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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

#131

Post by caseyy »

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…

From my experience, about 1-2 in 10 co-founders are like that. They bring negotiation and networking to the table and demand compensation that no hardworking and honest co-founder would ever ask.

I think Sturgeons law applies to co-founders, and if you haven't spoken to at least 20, you are likely talking to the crap ones. Not all crap ones demand excessive compensation, there are other types of crap. But there is a huge difference between the ones that will be good for business and the others.

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

#132

Post by conductr »

frenchmajesty wrote: post #118
crazygringo wrote: post #110

I don't agree at all. Not even with the premise that "there are significantly more business guys looking for tech guys than the reverse". There are a lot of business and tech guys and most of all of them are pretty clueless when you randomly meet them in "gatherings". But a valuable business co-founder brings extensive domain expertise, a network of people, sales skills, management skills, and fund-raising talent. Th…

Hey, OP here. I view it like this: if you were to take all technical people on the market for launching a startup and plot them on a distribution to find the "valuable in early stage" subset, you would find that 35% are good enough to get a startup off the ground. They don't need to be extraordinary programmers, just good enough but with a lot of drive.* However, for non-technical folks that are on the market, the di…

If you're taking a fail fast type approach, the business guys fail faster when they can't get a tech co-founder to rally around their ideas. If you can't do that, you probably can't sell the MVP either. On flipside, the tech guys will spend month and even years polishing their 'product' without ever actually launching it with actual attempts to sale it. So they fail slowly after sinking tons of time. They'll talk about it as a side-project to minimize the appearance of failure but if they put all that work in they really do want it to succeed. They just get to the point where code is good enough and can't force themselves to transition to marketing/sales/etc.

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

#133

Post by j45 »

wolpoli wrote: post #19
j45 wrote: post #12

Earlier quoted context omitted.

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.

Depends who's wanting that look.

Technology doesn't stop scaling in complexity the larger you get, or the business hits a ceiling on what it can hit in revenue and growth.

It's cool if b-school teaches other wise :)

Both the business founder and technical founder has to grow.

Which one can learn to scale to the moon easier?

I wish all my friends well on any side of co-founding.

The thing that doesn't work is trying to grift someone else's hard work and leverage them.

Builders build.. sellers sell.

Learn to deliver and ship consistently or someone will.

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

#134

Post by throwawaymaths »

parpfish wrote: post #86
_bin_ wrote: post #35

Earlier quoted context omitted.

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 engi…

> 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?

I wonder how many startups have failed because the tech has been too much of a pain in the ass to maintain and the technical staff burns out and leaves, with more and more expensive developers postponing leaving till as late as possible and doing as little as possible

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

#135

Post by throwawaymaths »

cruffle_duffle wrote: post #105
parpfish wrote: post #86

Earlier quoted context omitted.

> 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 engi…

Conflict of interest is exactly how I term it as well. Tech people with good product sense have to work very hard to override their engineering instincts or they’ll handicap the product. I’m guilty of it all the time. What helps is remembering that absolutely nobody gives a shit about the code or the architecture. Nobody. It really doesn’t matter. They just want an awesome product. (Which isn’t to say none of that ma…

> What helps is remembering that absolutely nobody gives a shit about the code or the architecture

The programmer on call at wee hours in the morning gives a shit. Good news though, that programmer will not be a problem soon enough. You can hire your way out of this problem after they quit.

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

#136

Post by j45 »

derektank wrote: post #42
j45 wrote: post #11

Earlier quoted context omitted.

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 d…

>Technical co-founders are perfectly capable of learning all aspects of business. If you assume the technical co-founder doesn't need to sleep or has a magical source of extra time, sure. But in the real world, failing to bring a product or service to market at the appropriate time can be the difference between failure and success. I certainly agree that a technical co-founder's knowledge is harder to replicate in th…

I assume neither, and have business skills to found and scale business and architecture as a technical cofounder.

It's just that thing - getting the reps in to learn.

Not just a function of time, but picking the things that have a greater chance of helping you grow.

Depending on who you ask, one mark of a CEO is to be a generalist to keep everything moving, guided, supported, looking ahead.

The age of the specialist went away before covid. Now the generalists see patterns and connections between different arenas in similar ways.

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

#137

Post by _bin_ »

JumpCrisscross wrote: post #100
_bin_ wrote: post #68

Earlier quoted context omitted.

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.

I don't think there are any good data on this, just my observations. Not everything has to be derived from data, though.

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

#140

Post by goatherders »

frenchmajesty wrote: post #109
goatherders wrote: post #71

This post is hilarious and details exactly why so many startups die in infancy. Yes yes, engineers are brilliant and without them nothing ever gets built. And even still, sometimes things get built and never turn into a real business precisely because of this hubris. And 99.9% of the time, the ones that DO grow over time would have grown much much faster if "the business guy" had been there all along.

This is true! I argue here that the right business co-founder who drives long term financial success to the company is super rare and super valuable. The problem is the average one you'll run into at a networking event cannot deliver on that. They are much more "I give the ideas and I want to keep 90% equity and you shut up and listen to me because I'm the CEO" guys.

Absolutely. Idea guys are the worst.

And a good business person is worth their fair share of equity in a SU environment

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