Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

verdikapuku.com

Post reply on HN
Print view View original

91–100 of 253 posts

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

#91

Post by LouisSayers »

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

I would have been tempted to take the idea, partner with someone else and run hard with it in spite.

I can't stand people with this mindset, and it's fair game if that's the cards they want to play.

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

#92

Post by verelo »

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…

I’m running a business that’s currently doing around 32k a month at ~85% margin after 2 years in operations, no funds raised to far. I have a friend who is an MBA and only held corporate roles up until now. I’ve been running companies my entire life, and had one exit that was 42.5M US.

We discussed partnering up, and when i mentioned a buy in or 10% equity split (with no buy in) or some combo of the two, he backed off pretty quick.

Turns out he expected something around 40%-50% with no buy in. To me this is just unintelligent? Especially from an MBA.

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

#93

Post by neom »

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.

I was one of the "business guys" at DigitalOcean from very tiny to big. Execution looked like: 20% of the time in meetings discussing what the next period of time without seeing each other was going to look like and 80% of the time on flights and in hotels. My mantra was always "be directionally correct, go to market as hard as I can every single day, and fully trust the engineers building the products around me".

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

#94

Post by greatpostman »

lurk2 wrote: post #87
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?

Once the business hits a certain level of revenue, the mvp is finished etc, whoever is the face of the company, I.e. CEO has way more power. CTO if they have shipped a complete product that’s getting paying customers can be replaced with an engineering manager. But not before

Getting the product to some level of completion is a monumental lift

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

#95

Post by ZeroTalent »

verelo wrote: post #92
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…

I’m running a business that’s currently doing around 32k a month at ~85% margin after 2 years in operations, no funds raised to far. I have a friend who is an MBA and only held corporate roles up until now. I’ve been running companies my entire life, and had one exit that was 42.5M US. We discussed partnering up, and when i mentioned a buy in or 10% equity split (with no buy in) or some combo of the two, he backed of…

MBA doesn't mean that much by itself.

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

#96

Post by neilv »

fellowniusmonk wrote: post #65
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…

If you are the technical co-founder who is writing code you should ensure you have legal protections before anyone else has access to what you have written. This can be a legal agreement or built in protections via copyright law. Same as any author who produces work that others can profit off of in perpetuity, don't sign your built in protections away.

In the example I'm giving, code IP isn't very relevant to a business cofounder screwing, because the (real or perceived) value of the code IP is less than the relationships that may be tied to the business cofounder.

All the code IP protections mean, in this regard, is that the technical cofounder has less value comparably tied to them personally.

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

#97

Post by dccoolgai »

_bin_ wrote: post #75
randysalami wrote: post #66

Earlier quoted context omitted.

What is needed in your opinion? EDIT: I say this as an engineer who is putting his notice in tomorrow to found a startup EDIT EDIT: Thanks guy, this is along the lines I'm thinking. I'll be competing with companies like Asana, Monday.com, and ClickUp. I worked in a consulting environment for two years and these tools could never be adopted despite the org size growing to 1000+ people in my larger team. It was a big p…

A good biz guy can be worth his weight in gold. It's harder than people think to get it right: to figure out the right markets to address first and how to tweak/target your product to do so, when, how, and from whom to raise capital, at what rate to expand the team, sales and marketing stuff, etc. Doubly so if the technical co-founder isn't as good at these. It's not worth 80% of equity against 20%, but it is worth a…

Agreed. The tough thing, though, is that it's (generally) a lot easier to spot a bad engineer than a bs "ideas guy".

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

#98

Post by s1artibartfast »

verelo wrote: post #92
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…

I’m running a business that’s currently doing around 32k a month at ~85% margin after 2 years in operations, no funds raised to far. I have a friend who is an MBA and only held corporate roles up until now. I’ve been running companies my entire life, and had one exit that was 42.5M US. We discussed partnering up, and when i mentioned a buy in or 10% equity split (with no buy in) or some combo of the two, he backed of…

>To me this is just unintelligent?

You would know better than us, but I dont think of 10% as a partnership. Maybe they just thought they were going to get a killer deal.

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

#99

Post by Ancalagon »

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…

I had this exact scenario happen on the ycombinator cofounder matching of all places. Except the other cofounder (non-technical) wanted it 95/5.

Yeah, I stopped all contact that same day. That project never got launched.

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

#100

Post by JumpCrisscross »

_bin_ wrote: post #68
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.

It can, to be sure, and it's not ideal. But the perception that technical co-founders typically get gypped hard is very warranted. This is a thing where you can often still get a reasonably good result with a technical co-founder, not as good as were he solely focused on product/tech stuff, but enough that his individual outcome may be higher than letting the biz guys run it. Obviously good biz guys somewhat mitigate…

> the perception that technical co-founders typically get gypped hard is very warranted

I’d love to see the data. Most start-ups fail. For any given category of founder, there are therefore more stories of disasters than successes.

Post reply on HN