Ask HN: Solo founder and MVP. New co-founder equity split? • Hacker News Board

Re: Ask HN: Solo founder and MVP. New co-founder equity split?

#11

Post by mseebach » Thu, Mar 01, 2018, 1:00 PM UTC

Blackstone4 wrote: post #4

WingH wrote: post #3

“He hesitates when it comes to sales because he does not see himself as a sales person.” isnt this a warning sign to you? at such an early stage you simply dont want just a “strategy” person who doesnt want to get his hands dirty

Fair point. I think when it comes to sales, he is not very confident so he talks himself down. I suggested a sales book for him to read and we shall see where he comes out on that. I feel like he is personable and gets on well with people. He's also a hard worker. So I think it could work but I acknowledge it's a risk. I also think two pedigree guys from XYZ asset management firm launching a SaaS company will find it…

> I also think two pedigree guys from XYZ asset management firm launching a SaaS company will find it easier to raise capital from VCs than a solo founder.

If you can sign and retain customers at ~$15k-$100k/yr with any kind of scale on a product you basically built in your spare time, prepare for your pedigree to come up ~0 times in fundraising conversations.

Re: Ask HN: Solo founder and MVP. New co-founder equity split?

#12

Post by tomtimtall » Thu, Mar 01, 2018, 1:03 PM UTC

It sounds like you are trying to get a sales person onboard without having to pay him up front and you’re trying to pay a friend with equity. Either you business is viable in which case this a a horrible idea or you business is not viable in which case it’s a horrible idea.

Find an employee that is willing to do high cut sales with a low salary. You don’t need a partner for that. If you don’t feel like setting up the sales engine is up your stream find a partner who’s experienced in running sales for a startup and suggest a partnering deal with him. The first thing he’ll do after getting a big equity cut is find a sales person who will do medium cut sales with a lower or nonexistent salary.

Re: Ask HN: Solo founder and MVP. New co-founder equity split?

#13

Post by Blackstone4 » Thu, Mar 01, 2018, 1:07 PM UTC

kennethologist wrote: post #9

Blackstone4 wrote: post #4

Earlier quoted context omitted.

Fair point. I think when it comes to sales, he is not very confident so he talks himself down. I suggested a sales book for him to read and we shall see where he comes out on that. I feel like he is personable and gets on well with people. He's also a hard worker. So I think it could work but I acknowledge it's a risk. I also think two pedigree guys from XYZ asset management firm launching a SaaS company will find it…

Which book did you recommend? Maybe others can make suggestions as well.

The book is: New Sales. Simplified.: The Essential Handbook for Prospecting and New Business Development

https://www.amazon.com/New-Sales-Simplified-Prospecting-Deve...

I read it in January and found it really helpful

Re: Ask HN: Solo founder and MVP. New co-founder equity split?

#14

Post by switchstance » Thu, Mar 01, 2018, 1:07 PM UTC

mchannon wrote: post #5

He is not a cofounder, he is (potentially) employee #1. Cofounders don't get brought on to do sales. Employees do. Treat him like a good salesman- give all kinds of incentive payments (commissions, bonuses) contingent on sales performance, but be very shy with the equity. Plan on firing him as a default unless he exceeds expectations quickly. Equity corresponds to risk and skin in the game, and it sounds like he has…

Great advice. Thanks for this.

Re: Ask HN: Solo founder and MVP. New co-founder equity split?

#15

Post by evrydayhustling » Thu, Mar 01, 2018, 1:09 PM UTC

mchannon wrote: post #5

He is not a cofounder, he is (potentially) employee #1. Cofounders don't get brought on to do sales. Employees do. Treat him like a good salesman- give all kinds of incentive payments (commissions, bonuses) contingent on sales performance, but be very shy with the equity. Plan on firing him as a default unless he exceeds expectations quickly. Equity corresponds to risk and skin in the game, and it sounds like he has…

There are good points here, but I'll present the other side.

If you have MVP but no customers, funding, or employees, 98% of risk is still ahead. There are important, identity defining questions about the business ahead, from how you position yourself against competition when marketing, to your recruiting process, to a multi-stage financing strategy. From experience, it can REALLY help to have a co-founder who is motivated at the "I'll make this business succeed" level to discuss those things and to implement them.

Is this that guy? It's smart to complement yourself with sales experience, but is he someone you want to have holistic business conversations with? If so, give him the co-founder title. If not, look for that person... going alone as a solo founder will be much harder if you are more of a builder than a seller.

Equity is a different story. Put both of you on a vesting schedule. Start your own vesting earlier, so that on day 1 you have 100% of vested equity. Make the _rate_ of vesting roughly match the [responsibility split / contribution to value / endurance of risk] going forward. If the positions are roughly CEO / COO or CEO / CRO, his rate could be 25-50% of yours (corresponding to a 15-35% of fully diluted grant).

