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Ask HN: What % of equity is a technical co-founder worth?

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Re: Ask HN: What % of equity is a technical co-founder worth?

#11

Post by bdmorgan »

At first glance, I agree with most others that "the idea itself is worth 0%". Having said that, we all know that's not always true...there's a looooong list of ideas that were so brilliant at the time of their inception that - combined with good fortune and perfect timing - the initial crappy implementation had no real negative impact (hello, Windows 3.0, hello Facemash, etc.).

So your idea may be brilliant...probably not, but maybe so :-) If you have already prototyped it out, have a basic wireframe built, have a good business plan in place, and have some funding lined up (either your own or from some external source) I would say that a technical co-founder would be at most worth 20-25%. From the gist of your question, though, it sounds like you have an idea in your head and that's about it. If that's the case, you gotta find your co-founder and immediately agree to a 50/50 split...maybe give them a 6-8 week 'trial phase' just to make sure they aren't a total fruitcake and are going to bail out on you, then lock it all down legally and move forward from there.

What people are trying to tell you in the other posts is that HARD skills >> SOFT skills when it comes to launching a tech company in the very early stages. Look at your descriptions:

* "business-minded" - hard to quantify * "action-oriented" - every great developer on earth is this as well * "team-building" - if you were great at this, your first stop wouldn't be at Hacker News for advice on how to build a team * "selling" - I agree that this is actually a HARD skill - either you got it or you don't. If you have demonstrated track record in this area, this is your trump card. * "partnerships" - soft skill...mostly manipulating paperwork with lawyers at the end of the day * "strategy" - you will easily be splitting this one 50/50 with your technical co-founder

Meanwhile, a good tech co-founder is going to bring:

* Specific dev experience - hard skill * Knowledge of architecture and scalability - hard skill * Knowledge of SEO and online technical marketing - hard skill * Ability to augment his/her skill with other good tech people out there, selecting from their own personal experience or interviewing based on their own skills - hard skill (i.e. business guy has no hope of locating and finding these people, IMHO)

Sorry for the long explanation. Bottom line: you gotta go 50/50. If your guy is not worth 50% in your mind, you have the wrong person.

Re: Ask HN: What % of equity is a technical co-founder worth?

#12

Post by krisrak »

technical co-founder should get >50%, he can build product without you, u cannot without a technical co-founder. If you are a marketing guy then try starting business like groupon that requires more marketing and sales talent than technical talent at its core. If the core of the product relies on building good web app/mobile app then technical guys don't need you, if the product is great people will come onboard without help of any marketing guys. This does not work in case on businesses like groupon, which relies on building partnerships with good brands, that where pure marketings guys should focus on building.

Re: Ask HN: What % of equity is a technical co-founder worth?

#13

Post by levifig »

keiferski wrote: post #10
mitchf wrote: post #6

85% Tech Founder, 15% Business Person. It's not the idea, it's the execution.

Really getting tired of the constant reiteration of this soundbite. It's much, much more complex than that, and the constant chanting of "ideas don't matter" just leads to groupthink. For example: what if the bulk of your product is copy (writing) or design? All it needs is a simple account system and framework built around it - the majority of the work is nontechnical . That's not to say that it is easy or simple; r…

And I'm tired of the constant rebuke of a perfectly good soundbite by people that have no idea of the distinction of "idea" and "execution". Design and copy writing are as much part of "execution" as code is. They are also as technical as code is, just not your idea of technical.

Good ideas with average execution are forgettable. Average ideas with great execution are memorable.

Re: Ask HN: What % of equity is a technical co-founder worth?

#14

Post by kls »

krisrak wrote: post #12

technical co-founder should get >50%, he can build product without you, u cannot without a technical co-founder. If you are a marketing guy then try starting business like groupon that requires more marketing and sales talent than technical talent at its core. If the core of the product relies on building good web app/mobile app then technical guys don't need you, if the product is great people will come onboard with…

I am not sure I totally agree with this, If the non-technical co founder is a business dev and sales guy he is just as important to the equation. And I would say there are a good deal of technical individuals who should not have controlling interest in the company. I say that as a 3 time CTO of start-ups and a very technical person. I was in no way qualified to be the controlling party of any of those organizations. I have a good business intuition, but my partners where way more qualified in what they do, if I held controlling interest, I may have forced issues that I was wrong about. I agree with 50-50, but if I where investing in a company I would be leery of a company where the technical and not business partner held controlling interest.

