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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

#81

Post by FlyingSnake »

dust42 wrote: post #60

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 unde…

> ability to execute

How do we define what execution looks like?

As a general rule we must be wary of “business cofounders” who sell pontification as execution.

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

#82

Post by lurk2 »

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.

> This presupposes a business major is any better at understanding customer needs than an engineer.

You can still derive advantage from specialization even if one party has an absolute advantage in both activities.

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

#83

Post by mlinhares »

FlyingSnake wrote: post #81
dust42 wrote: post #60

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 unde…

> ability to execute How do we define what execution looks like? As a general rule we must be wary of “business cofounders” who sell pontification as execution.

If your "business cofounders" aren't closing deals and landing sales they're useless. So if you're going to join a "non-technical founder" they must both have the contacts or a in in the industry you'll be trying to join and must be a great salesman.

If they don't have that, walk away, this person has no value.

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

#84

Post by JumpCrisscross »

liquidpele wrote: post #79
JumpCrisscross wrote: post #41

Earlier quoted context omitted.

> worth anyone technical's time to build skills in strategy, marketing, finance, etc. This leads to jack-of-all-trades types. Good non-technical folk exist. They’re just not easy to find for obvious reasons (same as good technical founders who can see the forest for the trees). A good technical founder dilutes their comparative advantage e.g. negotiating with suppliers and prioritising payments ahead of a close.

“Jack of all trades, master of none, is usually better than master of one”

Sort of the dividing line between small business and a startup.

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

#85

Post by dust42 »

FlyingSnake wrote: post #81
dust42 wrote: post #60

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 unde…

> ability to execute How do we define what execution looks like? As a general rule we must be wary of “business cofounders” who sell pontification as execution.

The ability to execute means to deliver timely and on budget.

I have seen people who would not be able to set up and manage a hot dog stand and yet they were trying to run a business with 50 employees. The only result was burning money like there was no tomorrow.

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

#86

Post by parpfish »

_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…

> Which is dumb, because sometimes I'm legitimately better at the strategy half too

A semi-related thought I've had recently:

I've run into a number of non-technical product people that say that they're primary skill is that they have a great "product sensibility" that engineers lack so they need to step in and provide guidance. It's true that many engineer-designed products are terrible, but I'd argue that most engineers have pretty good product sense.

The problem is that engineers have a conflict of interest that leads to them making sub-optimal product decisions. A non-technical product person gets the "luxury" of only thinking "what is the best product for the user?", so they end up with a good design. But an engineer can't help but also factor in "i'm the one that has to build this, so how much extra work am i giving myself?" so they're design will be a compromise of what's good for the user and what can be built easily.

this can have big consequences for how an org should divide work. If somebody has a broad set of responsibilities, they can't help but make tradeoffs (that they might not even be cognizant of) because they're weighing multiple objective functions.

So, when it comes time for figuring out who should be in charge of strategy, it might not just be an issue of "who's better" but more an issue of "who has the least conflict of interest"

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

#87

Post by lurk2 »

greatpostman wrote: post #18

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 th…

> Early stage the CTO is the most critical, but after real traction they can be replaced far easier than most want to admit.

If the technical founder can be replaced so easily, how does it follow that the non-technical founder is less valuable?

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

#88

Post by pj_mukh »

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…

You made the right call. I would never invest in this company, and neither would YCombinator [1]

[1] https://www.ycombinator.com/library/5x-how-to-split-equity-a...

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

#90

Post by yibg »

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…

Fairness of the equity split aside, it also indicates he doesn’t see you as an equal partner. Rather you are seen more as an employee that is going to be working essentially for free. So he probably also won’t value your input and contributions in the venture either.
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