The most numerous kind of people there, are nontechnical people who think they are technical, and nonbusiness people thinking they are business. Sometimes both at same time. Clowns. When you do custom development, these make up the majority of clients and they are the best clients to work for.
Business co-founders in tech startups are less valuable than they think
191–200 of 253 posts
Re: Business co-founders in tech startups are less valuable than they think
#192I 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…
Because you framed it as a Technical Partner needing a 'Business Guy' and approached someone from the post-2000 Cohort who uses the Wozniak/Gates power-dynamic as a best-practice case study (or RIM's example of Mike Lazaridis/Jim Balsillie).
The fact that you spent months refining the idea and building out prototypes is irrelevant or even detrimental to your position. In fact it may have represented a delivery anti-pattern depending on how far along you were to realising your value proposition as a product. Engineers to build MVPs are a dime a dozen. Why were you wasting time as an individual contributor when positioning yourself as a (co)-founder? Why would a prospective C-Level Business Strategy Leader see you as anything other than an Engineer with a MVP and no GTM, previous exits aside?
This is a common scenario for those who frame themselves as 'Technical Founders' - they end up being perceived as a cost-centre incapable of realising any sort of a GTM strategy, and as such are equity-weighted accordingly.
Re: Business co-founders in tech startups are less valuable than they think
#193Earlier 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…
MBA doesn't mean that much by itself.
MBA is a red flag.
Re: Business co-founders in tech startups are less valuable than they think
#194Earlier 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…
>"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-tec…
The blue-sky utopian version of this for the Business side is a company shaped like a big Inside Sales Funnel, with all Engineering work implemented in off-shored cost-centres paid piecemeal at contract rates.
Steam had a flat-management structure and Engineering driven leadership from its outset. I'm not sure there's many other that can survive the VC landscape where customer focused design is seen as something between over-engineering and altruism.
Re: Business co-founders in tech startups are less valuable than they think
#195> As you can imagine, this is highly unattractive to skilled engineers who know their worth. No one sane wants to leave a high-paying cushy job to work for (not with) a bossy guy while battling the already intense stressors of Entrepreneurship.
I can relate to that. I am creating a small product and more than the salary, I want to escape 9-5 because I want to exercise product and technical agency that I do not have in my current job, and going from that to not have an increased level of agency working for someone, especially for a co-founder.
Re: Business co-founders in tech startups are less valuable than they think
#196Earlier quoted context omitted.
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 even…
If your assumptions here are correct, he's just not a good candidate for being a founder. If you see earning 163k/year a hardship and don't value 10% equity in a high margin business doing > 30k MMR, then you should try to become an employee at a big company.
Re: Business co-founders in tech startups are less valuable than they think
#197I 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…
>But a valuable business co-founder brings extensive domain expertise, a network of people, sales skills, management skills, and fund-raising talent.
Yep.
I tried doing startups with a few ideas. I can easily code all day. But then, when it comes to doing all the secondary stuff, like filing paperwork for an LLC, marketing, networking, and so on, that stuff was "painful" to me, as it took some of the fun out of the whole making things work.
You could have a good idea, but without a strategy to let people know about it, even if you build it, it may never get used.
Re: Business co-founders in tech startups are less valuable than they think
#198I 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 I had to re-summarize your point, I'd put it this way:
1. Success is very little on the idea, almost entirely on the execution
2. Execution has both a technical side and a business side, and can fail from a poor execution either way.
How this applies to your target audience:
You have an idea for a business? Nice -- that's almost worthless (1). You can't influence execution on the technical side, so you need to bring execution from the business side (2).
I like the numbers -- "a waitlist of 1000 people or LOI from 20 businesses" gives a better idea what kind of execution a non-technical co-founder should be capable of.
Re: Business co-founders in tech startups are less valuable than they think
#199I 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…
>But a valuable business co-founder brings extensive domain expertise, a network of people, sales skills, management skills, and fund-raising talent.
I've found across industries that the technical guys typically have more domain expertise given equal time spent in that industry with way too many examples to throw in here down to entire factories being known better from just about every angle (bar the nuts and bolts) by a single senior tech guy than the actual owners and sub domain mangers. Just because he and many other technical guys in the other examples had to understand the problems in depth to develop for them and abstract them away for the managers, accountants, ppl running the machines, etc
The sales skills can matter a lot especially for b2b but it's not a given that these (along other people skills) aren't possessed by the dev. I tagged along trough a ton of the studies of my girlfriend as she studied international business management... and as far as practically useful stuff goes it honestly didn't go that far beyond what we got taught in our company management course when studying compsci.(other than things like statistics with spss and the like which they seemed to almost collectively suck at.) All it gave me was a sense of wonder at the amount of buzzwords and cargoculting in that sphere outside of the usefull stuff.
Don't get me wrong. There's technical guys that are bad at these 'people skills' and/or have no sense of popular aesthetics that makes their ads entirely ineffective or can't manage themselves so even your mentioned "management skills" would be usefull in a 2 people team, etc.
But if a technical guy is somewhat naturally competent on these fronts... or where they're lacking they could have a technical cofounder that completes them and they both keep eachother accountable... Well then i'd put my money on them rather than a technical/mba cofounder couple.
Re: Business co-founders in tech startups are less valuable than they think
#200I 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've gotten good at telling the machine what to do. He's gotten good at telling people what to do. The latter turns out to be a much more effective way to build power and influence.
>He's gotten good at telling people what to do.
Not in this case as it seems he didn't get the outcome he expected.