Re: Ask HN: What % of equity is a technical co-founder worth?

#15

Post by keiferski »

levifig wrote: post #13
keiferski wrote: post #10

Earlier quoted context omitted.

Really getting tired of the constant reiteration of this soundbite. It's much, much more complex than that, and the constant chanting of "ideas don't matter" just leads to groupthink. For example: what if the bulk of your product is copy (writing) or design? All it needs is a simple account system and framework built around it - the majority of the work is nontechnical . That's not to say that it is easy or simple; r…

And I'm tired of the constant rebuke of a perfectly good soundbite by people that have no idea of the distinction of "idea" and "execution". Design and copy writing are as much part of "execution" as code is. They are also as technical as code is, just not your idea of technical. Good ideas with average execution are forgettable. Average ideas with great execution are memorable.

Now you're just arguing about definitions. "Technical" = coders in 99/100 uses, especially for the OP.

Re: Ask HN: What % of equity is a technical co-founder worth?

#17

Post by mindcrime »

krisrak wrote: post #12

technical co-founder should get >50%, he can build product without you, u cannot without a technical co-founder. If you are a marketing guy then try starting business like groupon that requires more marketing and sales talent than technical talent at its core. If the core of the product relies on building good web app/mobile app then technical guys don't need you, if the product is great people will come onboard with…

technical co-founder should get >50%, he can build product without you

And? What good is a product if there aren't any paying customers willing to buy it? "Build it and they will come" has not proven to be a 100% effective strategy... in fact, history is littered with long lists of products that got built, some at great expense, but failed as businesses.

I think you underestimate - severely underestimate - the value the "business guy" brings to the table... IF said "business guy" is really a top-notch "business guy" and not just "some guy with an idea." Doing market research, identifying potential markets, interviewing customers and identifying pain-points and needs, determining pricing, determining market positioning, determining market type theory, cold calling to get leads, closing sales, raising funds, doing PR, determining channel strategy, generating demand and driving it into your chosen channels, arranging partnerships, etc., etc... these are the things that a good "business person" brings to the table, and they are essential.

Re: Ask HN: What % of equity is a technical co-founder worth?

#18

Post by mindcrime »

bherms wrote: post #4

When it comes down to it, despite how you feel you're good at "business", if you find a good technical co-founder, you're going to actually be close to worthless (considering you get a really good tech co-founder, not just a programmer). Business is easy for smart people. It's mostly common sense, personality, and drive. Once you find a really good technical co-founder, chances are the answer to "Could this business…

if you find a good technical co-founder, you're going to actually be close to worthless (considering you get a really good tech co-founder, not just a programmer). Business is easy for smart people.

I'm sorry, but I have to "call bullshit" on this (as a generalization anyway. I don't think we know enough about the specifics here to really say if the OP - specifically - is going to "be close to worthless" or not).

There are particular skills and talents that good people on the "business side of the house" have, and they're not necessarily things that come easily to just any smart person. I mean, sure, most reasonably smart people could probably teach themselves to make cold calls, generate leads, go on sales calls and close sales... but not to any greater degree than you could say "any reasonably smart person can learn to write code."

In the end, specialization and division of labor are a good thing, and a solid business needs people who have chosen to focus on, and develop skills in, different things... and the business side is no less important than the product side.

And if you really don't believe me, go round up 10 random engineers with no selling experience, give them a list of phone numbers and a stack of data-sheets and tell them to go sell a product, and see how that turns out.

Re: Ask HN: What % of equity is a technical co-founder worth?

#20

Post by krishmv »

Just wondering if there's a bit more to this than the idea vs. execution argument. Isn't a terrible idea well executed as bad as a great idea terribly executed?

What about skin in the game? If one's invested more capital, or has given up a job earlier to do things like research, talking to customers or building a prototype, his risk is higher and shouldn't he be rewarded for it?

Wouldn't expendability matter? What if the business guy can get a good development team to build the product (there are shops that work for equity) more easily than the technical guy hiring a capable sales agency (there are agencies that work on commission)?

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