Our Own Record #2 | The Two-Person SaaS Broke on the Cap Table — Even Though the Funding and the Fireside Talks Were Going Fine

Part 2 of this series is about the oldest, most outwardly polished, most quietly broken of our businesses: a B2B SaaS started between 2024 and 2025 with a colleague from the same graduate intake at my first employer.

A caveat first: this installment has almost no numbers. Funding amount, revenue, company name. All withheld, because other parties are involved. We write it anyway because what broke was not ability or chemistry but the structure of the cap table, and structure can be described with the amounts hidden.

How it looked from outside

At the time, the externals were genuinely good. VC and angel investment had come in. We had held a fireside talk with an executive from one of the Big-4 firms. A business partnership with a major company had been agreed. For an early-stage B2B SaaS, we were borrowing credibility from outside at a good clip.

Two people had been involved since founding. Product and customers were moving forward. At this point there was no sign of failure in the business itself. What breaks next is not the business but the relationship between the two people.

The period of working until dawn

Before the structural part, the context that turned the structure into pain.

Start with the place: we worked out of a corner of an office in a prime downtown location that a senior founder lent us for free. An address two first-time founders could never have paid for.

There, the two of us worked until dawn almost every day. Neither of us went home first; we sat in the same place, until the same hour. Sleep a few hours, straight into a sales meeting the next morning. Days like that, in a row.

We also went out constantly, anywhere prospective customers, investors or industry people gathered. Every event we could attend, we attended. It was in that period that the funding closed, the fireside talk happened, the partnership was agreed. I can’t prove causality, but the period we kept showing up and the period opportunities kept arriving overlap exactly.

What I remember most is the pre-dawn moment when work would end, and just as we were about to go home and sleep, a drinking invitation would come from the senior founder or some key business contact. Anyone would decline. I wanted to decline, every time. My co-founder got dressed and went, every time.

Honestly, watching that back as he left, I admired it. The relationships the business needed were built in those hours, not at our desks.

And the drinking invitations were only one part of it. In sales and in fundraising, you are refused far more often than accepted. Sometimes you are treated unreasonably. He went back every time, changing the angle, the person, the phrasing, never stopping until it happened. That stamina is the one thing I believe I could never match in a lifetime. I thought so then, and I think so now, after leaving.

What is certain in hindsight is that we were extraordinarily blessed in people. A senior founder who lent us the office, investors who wrote checks, major firms who came to listen, and next to me, a peer who sat at the same desk until the same hour. Not once does a villain appear in this story.

One more certainty: in that period, what the two of us were putting in was essentially equal. Time, stamina, the number of people we met. The gap in our equity existed on paper from the start, but not in the texture of our days.

And at the time, I didn’t resent it. I enjoyed it. Which is exactly why it hit later.

The split was wide from the start

The CEO’s stake and mine were very different. Not the result of a fight. It was the shape required to raise outside capital.

Two reasons. One is dilution: with each round, founders’ stakes shrink, and if the CEO doesn’t start with enough, a few rounds later no one controls the company’s decisions. The other is investor preference: a cap table where decision-making could split is an investment risk. Money flows more easily to companies where “who ultimately decides” is structurally visible.

Concentrating equity in the CEO is, on this logic, a rational defense for a company built to raise. That’s how it was explained to me, and I still think the explanation is correct.

The problem was whose rationality it was.

A gap that widens as the business grows

Equity ratios don’t surface in daily work. While you’re building product and closing customers, both of you face the same direction.

The ratio starts to mean something the moment you talk about what happens if the business succeeds.

Run the same arithmetic we run on this site’s exit cases. Suppose a future acquisition. Multiply the price by your stake. Subtract the hours you put in, the salary you didn’t take, the risk you carried. In my case, no version of that subtraction came out worth the risk.

Worse, the contribution demanded of the smaller shareholder does not shrink in proportion to the stake. In a two-person startup the work splits evenly or worse. The dawn hours were equal. The events were equal. Equal or greater input. A fraction of the return. The asymmetry grows with the business, in absolute yen.

We didn’t fight because things were going badly. Things going well is what exposed the arithmetic. That order matters.

What “drifting apart gradually” actually consists of

There was no decisive day of rupture. There was an accumulation of small misalignments.

The first was that people measure contribution differently. Is the basis of equity the money invested, the liability the CEO carries, the hours worked, the customers brought in? Which yardstick you adopt produces an entirely different “fair split”, and no higher rule exists to choose the yardstick.

