Vesting is crucial for founders because it prevents a situation where a founder leaves the company and takes a significant portion of equity with them, which would be unfair to the remaining founders.

Founders need to be incentivized to continue working on their startup; without vesting, they could walk away with full ownership at any time, which undermines their commitment to the company.

Vesting aligns incentives among founders, ensuring they all work together to grow the company before any of them can benefit from their equity.

The standard vesting period for stock in Silicon Valley is four years with a one-year cliff, meaning founders earn 25% of their shares after one year.

Equity should vest over time, meaning co-founders earn their shares gradually, and cliffs ensure they must stay for a minimum period to receive any equity.

Implementing vesting and cliffs protects the cap table and allows for smoother transitions if a co-founder needs to leave.

Typically, equity is subject to four-year vesting, meaning co-founders must work for four years to fully earn their equity stake, along with a one-year cliff where no equity is earned if they leave or are fired within the first year. Vesting with a one-year cliff acts as a safety mechanism, allowing you to correct any poor decisions about co-founders without long-term harm to the company.

Single founders should implement vesting on their shares to set a cultural example for employees, demonstrating that everyone is committed to the long-term success of the company.

If you don't establish vesting for co-founders, a fallout can lead to dead weight on your equity table, making it hard to attract investors.