How do you fire a startup employee?
ismarc: Did he have a salary or associated pay for any of the work?  Have you sat down and explained things to him yet (ie, how he is performing compared to what you were expecting)?  If you haven't told him, he may have just misunderstood the primary focus.  If he's been working for potential of equity only, let him retain that potential based on work already completed, or give him a reasonable payment of having worked for several months for free.  I know I would not be willing to ever be in any sort of business arrangement with someone ever again after them getting months of free work from me and then going "oh, hey, nah, not working out, sorry we didn't tell you so you could correct it, and no you don't get to keep anything you've been working on, good luck!"