The founding fathers would have loved dynamic equity

It’s the Fourth of July, and we celebrate independence. But the founders were equally obsessed with a different question: who deserves what, and why?

We remember them for declaring freedom from a king. We forget that they spent just as much time arguing about wealth, inheritance, and whether ownership should reflect what you’ve built or what you were born into.

Their answer — that ownership should track contribution, not birthright — sounds like something a YC partner would say. And if they could see how most business partnerships divide equity today, I think they’d be horrified.

The founders’ record on who actually deserved what was, obviously, deeply flawed. But the principles they articulated about merit over inheritance have aged better than their practice of them.

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Adams knew wealth was a monster

In 1813, John Adams and Thomas Jefferson exchanged a series of letters that read like two retired founders arguing over what went wrong with the company they built. They were in their seventies. The revolution was behind them. And they were wrestling with whether the country they’d created was actually living up to its principles.

As early as 1765, Adams wrote what might be his clearest statement on the subject:

“Property monopolized or in the Possession of a few is a Curse to Mankind. We should preserve not an Absolute Equality.—this is unnecessary, but preserve all from extreme Poverty, and all others from extravagant Riches.”

— Adams, draft notes for “A Dissertation on the Canon and the Feudal Law,” 1765 (Founders Online)

Not absolute equality — but no one accumulating more than they’ve earned. Nearly fifty years later, in the famous Adams-Jefferson correspondence of 1813, he was still wrestling with the same idea. He called wealth “another Monster to be Subdued” and asked Jefferson a question that founders still ask each other:

“Now, my Friend, who are the aristoi? Philosophy may Answer ‘The Wise and Good.’ But the World, Mankind, have by their practice always answered, ‘the rich the beautiful and well born.’”

— Adams to Jefferson, September 2, 1813

This is a conversation I have with founders all the time. When a co-founder’s ownership reflects their initial capital investment rather than their ongoing work, wealth is overbearing virtue again. When someone who wrote the first check two years ago still owns 50% while their partner works 60-hour weeks building the business, Adams’ monster is sitting in the cap table.

Adams understood that initial advantages compound. A co-founder who puts in more money at the start gets more equity, which gives them more control, which lets them protect their position regardless of whether they keep contributing.

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Jefferson believed the earth belongs to the living

Adams named the problem. Jefferson tried to fix it.

In 1789, before the Constitution was even ratified, Jefferson wrote a letter to James Madison that contained one of the most radical ideas in American political philosophy:

“The earth belongs in usufruct to the living.”

— Jefferson to James Madison, September 6, 1789

The word “usufruct” is a legal term meaning the right to use something that belongs to someone else, as long as you don’t damage it. Jefferson was arguing that no generation should bind the next with debts, contracts, or fixed arrangements they didn’t consent to. Every generation should have the right to renegotiate.

This is the argument for dynamic equity over static splits. Jefferson just didn’t have the software.

When two co-founders shake hands on a 50/50 split in month one and never revisit it, they’ve created exactly what Jefferson warned against: a fixed arrangement from the past binding the present, even when circumstances have completely changed. The founder who’s now doing 80% of the work is living under terms set by a version of the partnership that no longer exists.

Jefferson didn’t stop at philosophy. In 1776, he pushed through the abolition of primogeniture and entail in Virginia. Primogeniture meant the firstborn son inherited everything. Entail meant property could never be sold outside the family. Together, they were the legal mechanisms that concentrated inherited wealth across generations.

Jefferson deliberately destroyed both. He called these reforms among the most important for republican government.

He was breaking static ownership structures 250 years before we started calling them “dead equity.”

In his October 1813 letter back to Adams, Jefferson laid out a framework that maps almost perfectly onto modern equity debates. He proposed the concept of a “natural aristocracy” based on virtue and talents versus an “artificial aristocracy” based on wealth and birth. The goal of good government, he argued, was to elevate the former and suppress the latter.

Jefferson’s Framework	Modern Equity Equivalent
Natural aristocracy (virtue and talents)	Contribution-based ownership
Artificial aristocracy (wealth and birth)	Static splits based on initial position
Abolishing primogeniture	Eliminating dead equity
Earth belongs to the living	Dynamic equity that adjusts over time

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Franklin built contribution-based partnerships

Adams and Jefferson wrote about fairness. Franklin actually built it.

Before he was a diplomat or a scientist, Benjamin Franklin was a printer. And the way he structured his printing business across the American colonies was, in practice, a contribution-based equity model — arguably the first one in American business.

Here’s how it worked: Franklin provided the printing press, the type, and the training. His partner provided the labor and local expertise. They ran on six-year contracts with profits split based on what each party contributed. Franklin set up at least a dozen of these partnerships across the colonies, from Philadelphia to Charleston to Antigua. Each one followed the same structure: capital from Franklin, labor from the partner, equity tied to contribution.

