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An Open Letter To Business People

dave.is

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Re: An Open Letter To Business People

#51

Post by staunch »

marionogueira wrote: post #45
sachinag wrote: post #37

Earlier quoted context omitted.

Steve Jobs soldered with everyone else at Atari. Just because he didn't engineer at Apple doesn't mean he's non-technical.

Just soldering doesn't make anyone "technical". Woz's designs were the technical assets that made Apple a successful startup. Furthermore, that experience certainly didn't mean a thing for his second tenure at Apple since 1997, during which the company became bigger than ever. I also doubt he had anything to do with the technical aspects of the operation during this time.

You can be technical without being an engineer. Steve Jobs has been working closely with some of the best engineers in the world full-time for 30 years.

He probably knows more about display, memory, graphics, processor, and battery technology than 99% of programmers. Not to mention his knowledge of a dozen other technologies.

Re: An Open Letter To Business People

#52

Post by netcan »

I listened to a Mixergy podcast earlier this week where the founder (a "business founder") started by doing some customer development, getting a prototype developed (paying to get it done, raising a round and then going to find co founders. Andrew (interviewer) assumed this meant a higher equity portion, but Rafael said it was close to an even split. The logic seemed to be that he could get better co founders this way.

To anyone who sees themselves in David's (the poster) position: How would you feel about coming on board at this stage? How would you feel about coming on board at this stage minus the investors?

Re: An Open Letter To Business People

#53

Post by netcan »

davidbalbert wrote: post #34
grellas wrote: post #22

This is a nice piece overall but, having seen founders negotiate their splits countless times over nearly three decades, I would add that such negotiations tend to be more nuanced than equal splits in most cases. Idea people may not be able to proceed without solid technical people but what they do or don't have to give them for their services is always governed by supply and demand. An exceptional technical person w…

I definitely agree that 50/50 is nowhere near a hard and fast rule. The split depends on how long the company has been around, how much progress has already been made, etc. The larger point I was trying to get across is the discrepancy between the amount of value many businessy types ascribe to technical skills and the actual value (at least from my perspective). If the only progress you've made on your company is th…

I think the problem is extrapolating from simple examples used to illustrate thing.

eg Rich Dad or similar: You have an idea for a company. You create the company and deposit $10k in it's account. You bring on a programmer to build the project paying him in equity. The company could be worth $100m in a few years, so his 10% is better than a salary.

I'm sure parallel toy ideas exist in people's minds about investors. If someone puts $1m into a company that's still mostly an idea and a prototype, it doesn't seem all that far fetched that the investor would expect to basically own the company. What have the founders contributed? An idea and 6 month work. What has the investor contributed? $1m.

In the absence of actual experience, people develop biases based one imagined experiences where they are the hero. I don't mean that in a bad way. Everyone does it. It's hard to see an outside perspective unless you encounter it.

Re: An Open Letter To Business People

#54

Post by mkramlich »

nicholasjbs wrote: post #5
smanek wrote: post #3

A startup without a business plan isn't a business. It's just some code. I disagree. Users make it a business - and users don't care if I have a business plan. They just care if the product (i.e., code) makes their lives better.

I mostly agree, though I don't think "business plan" in this context is meant to read "a 100+ page analysis of the market and other bullshit." Rather, I took it to mean a sense of how you're going to get the product out to users and (maybe) how you'll eventually make money. Both of those things are required if you want your business to become sustainable.

A business without a business plan is still a business.

A codebase without users is probably not a business, sure.

But if you have users there is almost always a way to monetize that. Thus, a business. The plan doesn't have to be any more complex than, "Charge for something."

Re: An Open Letter To Business People

#55

Post by mkramlich »

vietor wrote: post #38
smanek wrote: post #3

A startup without a business plan isn't a business. It's just some code. I disagree. Users make it a business - and users don't care if I have a business plan. They just care if the product (i.e., code) makes their lives better.

