Co-Founder Experiences?

[WestCoast]

Anyone here have experience working with a Co-Founder?


My Background:

I'm seeking signifiant funding for risky new technology.

My advisors: "We highly recommend you find a Technical Co-Founder with lots of engineering/academic experience"
"Without that, you probably won't get funded"

Ok... I'm not at all opposed to that, but it's a brand new situation for me.


Any here have experiences working with/finding a CoFounder?

- What was the good and bad?
- What was compensation? (especially pre-revenue)
- Did you write up a contract in advance, or skip this?

--
Really curious for any experiences or links to information that other businesses startups have had.


Last thread on this topic was from 2011, so, I figured it was time for a new one.

 

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[PapaGang]

Finding a good co-founder is like a marriage, but even more complicated. I have had three co-founders.
My take-away now is to never have a co-founder if I can help it. And if I do have a co-founder, NEVER split 50/50. That's idiotic, because it's not realistic, and you're asking for future trouble when disagreements over the direction of the company occur. It's more sensible to establish the value each party is bringing to the company, then weighing that value according to the business needs.

If you want guidance on how to structure equity, I would highly recommend you read/scan the book Slicing Pie by Mike Moyer (non-affiliate link). Very helpful for me when I was discussing equity splits with 2 co-founders.

 

[PapaGang]

BTW, contracts are a must. It's a way of showing that everyone is serious about this and is a litmus test for commitment. Get yourself a good accountant and lawyer. Do yourself a favor, the costs are small in proportion to what you could lose later on. I learned that the hard way, to the tune of losing mid-5 figures on a bad deal.

 

[WestCoast]

@PapaGang - this is a great first reply to my question, thank you for sharing your experience. (on contracts too, I agree)

I've always heard the joke told:

'What's the only ship - that doesn't float?'
...
...
'Partnership'

--
That said, I'm going to need a Technical CoFounder.
So, I want to learn from others and figure out how to do it right.


Who else knows?
Anyone been on the other side?

 

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[PapaGang]

@PapaGang - this is a great first reply to my question, thank you for sharing your experience. (on contracts too, I agree)

I've always heard the joke told:

'What's the only ship - that doesn't float?'
...
...
'Partnership'

--
That said, I'm going to need a Technical CoFounder.
So, I want to learn from others and figure out how to do it right.


Who else knows?
Anyone been on the other side?

The biggest recommendation I have is to read Slicing Pie. You will be ahead of 90% of founders if you do.

 

[CHEntrepreneur]

Hat hier jemand Erfahrung mit einem Mitbegründer ?


Mein hintergrund:

Ich suche eine bedeutende Finanzierung für riskante neue Technologien.

Meine Berater: "Wir empfehlen Ihnen dringend, einen technischen Mitbegründer mit viel technischer / akademischer Erfahrung zu finden."
"Ohne das wirst du wahrscheinlich nicht finanziert"

Ok ... ich bin überhaupt nicht dagegen, aber es ist eine brandneue Situation für mich.


Haben Sie hier Erfahrungen mit der Arbeit mit / der Suche nach einem Mitbegründer?

- Was war das Gute und das Schlechte?
- Was war Entschädigung? (insbesondere Pre-Revenue)
- Haben Sie im Voraus einen Vertrag abgeschlossen oder diesen übersprungen?

- -
Wirklich neugierig auf Erfahrungen oder Links zu Informationen, die andere Unternehmensgründungen gemacht haben.


Der letzte Thread zu diesem Thema war aus dem Jahr 2011, also dachte ich, es wäre Zeit für einen neuen.

I agree with PapaGang. My experience is that it is very complicated when several founders are involved in the company. I currently have several companies and everywhere I have to arrange with the co-founders.
And it gets even harder when your business partners are married and their wives feel they have a say xD

Today, I would build up every company myself. I would learn the missing knowledge or pay someone to do it. But I would no longer share the company with 50/50

 

[maverick]

I must have worked with 4-5 co-founders over the years and I was always bitterly disappointed. They either:

• Did not have the same work ethic that I have
• Not have any work ethic at all
• Were tired most of the time after their day job and thus always late in delivering
• ....

I'd advise you to start building on your own. Development is a commodity. You are able to find skilled workers on Upwork that will help you on the technical side of things. Your job is to write up everything clearly, define requirements up-front and overall make sure that the developers do what they're good at... developing code.

Over the years I've learnt that this is yet another limiting belief. Or even a reason to justify my own procrastination.