His first partnership taught him why this mattered. In 1728, Franklin went into business with Hugh Meredith, whose father put up the capital for a printing press. Franklin contributed all the skill and most of the labor. Profits were split 50/50. But Meredith, as Franklin later wrote, was “no compositor, a poor pressman, and seldom sober.” Franklin worked late nights alone while Meredith contributed little. They dissolved in 1730 when Meredith offered to walk away.

Had they used a contribution-based model, the split would have naturally reflected Franklin’s vastly greater output. Instead, the fixed 50/50 created resentment until the partnership had to end. Franklin learned from this — every subsequent partnership explicitly tied equity to both capital and labor.

Franklin’s philosophical writings matched his practice. In a 1783 letter to Robert Morris, he wrote:

“All the Property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other Laws dispose of it.”

— Franklin to Robert Morris, December 25, 1783 (Papers of Benjamin Franklin, vol. 41, Yale University Press)

Ownership is a social construct, and it should serve the people who create value, not just the people who hold the paper. From Poor Richard’s Almanack: “A Ploughman on his Legs is higher than a Gentleman on his Knees.”

Franklin was running contribution-based equity in the 1730s. We just didn’t have a name for it yet.

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What the founders got right (and what we still get wrong)

Adams, Jefferson, and Franklin weren’t alone. Thomas Paine went furthest in his 1797 essay “Agrarian Justice,” arguing that every landowner owed a “ground-rent” to the community — because the value of cultivated land comes partly from society’s collective work, not just the owner’s labor. Value created by collective effort shouldn’t be captured by individuals who didn’t create it. That’s the dead equity problem in one sentence: when someone holds ownership they stopped earning through contribution, they’re collecting ground-rent on their partners’ labor.

The colonial-era partnerships the founders knew had the same structural problem we see today. Default rules gave partners equal profit splits regardless of who contributed more. The Commenda, a medieval Italian contract form that influenced colonial norms, was one of the few exceptions — the investing partner put up two-thirds of the capital, the traveling partner one-third, and profits were split evenly. It was an early recognition that labor and capital should be valued differently.

But the default was equal splits. Just like today. And the data on how this plays out hasn’t improved much in 250 years:

Statistic	Source
65% of high-potential startups fail due to co-founder conflict	Wasserman, The Founder’s Dilemmas
73% of founding teams split equity within a month of founding	Wasserman research
40% of teams spent less than a day on the equity split discussion	Wasserman research
Unhappiness nearly triples in teams that split equity equally by default	Wasserman research

The founders fought against a system where what you inherited mattered more than what you built. Most modern partnerships still operate on a version of it: whoever was at the table on day one keeps their share forever, regardless of what happens next.

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Dynamic equity finishes the thought

The founders didn’t have the tools to track contributions in real time. They had pen and paper and handshake agreements. Franklin had to dissolve his partnership with Meredith because there was no mechanism to reflect who was actually doing the work. Jefferson could abolish primogeniture by law, but he couldn’t build software that automatically adjusted ownership as circumstances changed.

We can. Dynamic equity is the logical conclusion of what the founders were arguing for: ownership that adjusts as contributions change, merit recognized as it happens, no dead equity from inactive partners. You can model it, track it, and update it in real time.

The founders declared independence from a system where what you inherited mattered more than what you built. Dynamic equity declares independence from the same thing.

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Frequently asked questions

What is dynamic equity?

Dynamic equity is a model where ownership percentages adjust over time based on each partner’s actual contributions — time, money, expertise, connections, and other inputs. Instead of locking in a split at founding, the split evolves as the business does. It’s designed to keep ownership fair as circumstances change, which they almost always do.

How did the founding fathers influence modern business structures?

The founders didn’t write about startups, but their principles map directly onto modern equity debates. Jefferson’s argument that fixed arrangements shouldn’t bind future generations is the case for revisable equity splits. Franklin’s printing partnerships were an early form of contribution-based ownership. Adams’ warnings about inherited wealth overbearing merit describe the dead equity problem perfectly. Their core idea — that what you build should matter more than what you start with — is the foundation of dynamic equity models.

Why do most founders still use static equity splits?

Same reason the colonies defaulted to equal profit splits: it’s easier. Having a real conversation about relative contributions is uncomfortable. Putting a number on your partner’s value feels adversarial. So 73% of founding teams decide within a month, 40% in less than a day, and they pick whatever feels fair in the moment. The problem is that “fair in the moment” and “fair over four years” are rarely the same thing.

Is dynamic equity better than a traditional equity split?

For most early-stage companies, yes. Static splits assume that contributions will stay the same forever. They almost never do. Someone’s life changes, someone loses motivation, someone ends up carrying more weight. With a static split, you’re stuck. With dynamic equity, the ownership adjusts. It’s not more complex to manage — tools like Equity Matrix automate the tracking — but it does require founders who are willing to tie ownership to contribution rather than to a handshake.