Re: Ask HN: Solo founder and MVP. New co-founder equity split?

#16

Post by Blackstone4 » Thu, Mar 01, 2018, 1:11 PM UTC

cl42 wrote: post #8

We’ve had lots of sales people come through our doors and I highly suggest you interview several more here. A few reasons: + MBA degrees prep you for corporate success, and rarely teach you how to sell or create sales collateral + Hesitation re: sales means he will never be a sales person, at least with that attitude. Many (most?) sales people fail because they are afraid to cold call, prospect, do the grunt work, et…

Thank you for your thoughtful response.

I agree with you on MBAs.

I think when it comes to sales, he is not very confident so he talks himself down. I suggested a sales book for him to read and we shall see where he comes out on that.

I feel like he is personable and gets on well with people. He's also a hard worker. So I think it could work but I acknowledge it's a risk.

Also I don't want him just for sales. I have a lot to do between tech, finance, legal, sales etc. If he could come in and lighten the burden that would be great.

He doesn't have domain knowledge so I would have to get him up the curve on the industry and the product. Good point.

Re: Ask HN: Solo founder and MVP. New co-founder equity split?

#17

Post by xstartup » Thu, Mar 01, 2018, 1:13 PM UTC

Sales guy here. I like being paid in cash because having ownership runs counterintuitive to my work.

Better, I get cash compensation and other benefits but not ownership/equity.

Re: Ask HN: Solo founder and MVP. New co-founder equity split?

#18

Post by Blackstone4 » Thu, Mar 01, 2018, 1:15 PM UTC

mchannon wrote: post #5

He is not a cofounder, he is (potentially) employee #1. Cofounders don't get brought on to do sales. Employees do. Treat him like a good salesman- give all kinds of incentive payments (commissions, bonuses) contingent on sales performance, but be very shy with the equity. Plan on firing him as a default unless he exceeds expectations quickly. Equity corresponds to risk and skin in the game, and it sounds like he has…

Why would he not be a cofounder?

At the moment, I have an idea and an MVP. I have three advisers who I brought on in a semi-formal capacity. Two are senior investment managers and one is a serial entrepreneur having started companies in the same area. I speak to them maybe 1-2 a month to get advice and they are listed on my website.

In reality I have zero revenue and it will take 5+ to build this company. I've barely started.

I also read this article on YC: https://blog.ycombinator.com/splitting-equity-among-founders...

Re: Ask HN: Solo founder and MVP. New co-founder equity split?

#19

Post by ryanbrunner » Thu, Mar 01, 2018, 1:15 PM UTC

evrydayhustling wrote: post #15

mchannon wrote: post #5

He is not a cofounder, he is (potentially) employee #1. Cofounders don't get brought on to do sales. Employees do. Treat him like a good salesman- give all kinds of incentive payments (commissions, bonuses) contingent on sales performance, but be very shy with the equity. Plan on firing him as a default unless he exceeds expectations quickly. Equity corresponds to risk and skin in the game, and it sounds like he has…

There are good points here, but I'll present the other side. If you have MVP but no customers, funding, or employees, 98% of risk is still ahead. There are important, identity defining questions about the business ahead, from how you position yourself against competition when marketing, to your recruiting process, to a multi-stage financing strategy. From experience, it can REALLY help to have a co-founder who is mot…

I think this is a fair comment, but a couple of things give me pause based on the original ask:

- Unwillingness / hesitation to do sales - In an early stage startup, and especially as a co-founder, you need to be willing to do what needs to be done, even if it's outside of your comfort zone. As the technical co-founder, you're still going to be involved in the business, and probably even selling yourself. People who are more interested in managing or high-level strategy than getting their hands dirty is a big red flag in my opinion. What would you think if your first dev hire was really more comfortable being a manager, but was "willing" to develop software for the time being?

- Commitment level - if he's working a couple of days a week for an indefinite period of time, that's an indicator that he really doesn't have "skin in the game". If you want to go forward, I would consider something like bringing him on as a consultant, and making him a co-founder if and when he's fully ready to commit.

Re: Ask HN: Solo founder and MVP. New co-founder equity split?

#20

Post by rajacombinator » Thu, Mar 01, 2018, 1:18 PM UTC

-fresh MBA -no existing network -hesitant to join -wants to moonlight

All bad signs but you seem to think he would be a good person to work with so ultimately you have to decide. It sounds like what you need is 1 or 2 rich angels who have the connections to get your first few contracts, or an old guy like 50+ with actual connections and sales experience. (Pay him commissions.) Ideally you should be able to land your old employer as customer #1. Let your MBA friend strike while his job ticket is hot and get a stable job somewhere. Honestly sounds like you don’t know the industry too well either btw.