 

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[PapaGang]

I agree with PapaGang. My experience is that it is very complicated when several founders are involved in the company. I currently have several companies and everywhere I have to arrange with the co-founders.
And it gets even harder when your business partners are married and their wives feel they have a say xD

Today, I would build up every company myself. I would learn the missing knowledge or pay someone to do it. But I would no longer share the company with 50/50

Word.

 

[PapaGang]

I must have worked with 4-5 co-founders over the years and I was always bitterly disappointed. They either:

• Did not have the same work ethic that I have
• Not have any work ethic at all
• Were tired most of the time after their day job and thus always late in delivering
• ....

I'd advise you to start building on your own. Development is a commodity. You are able to find skilled workers on Upwork that will help you on the technical side of things. Your job is to write up everything clearly, define requirements up-front and overall make sure that the developers do what they're good at... developing code.

Over the years I've learnt that this is yet another limiting belief. Or even a reason to justify my own procrastination.

Totally agree Maverick. I ended up bailing on a company after the co-founders repeatedly failed to follow through on their commitments and take responsibility.

@WestCoast don't take this as a vote to not take on a partner though. If you can trust them, they follow through on their responsibilities, possess great integrity, etc. it could be a great venture for the both of you.

Be VERY CLEAR upfront about how the company will be allocating equity and get that agreement up front. Maintain control of your ownership, slice the pie expertly and brilliantly.

 

[WestCoast]

I appreciate the insight. And trust me, my usual MO is to do things myself.
Then, hire smart people to do particular jobs.

It has worked best for me.

That said, this is a complex, physical product that needs a PhD level person on the roster to get funding.
It's very different than anything I've done. So, I have to figure it out.

Be VERY CLEAR upfront about how the company will be allocating equity and get that agreement up front. Maintain control of your ownership, slice the pie expertly and brilliantly.

I sense a THEME here @PapaGang ???
I love that you are honest and direct about this. I am taking it to heart, promise.

 

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[maverick]

Another note.. it's easier to create a company that keeps 1 person afloat. Dividing everything by 2 makes things lot more difficult.

What I mean by that.. 50k net profit is a decent return for a starting business. 25k net profit not so..

 

[PapaGang]

I appreciate the insight. And trust me, my usual MO is to do things myself.
Then, hire smart people to do particular jobs.

It has worked best for me.

That said, this is a complex, physical product that needs a PhD level person on the roster to get funding.
It's very different than anything I've done. So, I have to figure it out.



I sense a THEME here @PapaGang ???
I love that you are honest and direct about this. I am taking it to heart, promise.

I like that you are thinking big. I wish you the best of luck.

 

[Knugs]

Anyone here have experience working with a Co-Founder?


My Background:

I'm seeking signifiant funding for risky new technology.

My advisors: "We highly recommend you find a Technical Co-Founder with lots of engineering/academic experience"
"Without that, you probably won't get funded"

Ok... I'm not at all opposed to that, but it's a brand new situation for me.


Any here have experiences working with/finding a CoFounder?

- What was the good and bad?
- What was compensation? (especially pre-revenue)
- Did you write up a contract in advance, or skip this?

--
Really curious for any experiences or links to information that other businesses startups have had.


Last thread on this topic was from 2011, so, I figured it was time for a new one.

Very pessimistic comments on here considering you need a CTO to lift this off the ground. You wanna hear the truth why people who have done itonly have bad things to say about cofounders?

... because their business failed and they needed somebody to blame.

that’s what happens when you team-up and you mess something up. You blame the others. most of the times it’s something to do with people.

A CTO is a must have in a tech company and you will never get one without shedding equity and you will never get investment without a CTO.

And actually it’s very simple. You do a founding shareholder agreement with a vesting period of 4 years and a 1 year cliff. You define as much as you can. Time commitment/ goals/ steps etc.

everybody is going to be thankful for this because everyone is protected from each other. Even investors will love this setup because it motivates and prevents dead shares.

so what is vested equity with a cliff?

basically if I break my own rules or want to get out, my shares will be returned to the company. In other words, if your CTO underperforms or there are “issues”, the shareholders can return the shares.

The setup we have in our company works as follows. I own 33% equity. Divided into 48 months = 0,6875%/month. The first 12 months I get nothing but when I complete the 12 months I get 12x 0,6875= 8.25% equity. From now on I earn 0,6875% equity each month until the 48 months are over. If I get kicked out or leave, I only have this what I earned.
Btw this is what my VC wanted




we have a clause that when our company gets acquired, the equity vesting rule is ignored and we are all getting paid out for what we theoretically have.

I would always prefer equity with no salary for all founders. You don’t want to start with a high HR cost burden. It’s unattractive for investors and will be expensive in the long run. Some people do low equity with a salary. In fact nowadays you will barely get any good dev without giving a few% in equity unless you can pay good salary. Same principle: vest the equity or here called VSPO.

