Equity Is a Puzzle: Never Split It Equally
When you first start a company, that 100% equity is really just a dream. The startup journey is the process of sharing that 100% dream with money, the best engineers, and the best marketing and resources. Lei Jun's own words: starting a company is assembling a puzzle. This lesson examines how to assemble it — and why three common approaches (giving too much away, hoarding it all, or splitting equally) all lead to failure.
In the early days of a startup, a founder's only asset is that 100% equity stake. What it's worth depends entirely on whether anyone believes in it. Lei Jun's math is direct: if you truly want to build a great company, you have to think "I'm going to build a billion-dollar company — my 1% is worth $10 million, what can I trade it for?" If you don't believe your company can become big, how can it possibly succeed?
The 100 cells below represent your 100% dream. Following Lei Jun's example, give away equity piece by piece and see what each piece buys you. This is the puzzle game.
In Lei Jun's experience, founders on equity tend to go to one extreme or the other. Two real examples.
50/50 to a Figurehead Partner
A friend found a "very impressive" person to co-found with and split 50/50. Lei Jun knew that person: a CEO running five companies with 300–500 employees — how could he go full-time on your startup? "At most he plays the role of an Angel investor — and I often think he doesn't even put in money. What investor would touch your 50/50 structure?"
Another case: a returning PhD spent ¥50,000 to register a company; someone with "a few social connections" put in ¥30,000 for 30%. What can that person actually do? "He helped me register the company." Anything else? Nothing. If you sell off 50% of your dream cheaply at the start, you won't get enough in return — and the rest of the puzzle will have nothing left to trade with.
100% Is All Mine — I'll Do It Alone
"Too many voices in the company — better if I make all the decisions myself." Lei Jun's verdict is unsparing: in today's internet startup environment, if you hold 100% of the equity, your chance of building a successful company is close to zero.
Every successful startup over the past five years has done the puzzle well. Success with highly concentrated ownership — like Chen Tianqiao or Ding Lei — is very, very rare today, and even they had partners.
Sharing equity is right. Splitting it equally is a different trap. Lei Jun has stepped into it himself.
Four People, 25% Each
When Lei Jun started a company in college, he was "dragooned into co-founding" — four people, 25% each. Within six months, they had to hold two elections for who would be Chairman and who would be CEO. Another time, a group of co-founders came to meet him and handed over business cards: every single one said "CEO." Four people, 25% each. The first question was obvious: who is actually in charge at your company?
When You Disagree, Who Decides?
50/50 has worked in the US: Google, Yahoo, and HP all started that way. The advantage is you don't need to compare contributions or maintain checks and balances. The disadvantage is there's no tiebreaker when a fundamental disagreement arises. It works more often in the US because everyone follows the rules; in China, many early-stage companies start with 50/50, but few succeed. If you use this structure, "who has the final say when opinions differ" must be agreed upon at the very beginning.
Three or four people splitting equally — don't even discuss it. Three monks and no water to drink. Someone must have a larger stake, more leadership, more authority, and a bigger voice within the group. Authority must exist for the team to function.
Four common equity structures. Click any one to see Lei Jun's diagnosis.
Click any structure above to start the health check.
For a solo creator, the "100%" is your time and product revenue — the puzzle logic is exactly the same. When someone approaches you to co-build an AI product and opens with "let's go 50/50," ask Lei Jun's three questions first:
- Full-time or figurehead: Are they truly committed, or just lending you their name?
- Who decides: When you can't agree, who has the final say?
- Which piece of the puzzle: What gap of yours are they filling? If the answer is "I know a lot of people and can introduce you to resources," that's a referral commission or advisory fee — not half the company.
Independent developers most often fall into the far-right trap: handling design, growth, and distribution all alone — unwilling to share anything. You can absolutely trade 15% of revenue for a distribution channel that actually drives traffic, or 10% for a designer who elevates the product experience. But don't trade 50% for "I believe in you."
For every percentage point you give away, you should be able to point to exactly what you got in return.
Startups are puzzles: 100% equity is your only asset — and also just a dream.
Every piece must buy something real: 15% for funding, 10% for the best engineer, 5% for the best designer.
Selling too cheap or hoarding it all both near-zero success odds — and three or four people splitting equally is even worse.
Authority is essential: Before going 50/50, answer this first — when you disagree, who decides?
Source: Lei Jun's public startup lecture series