Important for Founders).
If the founder title is legally meaningless, why does it matter so much and why do some people fight so hard to ensure that the “right” people are listed as founders? Perhaps it’s out of the desire to be recognized for creating something that didn’t previously exist or because we tend to admire successful people (though some founders don’t always end up wealthy even if the business succeeds beyond anyone’s wildest expectations). In any event, for those individuals who aspire to start companies and crave the recognition of being a founder — remember — it’s just a title.