I think there is a third distinction that's missing: Idea + Code = Tech Tech + Users = Product Product + Plan = Business It's also worth noting that you don't have to make it to step three to have a good M&A exit, as many examples illustrate. (Good execution at all steps is, of course, implied)

And:

Plan = way to monetize the product + way for users to find out about the product

Re: An Open Letter To Business People

#56

Post by mdda »

Devilboy wrote: post #48
alain94040 wrote: post #2

Pretty good explanation. A couple of tweaks: 50/50 is a bad split, because it will lead to paralysis, argument, flying chairs, and eventually bankruptcy. Second, the advice here is to not pitch the idea when you first meet potential technical co-founders. I disagree: I think sharing the same passion is key, so you definitely should tell me that you plan to revolutionize the music industry (a bad example, I know...).…

A 50/50 split can work fine as long as you have a roulette clause. With a roulette clause or similar it's always possible to easily part ways if the 2 parties reach a deadlock that cannot be resolved.

This is a definition http://www.practicallaw.com/8-203-6625 - you'll have to play out a few scenarios to see the terrifyingly stark implications...

Re: An Open Letter To Business People

#57

Post by ndl »

I have a few things to add to this.

Know something I don't. Plenty of people seem to operate under a false dichotomy between code and business, where "not programming" gets treated as a business skill. I consider myself a hybrid hacker/businessman, but stronger on the hacker side for now. If I am to take a "business person" as a partner, I'm looking for that person to do things I couldn't learn easily from a day of reading. This could mean lots of things: truly understanding markets and pricing, being a professional member of a specialized target market, legal and accounting training, unlimited patience for customer support, etc.

I see some "business" people making the same mistakes they're supposed to prevent. The stereotype is of a programmer who builds and builds without testing the market, but how many non-programmers try to recruit techs to hack together a totally untested but "revolutionary" idea?

Another thing I've gotten wiser to is the use of vague terms, like "leadership" and "networking." To me this comes off as "I wanna be the boss and hang out." If you really are good at these things, try to give some specifics.

Finally, if I wanted to have a boss and live in a hole, I'd get a job at X big corporation. This is the point I expect the most disagreement on. I don't want a business founder who will "take over" all of the networking. By deciding to be a founder, I've already bet that I can manage myself better than someone else can manage me.

Re: An Open Letter To Business People

#58

Post by c1sc0 »

marionogueira wrote: post #27
rguzman wrote: post #11

I liked the piece a lot and it is roughly right. However, as a technical co-founder, I think a good measure of a business co-founder is whether he tries to solve the technical problems himself. e.g. by learning a bit of php and hacking something together. Not only does that show that he's resourceful and scrappy, but it also makes it more likely that he'll be able to talk about the product coherently i.e. understandi…

Are you willing to try to solve non technical problems by yourself? You know, researching the market to assure you're actually building something people will want to use, finding paying customers or advertisers, dealing with investors, finding decent PR people, recruiting etc... nothing too fancy.

I think you'll find lots of technical founders are willing & able to pick up those skills along the way. Programming is perpetual self-education. This means that for a large subset of entrepreneurial programmers picking up business skills is easier than you'd think.

Re: An Open Letter To Business People

#59

Post by locomoto »

This piece gave me a couple of red flags even before I started into the article - primarily the adversarial premise in the title and implied put down of "business people". Remember the time when your VP or manager walks into the room and begin with "you people need to ..."?

As a tech founder, I realize how many aspects of technologies and competencies I need to get right to move the startup to somewhere near a profitable business. There are very few super techs who "know it all". There are legal techies, business techies, hardware techies, etc and probably will look down with similar disdain that a "coding techie" who just don't get it. That attitude is not going to be conducive to building relationship all around.

I would suggest looking at any proposition that comes your way as what a good angel or VC would - ask the right questions, be helpful, do your due diligence, say no politely and walk away if it does not interest you. We techies must educate ourselves how to evaluate a startup proposition and be helpful where possible to build our network because the network may yield answers in our "next" startup.

Re: An Open Letter To Business People

#60

Post by mfukar »

marionogueira wrote: post #45
sachinag wrote: post #37

Earlier quoted context omitted.

Steve Jobs soldered with everyone else at Atari. Just because he didn't engineer at Apple doesn't mean he's non-technical.

Just soldering doesn't make anyone "technical". Woz's designs were the technical assets that made Apple a successful startup. Furthermore, that experience certainly didn't mean a thing for his second tenure at Apple since 1997, during which the company became bigger than ever. I also doubt he had anything to do with the technical aspects of the operation during this time.

I'm sorry, but every reference I've ever read to the history of Apple has only reinforced my opinion that Jobs is a marketing bully. A clever one, perhaps, but still.

PS. I'm counting seconds until I get to -5.

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