 

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[PapaGang]

Very pessimistic comments on here considering you need a CTO to lift this off the ground. You wanna hear the truth why people who have done itonly have bad things to say about cofounders?

... because their business failed and they needed somebody to blame.

Oh, I blame myself.

For choosing the wrong team.
I'm better at it now though.

 

[WestCoast]

@Knugs - thanks for the super specific write up.

I like the idea that 'you don't need to overthink this' - there is a formula that the big dogs use, and in general, you can use that.

I am going to be reading this Slicing Pie book, but I'm also watching webinars and learning.
I have a week or so before I need to make moves, so, any other feedback or information you guys have - bring it on.

 

[Knugs]

@Knugs - thanks for the super specific write up.

I like the idea that 'you don't need to overthink this' - there is a formula that the big dogs use, and in general, you can use that.

I am going to be reading this Slicing Pie book, but I'm also watching webinars and learning.
I have a week or so before I need to make moves, so, any other feedback or information you guys have - bring it on.

I'm also a really big overthinker and even though I see it as one of my main strengths to overanalyse everything to the smallest detail, its also a significant weakness that I have. It took me years to start my first business because of analysisparalysis.

Practically you dont need to create a company yet and us founders didnt incorporate for months. Thats also a good way to find out if you fit each other. Most importantly, you need to validate each of your assumptions espcecially the "need" and the assumptions you make of the "buyer". Only true data can validate that.

Its worth building a bigger team, because if this is a really scalable business you wil lprofit far more from scaling the team. Its good to have more cofoudners or people on % as this will make you more attractive to external capital. When you build a co-founding team you need to make sure that whilst you all equal shareholders, roles and responsibilities are clear. Communication is a really big problem, even in small teams.

 

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[Hadrian]

Anyone here have experience working with a Co-Founder?


My Background:

I'm seeking signifiant funding for risky new technology.

My advisors: "We highly recommend you find a Technical Co-Founder with lots of engineering/academic experience"
"Without that, you probably won't get funded"

Ok... I'm not at all opposed to that, but it's a brand new situation for me.


Any here have experiences working with/finding a CoFounder?

- What was the good and bad?
- What was compensation? (especially pre-revenue)
- Did you write up a contract in advance, or skip this?

--
Really curious for any experiences or links to information that other businesses startups have had.


Last thread on this topic was from 2011, so, I figured it was time for a new one.

Might be some useful info in here:

Question for founders or anyone that works with a startup?

I'll be sure to make this short, so i don't take most of your time. I live in Nigeria, currently in my 2nd year in college, and as all 3rd world countries it's filled with so many problems that could be tackled, both here and in africa. To be honest, building a tech solution is one thing, but...

www.thefastlaneforum.com

and here:

Starting a Video Game Company: Conversations for Co-Founders

Starting a video game company? Taking some time to ask the tough questions up front can save a lot of heartache down the line

www.breakingthewheel.com

NB: I've attached a Must-Read document for you. It'll make you think about stuff you wouldn't have imagined.

My Top Tip: When you make a Founders Agreement you MUST remember its a blueprint for a Founders Disagreement... Use Vested Shares all the Way!

 

[WestCoast]

@Hadrian - thanks for the links to other threads, and the PDF.
I've downloaded it, and will read it over the weekend.

@PapaGang - I bought the Slicing Pie audio book, and listening to it right now.
I don't agree with a few of the things, but, it is making me think in a brand new way. So, I super appreciate your recommendation there too.


Anyone else got some CoFounder advice?

 

[Ronak]

I would start by building an advisory board/board of directors, assuming this is going to be a big scale project, eventually.

One of those members should be a technical guy that has experience doing several projects like you propose.

In the process of finding and interviewing for these positions, you will rapidly learn the 80/20 of the market in a short time period.

The purpose of the board members are not to do the work, but give you high level advice and contacts. With the right person, they can point you to the resources, companies, etc, that my be able to help you along the way. You will learn the steps that would be required to get your project off the ground.

Then, you can make the determination regarding who you need to hire, what can be outsourced, and delay bringing on a CTO until it's absolutely necessary. This will save you equity in the long run.

By then, you would have established some sort of product and market knowledge, and between you and the board, can make a much better decisions on the right candidate.

Heck, you can even do this for the business/ finance side of things--bring on a retired successful entrepreneur that has done this before and offer them a few points in equity for their guidance. It will be worth it's weight in gold if you get the right person, especially if they have raised money in the past.

 

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