Live data from Hacker News

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

verdikapuku.com

161–170 of 253 posts

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

#161
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…

>"who has the least conflict of interest"

What about "what role needs to be done the most at the time?"

>sometimes I'm legitimately better at the strategy half too

Technical people should be eager for more business responsibilities than ever before starting a business.

If it's an "engineering company" ideally you would have two founders each having outstanding technical abilities, and far exceeding anything a non-technical alternative could bring to the table from a business or sales aspect. To begin with if you want to start a business, you need to be the kind of engineer that wants to build sales in some way or another. On the front lines and/or in the background.

And to be real one of you is going to have to go full-time into sales & marketing to pursue some type of cash flow until things get rolling in some way. At least.

Then you can more sensibly consider having the non-tech MBA type come in under the top engineer who has been successfully selling already. And that's the beginning of a chain-of-command where an "engineer" is never hired or fired by anything other than an "engineer". And there's always an engineer (sharp in business, not lacking anything needed) at the top of any non-tech hierarchy by design.

Non-engineering companies where the non-tech-types dominate the hierarchy, can still have decent opportunities for the engineers they hire to work on projects under them. But there may not be as much room for upward movement or appreciation for outstanding skill up and down the line. Might also be more often found involved with financial irregularity, or more commonly non-fair dealing even with some of their own people sometimes.

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

#162
I’m not sure it’s fair to say Zuckerberg’s only advantage over the Winklevoss brothers was his engineering skills. I think he quickly understood the whole dynamics of that potential business and had a more clear vision. Being able to digest a lot of seemingly disparate information (e.g. how college students responded to the “hot or not” prank) and create a compelling vision along with a path to get there, that’s both very hard and very valuable.

But I do agree with the overall sentiment that these ex-McKinsey “business co-founders” often lack the most valuable skills. I’d even go as far as saying they are generally quite bad “idea guys”, in the sense that they are more Winklevoss than Zuckerberg.

I even have a sneaking suspicion that Europe is so far behind the US in the startup game partly because the “ex-McKinsey guy on top” anti-pattern is the social norm here.

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

#163
post #43

Very pro-labor/anti-capitalist take. Not that it's wrong! > In reality, it should flipped! The technical person is the one who breathes life into an idea and should get the lion’s share.... The riches are in the execution. The work done. Labor is what makes capital useful. Otherwise it's just a pile of money sitting there.

You're thinking of VC vs startup, not business skills cofounder vs tech skills cofounder.

To be sure, I'm applying one dynamic's description to another dynamic.

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

#164
post #75

Earlier quoted context omitted.

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".

Not for a business guy it’s not. Both sides have a hard time evaluating each other.

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

#165
post #58
post #5

Earlier quoted context omitted.

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.

Cool, thanks :)

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

#166
post #19
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.

No idea why this is downvoted, its completely true. Only inexperienced people think otherwise

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

#167
post #45

Earlier quoted context omitted.

Unless someone is putting cash on the table, or one partner is full time and the other is not, there is zero reason not to split founder interests equitably. (Even in the cash state, the better play is vesting, not an unequal split out of the gate.) If you want an unequitable split, hire an employee. If you can’t (or won’t), you’re not the hot shit you think you are.

> Unless someone is putting cash on the table, or one partner is full time and the other is not, there is zero reason not to split founder interests equitably. When he asked why I thought 50/50 was fair, this pretty much sums up what I said. I'd be happy to take an 80/20 split with an industry insider or celebrity, someone who's guaranteed to attract buzz and attention. But he wasn't that guy.

Trust is important.

But beyond that, a good partner might be one where you can first successfully try to come up with an arrangement that you would each be delighted with at the 50/50 point.

Without any adversarial attitude, what can really work is that kind of baseline, which can be negotiated away from, but also returned to without disdain.

There has to be a sense that each person at the baseline would generously actually be putting in 60% for the foreseeable future and love it because it was still an equal partnership and you were getting 120% accomplished consistently. Ideally you want to build consensus not by trying to limit contributions to keep from putting in too much, nor valuing other contributions for less than they are. When it is 50/50 it's more likely to be harmonious when both partners step up to the plate simultaneously and try to put in more than their fair share when needed, and see the other partner as an over-contributor just like themself.

Like what if somebody thinks they're hot and can raise a million within one year, or less if you have something tech ready to deploy? Or they say they can sell your product through the roof. You could make that a contingency they would be proud to achieve or they would have to understandably not be up to their share. If you came to a tentative agreement like that, that you were both very happy with at 50/50, all you would be doing next is planning to "start your engines" soon.

If the potential partner comes back a couple days later with a $4 million commitment within a month by selling some property or something, and it's for real, you will probably re-negotiate. The contingency would be over in a month then, and you would be flying. This wouldn't be too bad if it was non-adversarial from the get-go. You could end up at something way different that's quite fair anyway.

Remember each engineer is worth a million in the right situation, now with their $4 million it's a 4:1 imbalance, so 80/20 might be easy to migrate toward then so you can still go forward.

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

#168

Earlier quoted context omitted.

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.

You should have countered with 95/5 in reverse, because if you can't code, nothing is getting done anyways.

Maybe, if only for the schadenfreude. But the initial offer was so bad I immediately no longer trusted them and no longer wanted to work with them.

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

#169
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…

Why don't you start the idea on your own now? Or find another co-founder? You owe each other nothing.

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

#170
post #119

Somebody has to manage the business relationships and go out and sell. Somebody has to be in charge of marketing, payroll, and PR. Somebody has to be the public face of the company, out networking and attending trade shows. If you’re a technical founder and all this sounds like fun to you, then yeah, a non-technical cofounder would not offer much. But there’s something to be said for having more time to put your head…

Well said. If the company is built around a certain specialism, the specialist will want to spend most of your time there, because that is where most value is created per hour. But many of the other things are critical, but happen to be very time-consuming. Such as traveling around. So in some teams you end up having one person do this specialist work while the other can focus on the more time-consuming things. I think you worded it much more elegantly, I'm just repeating what you said.
Post reply on HN