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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

#51

Post by JumpCrisscross »

neilv wrote: post #48

One thing I've wondered about for awhile: How do you find a business co-founder you can trust? For one example, the article says that some of the best value that a business co-founder can contribute is disproportionately building the relationships. But those relationships can be more connected to the business cofounder themself, than to the company. It's a bit different for the technical co-founder, since your percep…

Anyone can do a back room deal to screw their partners. Mark Zuckerberg was a technical founder, for example.

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

#52

Post by hibikir »

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.

The difficulty with the business person is identifying actual skill. I've seen way to many startups where the business side was basically floundering, and the end result was technical firings and business hires, but no acknowledgement or punishment for the existing product and business staff.

The places I've seen with actual success involved at least one founder capable of both, and that therefore had the taste to to realize when people coming up with ideas and taking meetings were just not meeting the high bar required. Because having ideas that don't work is easy, and so is having meetings that don't get you close to making sales. It looks like work is being done, but, if anything, it's making sure the company is spending time building the wrong things.

I'd much rather work with business aware developers, who are interested in knowing more about the business, than with total business specialists. Finding business-only people that have interest in learning how things would get done, and therefore have any idea of how difficult their ideas are to implement, is in my experience way too hard, as the barrier of peering into code is way too high.

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

#53

Post by eezurr »

ElevenLathe wrote: post #30
eezurr wrote: post #23

Earlier quoted context omitted.

Hmm, if it were me, I would have asked how his 80% share would have made my 20% a good investment [than all the other options]. It's all about what each of you are bring to the table. It's possible he priced the tech side perfectly AND being the best option available to make you better off.

You're of course right in a game-theoretic sense but I would never start a business with somebody who thinks like this.

Its true in a game-theoretic sense, but I'm actually talking about being honest (and rational) with yourself and what you're able to contribute. There's many other factors that have been mentioned by other people here.

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

#54

Post by loktarogar »

riskassessment wrote: post #20
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.

it's not "a business major", but "a business major who deeply understands a customers need". just any old business major won't do.

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

#55

Post by dentemple »

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.

In my experience, engineering CAN be the hard part, but almost always in situations where the business requirement is unclear or non-sensical to begin with.

For example, business ideas in the form of: "Use {X} to solve {Problem that literally can NOT be solved with X}"

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

#56

Post by pier25 »

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…

> wanted an 80/20 equity split in his favor.

If they're so confident in their value they should just find some money and pay for the development of the product to a freelancer or employee.

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

#57

Post by mountainriver »

_bin_ wrote: post #35
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…

Very typical. I've run into cases where an "idea guy" basically says "you do all the product and tech half, I'll do marketing and strategy." Which is dumb, because sometimes I'm legitimately better at the strategy half too. Generally these people want ridiculous equity splits of that nature. It's worth anyone technical's time to build skills in strategy, marketing, finance, etc. The technical co-founder always gets s…

It’s funny how many people think their ideas are truly brilliant and warrant a massive amount of respect.

Anyone who’s worked as an engineer for awhile knows that ideas are a dime a dozen, they are rarely unique, and are about a millionth of what needs to be done to succeed

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

#58

Post by silexia »

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? :)

CoalitionTechnologies.com. We do services like web design and SEO. I personally built massive Laravel applications for recruiting and training and for running the business.

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

#59

Post by nativeit »

randysalami wrote: post #34
lucasyvas wrote: post #28

Earlier quoted context omitted.

There’s zero chance this would ever be a fair split. They know nothing about building technology so are never in the right. This happens often enough that most startup accelerators pre-flag it as criteria to not invest in founders (with an out of balance equity split).

Maybe he has privilege and lots of connections? Some people have doors open for them just because of who they are and there is value in that.

They need to pay for the tech then. Hire an engineer and design team. If they don’t have the access to that sort of immediate funding, then I’d struggle to imagine what sort of in-the-bag contacts they could bring to justify such an uneven split.

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

#60

Post by dust42 »

Having seen plenty of businesses throughout my life, both successful ones and less successful ones I'd say the most important traits are:

  - the ability to execute
  - having drive, focus and flexibility to adapt
  - being able to manage a team and keep it focused, motivated and on track
this is valid for both the technical founder and the business founder alike.

In a perfect team the business founder has a very good understanding of the tech side and the technical founder a good understanding of the business and marketing side. Product is nothing without sales and sales nothing without product. Despite this being obvious I have seen several companies fail on this.

Last not least it depends on the product. The more complex the tech is the higher the share of the technical partner should be and vice versa the more specialist business domain knowledge is needed, the higher the business partner's shares are.

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