True but lions share requires teeth
A good rule of thumb I picked to from Founders at Work is that the idea person gets a 5% bump on equity, but no more than that.
Business co-founders in tech startups are less valuable than they think
211–220 of 253 posts
Re: Business co-founders in tech startups are less valuable than they think
#212I 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.
>> You can build a product and sell it without business guy but you can't have a product without the tech guy.
I'd argue that you need both guys. But that both guys can be the same person. It's just uncommon that they are the same person. If you have both sets of skills, then you can do it alone.
A tech guy, with little to no business acumen will fail just as easily as a business guy with no technical acumen.
Re: Business co-founders in tech startups are less valuable than they think
#213Earlier quoted context omitted.
There's no point having the skills to build a product if you can't fundraise to build a team, market, sell, refine to find product-market fit, etc. etc.
I’m not sure if this is a joke. You’re saying that there’s no point in having the skills to actually do something (building a product), unless you have someone derivative skills as well (all the business things you state). That really comes off as trying to justify the business cofounder. I can build independently. You can’t build a team (which I can do), market (which I can do), sell (which I can do), or refine (whi…
I think that comment is saying that there is a difference between building a project and building a feasible company that productizes the project. There are many other aspects of company building that purely technical folks often trivialize as unimportant.
One can have 3 technical cofounders but the paperwork still needs to be done and someone has to do it.
Re: Business co-founders in tech startups are less valuable than they think
#214Earlier quoted context omitted.
Can you say a bit more here, genuinely curious as to why.
I made an observation that, as a company grows, there are more opportunities for increasing revenue from the business side than from the technical side. Technical is important, but just saying that it is easier for the business side to toot their horn.
Doesn't that make them less important? Just hire people to do that, it is possible to hire business people.
For example if you want to sell to X market, hire a person from those companies, that isn't rocket science.
Re: Business co-founders in tech startups are less valuable than they think
#215My first and second "start ups" (90s) were peopled by very technical people and no "professional class" (e.g., HR, BizDev/Sales, etc.) beyond finance. I joined a third as an executive and it, too was missing HR and Sales.
We added sales (later HR, sigh) and it was (eventually) transformative.
My point is that you can have the greatest technical team and lack of sales and shitty toxic culture will mean no growth/stagnation/running out of cash.
You can also be (this is probably the default state) a pure MBA-play where you are a "sales driven organization" that has shitty product and shitty technical culture.
You can rarely have a successful business (unless you are large enough!) without some degree of both. So stating that "business cofounders" or "technical cofounders" are less valuable/overrated reads like low effort click bait that resonates with really inexperienced "professionals".
Re: Business co-founders in tech startups are less valuable than they think
#216Earlier quoted context omitted.
MBA doesn't mean that much by itself.
MBA is a red flag.
I have no idea what they teach in MBA programs these days - I'm many years removed from the age that most people get theirs.
My dad got his MBA in 1959. When I was younger and considering one (I moved out of day to day tech work a long time ago because I wanted to "fix" the business problems I kept encountering because of their negative impact on the tech work), we reviewed curricula for several programs.
My dad was pretty astounded that in the wake of globalism and technology, they were still teaching the same tired-ass theories that he was taught in the 50's. Note that this conversation wasn't all that long ago in the grand scheme of things.
I get that this is a vulture capital site but all one has to do is look at what is happening in the world (Bain capital et al) and you see that all they are really teaching/practicing is wealth extraction, not wealth building.
Edit: sorry, my dad got his BS in 1959, his MBA in 1962.
Re: Business co-founders in tech startups are less valuable than they think
#217Earlier quoted context omitted.
MBA is a red flag.
I have no idea what they teach in MBA programs these days - I'm many years removed from the age that most people get theirs. My dad got his MBA in 1959. When I was younger and considering one (I moved out of day to day tech work a long time ago because I wanted to "fix" the business problems I kept encountering because of their negative impact on the tech work), we reviewed curricula for several programs. My dad was…
I think one fundamental thing to understand is that an MBA is an indoctrination process into capitalist ideology, not a science.
Re: Business co-founders in tech startups are less valuable than they think
#218I 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. A valuable technical cofounder brings the skills to literally create what you're trying to sell. Otherwise, have fun selling dust. Or networking to sell nothing. The "0 to 1" here isn't "no management to management" it's "not having a product built to having a product…
Selling dust is the job of the business co founder before the product is built. This is how you verify there is customer demand before wasting everyone’s time. It’s surprisingly easy if you’re solving a real need. It’s also how you can demonstrate meaningful value to your technical cofounder.
Re: Business co-founders in tech startups are less valuable than they think
#219I 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…
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…
I don't know that I understand this, typically I structure the shareholder agreement (when I can) to be such that I have clout because I own or control a significant percentage of the shares, not because of my "title".
Re: Business co-founders in tech startups are less valuable than they think
#220Earlier quoted context omitted.
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…
Solo founders do worse and teams with a technical founder do better particularly in enterprise. So it seems your best chance is one of each. https://10years.firstround.com/
This list is a pure fallacy of statistical understanding. Skewed data and cherry-picking while also being strengthened by our subjective biases. I would appreciate the list way more if it also included founders who applied but were rejected, or for any other reason were not invested in.
For stuff like this I recommend the book, May Contain Lies by Alex Edmans, he does a fantastic job explaining how most of the time we seek data to confirm our hypotheses, instead of seeking a hypotheses that confirms our data.