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What should I know about equity, terms, etc? How should I structure the business? What should we get straight right at the beginning of this all? So many questions!
Any articles/advice you care to give would be greatly appreciated.
Thanks :)
What skills do you lack?
Do you trust them?
Whatever the deal, assume you own all the equity to start with, and they have to buy shares to become cofounder. It doesn't really matter what the cost per share is, but it should be enough for you to reach the next milestones.
You also need to reg the company, and have a lawyer produce a shareholders agreement.
The analogy of co-founder to marriage isn't far off the mark.
At the end of the month, you'll likely either think "well, it doesn't look like he(she) did anything I couldn't do" or "wow, there's no way I can do this without him(her)".
If it's the latter, give up 30% of your company vested over a few years.
Have him or her prove his worth over the next month as a trial. No compensation or promises, equity or otherwise. Business co-founders are generally great at talk, but less so at action. It's stereotyping I know, but its a generalization based in fact. They aren't as in demand as the technical side, and are generally more willing to work for free. Of course, saying "I'd like you to work for free without any compensat…
Wow, dude... I'd need to write you a textbook to answer your questions... if you have specific questions you can ping me at magee70@yahoo.com... FYI I'm on my 3rd startup... sold the first two..
More importantly, is this person the right co-founder for you? What skills do you lack? Do you trust them? Whatever the deal, assume you own all the equity to start with, and they have to buy shares to become cofounder. It doesn't really matter what the cost per share is, but it should be enough for you to reach the next milestones. You also need to reg the company, and have a lawyer produce a shareholders agreement.…
Have him or her prove his worth over the next month as a trial. No compensation or promises, equity or otherwise. Business co-founders are generally great at talk, but less so at action. It's stereotyping I know, but its a generalization based in fact. They aren't as in demand as the technical side, and are generally more willing to work for free. Of course, saying "I'd like you to work for free without any compensat…
So you'd say 30% vested over how many years? He's got a pretty good track record and claims he can introduce me to all the right people. He's thrown out some names, and seems like a pretty legit and nice guy. I'd essentially like to keep developing the idea while someone else is out building business relationships and structuring the business.
I'd also get references without asking. If he claims to play golf with someone big, track them down and see if they say the same. Ask around and see what his friends say. Track record is huge. Make sure the measurable successes match the hype.
I'd say 2-3 years is good to vest. You'll know by then if the business is failing or not. Things could also change if you get investment.
Definitely delay bringing him on board so you can cultivate a friendship and vette his work ethics. Its a lot easier to not hire someone than it is to fire them.I'd say try and spend lots of time together for the next couple months if you just met him. Make him make sacrifices.
I'm also on the look out for a technical partner and will actively start looking once I have my prototype working.
What I plan to do though is meet them in person or via webcam first. Shoot the shit, observe how they handle different situations, get a feel for their morals, talk about normal stuff friends talk about.
You want to know the real person you're going to share your business with, not what their CV says or what their marketing talk convey.
How would they handle conflict? How likely are they to use slight of hand tricks to better themselves at others expense? What do they want to accomplish and how would that tie in with your shared business? Do they simply want to make a quick buck? Do you?