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Business co-founders in tech startups are less valuable than they think

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Re: Business co-founders in tech startups are less valuable than they think

#11

Post by j45 »

dgs_sgd wrote: post #8

I recently walked away from a potential startup because my non-technical partner (MBA ideas guy) wanted an 80/20 equity split in his favor. I was the first to broach the discussion and proposed 50/50. It was a severe misalignment in expectations, and this was after 3 months of meeting regularly to refine the idea and build out prototypes (read: I was building the prototypes). My advice is to have this conversation wi…

Partnerships should be about leveraging opportunity in the market, not partners leveraging each other.

With business idea guys, the tech guy could own 100% of the shares until business founder shows up with paying demand and repeatable and scalable demand.

The technical founder invariably builds and creates value in working software. It's tangible.

If the business / "idea" person over values their share it's likely due to knowing the mismatch to begin with.

Technical co-founders are perfectly capable of learning all aspects of business. Plenty of good books and resources out there at present.

Re: Business co-founders in tech startups are less valuable than they think

#12

Post by j45 »

bix6 wrote: post #6

Your solution to bad business co-founders is for them to become sales people? The traits and failures you are describing could be attributed to anyone including an engineer. A good business person moves mountains while keeping builders free to build.

Business founders have to bring the distribution, technical founders bring the product.

Require both.

Re: Business co-founders in tech startups are less valuable than they think

#13

Post by j45 »

relyks wrote: post #5
silexia wrote: post #3

Cofounders are not great anyways of either type. If you are a business person, learn the tech stuff you need. It's easier today than ever. If you are a tech founder, it's even easier to pick up business stuff than tech stuff. Investors always encourage it because it reduces their risk... One of you can be fired and they still have the backup. But when it is all on you there is no passing the buck. Source: solo bootst…

What's your product? :)

Better to go learn how they did it than the product.

Re: Business co-founders in tech startups are less valuable than they think

#14

Post by steelbrain »

I don't man, I am fairly technical and have failed solo startups several times because I'm not good at the selling part (and I guess by extension build what people want). So in my limited experience, a co-founder that can sell well is really valuable.

Re: Business co-founders in tech startups are less valuable than they think

#16

Post by ivape »

It feels like the business layer has always successfully commodified the developer layer, but developers don't seem to have any desire to commodify the business layer. It seems like the developer layer naturally wants to eliminate the business layer entirely. It is basically extinction if you let developers sit on the other side of the coin, so I suspect anyone on the business side of things will have to be a cut-throat survivalist (there's no other way).

Re: Business co-founders in tech startups are less valuable than they think

#17

Post by guywithahat »

I realize this is all subjective, but the hardest problem in every startup is solving a real customer problem. I’ve never been part of a startup where the engineering was the hardest part, and I’ve been part of very high-tech companies.

An accountant maybe doesn’t add much, but a business major who deeply understands a customers need can be more valuable than any engineer.

Re: Business co-founders in tech startups are less valuable than they think

#18

Post by greatpostman »

Living in NYC, I have been around a TON of venture backed startups with the classic non technical CEO, technical CTO. Some HUGE percentage of startups see the CTO fired once the tech stack and revenue are stabilized.

The incentive from the CEOs perspective to remove a contender as well as claw back the equity is huge. Early stage the CTO is the most critical, but after real traction they can be replaced far easier than most want to admit.

My advice for technical founders is to always place themselves first, from a legal and organizational perspective. For a technical founder with social skills, a non technical founder brings very little value relative to their vesting in the early stage.

Re: Business co-founders in tech startups are less valuable than they think

#19

Post by wolpoli »

j45 wrote: post #12
bix6 wrote: post #6

Your solution to bad business co-founders is for them to become sales people? The traits and failures you are describing could be attributed to anyone including an engineer. A good business person moves mountains while keeping builders free to build.

Business founders have to bring the distribution, technical founders bring the product. Require both.

The technical cofounder becomes less important as the company grows through.

Re: Business co-founders in tech startups are less valuable than they think

#20

Post by riskassessment »

guywithahat wrote: post #17

I realize this is all subjective, but the hardest problem in every startup is solving a real customer problem. I’ve never been part of a startup where the engineering was the hardest part, and I’ve been part of very high-tech companies. An accountant maybe doesn’t add much, but a business major who deeply understands a customers need can be more valuable than any engineer.

This presupposes a business major is any better at understanding customer needs than an engineer. Given that most startups fail, I'd be willing to infer that neither the typical non-technical founder nor the typical technical founder is particularly good at this.
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