Business co-founders in tech startups are less valuable than they think • Hacker News Board

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

#181

Post by DonHopkins » Mon, Apr 28, 2025, 6:43 AM UTC

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.

And that type of person quite often turns out to be a huge over-privileged narcissist who's never had to work hard a day in their life, because of their family and frat-bro connections, and who will gladly fuck you over without a second thought.

https://news.ycombinator.com/item?id=43815768

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

>>It behooves everyone to be able to spot a narcissist, and that eliminates a huge swath of bad "idea guys" and bad MBAs.

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

#182

Post by jillesvangurp » Mon, Apr 28, 2025, 7:01 AM UTC

You don't want clean separation between co-founders. They should overlap in skills and be multi disciplinary.

Having a tech founder that can't talk to customers or a business person that doesn't understand what the company makes or sells is not a great recipe for success. That's two people that probably can't even talk to each other. That's not a team.

I've learned the hard way that being a CTO means I need to talk to customers and it's one of the more important things I do. There's nobody more qualified in the company to explain what we do and how we do it than me. I don't initiate the meetings and I don't close the deals but having access to me is an important part of the process. It reassures the other side that we are bona-fide, can actually solve their problem, and they'll often do the same and bring in operational people on their side in follow up meetings. Once you have direct lines of communication like that, it becomes a lot easier to close the deal.

Also, being exposed to that means I learn what customers need, want and expect. No ivory tower is going to produce that kind of insight. It allows me to adapt to what is needed rather than me trying to imaging what it is they might need based on whatever filtered down version I might get from a business person. There is no substitute for first hand information.

And that works both ways. Business people without a connection to the product aren't very useful. They'll try to sell stuff that isn't there and they'll undersell stuff they don't even know is there. I've seen both happen. If you sell something that isn't there, you set up a deal for failure. You are misrepresenting the product and that's going to cause disappointment. If you don't sell what's there, you shoot yourself in the foot. Especially if it's something the customer would have liked to have. But business people are great for validating product ideas and trying to imagine how the business side would work early on is a good idea.

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

#183

Post by CalRobert » Mon, Apr 28, 2025, 7:10 AM UTC

memhole wrote: post #153

throwawaymaths wrote: post #134

Earlier quoted context omitted.

> 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

Start ups that choose things like Azure are a red flag for me. Churn is really problematic. Learning a code base by having to poke and grok takes a lot longer than being able to fire off a few questions.

Not sure why Azure matters in terms of infra (it's... fine) but if it means dealing with MS Teams that's a big negative.

I don't understand why Europe loves MS so much. Teams as far as the eye can see....

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

#184

Post by zmgsabst » Mon, Apr 28, 2025, 7:33 AM UTC

underdeserver wrote: post #177

verelo wrote: post #92

Earlier quoted context omitted.

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…

Why is that so crazy? 85% margin gives $27k a month or $326k a year before taxes. Was he going to work on this full time? How does he replace a reasonable salary otherwise? Of course, I would expect this to be over time (say, linearly over 3 years) and subject to hitting growth targets.

Just to further that:

50% margin share would be $163k/yr pre-tax.

He’s could be taking a significant pay cut and only assigns a moderate future value to the stock, eg, 1% of 50M exit and 10% of 5M exit with 50% ownership is only $500k expected value. Amortized across several years of pay cut (eg, 5 years to exit) you’re looking at $100k/yr “bonus” on $160k for effective $260k/yr. (And that’s assuming no dilution events!)

I agree expectations were misaligned so a bad partnership — but the ask doesn’t seem particularly crazy.

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

#185

Post by DonHopkins » Mon, Apr 28, 2025, 7:36 AM UTC

mtlynch wrote: post #157

This article seems AI generated, at least in part. The opening image incorrectly refers to Erlich Bachman from Silicon Valley as "Erik." OP goes on to claim: > Paul Graham wrote in 2008 that Sam Altman was the best fundraiser he’s ever seen in his 30+ years in the valley. Sam was just 23 years old at that time! That's not what the linked article says. That post has a single paragraph about Sam Altman that says he's g…

>Sam Altman has it. You could parachute him into an island full of cannibals and come back in 5 years and he'd be the king.

The eating human flesh part rings true.

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

#186

Post by herbst » Mon, Apr 28, 2025, 8:09 AM UTC

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…

You can build a product and sell it without business guy but you can't have a product without the tech guy. One definitely is more valuable than the other.

Either I have a talent for the business aspect or I am just a tech guy with a lot of luck, but I invest time into my products not marketing and still get what I want.

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

#187

Post by pyb » Mon, Apr 28, 2025, 8:17 AM UTC

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…

>> they're primary skill is that they have a great "product sensibility" that engineers lack

Sounds a lot like what comes up when you google "Rick Rubin meme"

OTOH, I regularly come across great engineers who seem bad at picking projects, and who don't seem to get any better at this over time.

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

#188

Post by hn_throwaway_99 » Mon, Apr 28, 2025, 8:17 AM UTC

underdeserver wrote: post #177

verelo wrote: post #92

Earlier quoted context omitted.

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…

Why is that so crazy? 85% margin gives $27k a month or $326k a year before taxes. Was he going to work on this full time? How does he replace a reasonable salary otherwise? Of course, I would expect this to be over time (say, linearly over 3 years) and subject to hitting growth targets.

It's crazy if you know how startups work, and you're not valuing it at all how investors value startups.

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

#189

Post by Rastonbury » Mon, Apr 28, 2025, 8:21 AM UTC

jongjong wrote: post #159

ZeroTalent wrote: post #95

Earlier quoted context omitted.

MBA doesn't mean that much by itself.

I would say that MBA means nothing by itself. It's 100% about their social network. MBAs were a great way to network as a lot of elite kids got MBAs. An MBA is just a proxy for something else which isn't necessarily there...

When we hire MBAs it means nothing except a minimum standard of work ethic and communication skills and usually (but not always) ability to grasp and breakdown problems. What they usually lack is expertise/applicable experience, we know this when we hire them, but any non-MBA candidate with relevant experience is preferred to an MBA. Like I said we don't expect fresh MBAs to know deeply about software but you do get pompous types who don't have the humility to realise they are out of their depth

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

#190

Post by aosaigh » Mon, Apr 28, 2025, 8:35 AM UTC

This is crazy. I’m a technical cofounder of two businesses and in both cases the product would be completely dead on arrival if it wasn’t for the business cofounder. They intimately understand the business landscape and have all the contacts and context required to find customers.