The pre-dawn drinking calls were exactly this. That was obviously contribution, and of the kind that leaves no record in hours or deliverables. From the CEO’s side, what he carried surely felt commensurate with his stake, and that perception wasn’t wrong either. Both of us were right, and only one split could be chosen. That is why talking never solved it.

Being two people mattered too. With three or more, majority vote is an escape hatch. With two, the moment opinions split, someone yields or everything stops. Under an unequal cap table, the one who yields is always the same person.

We did talk it through, each time. Each time I was persuaded. Then the business would grow, and the same asymmetry would return one size larger. We were re-running the same argument at ever higher stakes.

The hardest part was not the amount

Looking back, what accumulated most was the sense of unfairness. Not the smallness of the share itself, but that the smallness was structurally fixed, no amount of work would move the ratio.

I could work until dawn not out of stamina or grit, but because I naively believed something equal lay at the end of it. Once I knew it wasn’t equal, I couldn’t rebuild a reason to sit at that desk until that hour.

That feeling operates independently of how the business is doing. On bad days: “and I’m carrying all this.” On good days: “most of this outcome is not mine.” Either way it lands on the same conclusion.

And, the practically decisive point, unfairness erodes the motivation for full effort. I never decided to slack. But at each moment where you either push one step further or don’t, the reason to push kept thinning. In a two-person startup, when one person can no longer give full effort, the venture is already unsustainable.

I decided to leave at the moment I recognized I had entered that state. Not because the numbers turned bad, not because I came to dislike him, because a person who could no longer give full effort occupying that seat was bad for the business.

How it ended

In the end I received money for my accumulated contribution and left. The company remains, and it is still running.

Not a liquidation, not a business failure, one of two co-founders settled his stake and stepped out. In this site’s taxonomy it belongs on the same shelf as Contentellect, which bought out a co-founder before growing revenue 3.6x and selling ahead of AI, or DashThis, whose 12 years included a CEO buyback and two collapsed deals. In published cases it’s the kind of event covered in one line of a success story. Seen from the side that leaves, that one line is the whole story.

What can be said as fact, after the fact

This is not a place for advice, so only observations.

The equity split was the item decided when information was scarcest, hardest to discuss frankly, and hardest to change afterwards. Product, pricing, hiring can all be redone. Equity, once outside capital arrives, carries third-party interests and can no longer be moved by the founders alone.

And a fundraising-first equity policy does not automatically protect the risk and return of the non-CEO founder. Without separate mechanisms (vesting, scheduled re-evaluation of contribution, buyout terms on exit) there is no protection. We had none of them in place.

Would they have prevented the break? Unknown. What is known: because they weren’t in place, we had no choice in how it broke.

One more thing. There is no villain here. A senior founder lent us the office, investors funded us, and a peer sat beside me until dawn. We were blessed in people, and it broke anyway. So the cause cannot be sought in people. Only the paperwork of the cap table remains to examine. The more blessed we were, the more purely the structure stands exposed.

How the proceeds get divided at exit is contract-shaped. See Tweet Hunter, an MVP-to-$10M exit in 18 months whose founder still regrets the earnout. Becoming a party to one is when the meaning finally became real to me.

I still look them up, about once a month

Even now, after leaving, I quietly check on the company and its service about once a month. Press releases, the careers page, the product changelog. Search without telling anyone, look for a while, close the tab. I’ve repeated this many times.

As far as I can see, they are doing well. I confirm it and I am honestly glad. “Cheering from the shadows” is the most accurate description of the current distance.

My co-founder and I did, in the end, fall out. The relationship has not recovered. Even so, that person was the one who first handed me entrepreneurship as an option. He taught me, not in words but as a lived situation, that there are paths other than employment. Including that back, getting up to go when the phone rang at dawn. That I run my own business now, that I run this site collecting other people’s numbers, all of it extends from what I received there.

I respect him, and I am grateful. And none of that contradicts anything written above. The cap table broke. What I received through it did not. Watching, at that distance, a person who does not stop until the thing is done. That may have been the largest share I took away.

So this is a record, not a grievance. We simply placed our own case on the same shelf as the 343 others on this site.

In this series

• Part 1 — We started four, and three broke
• Part 2 (this article) — The two-person SaaS broke on the cap table
• Part 3 — 277 commits and 17 languages, and it still stopped
• Part 4 — 9,103 monthly users in 3 months: a content site’s real numbers