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7 months ago I thought of a great idea for a website. I enrolled in an intro to entrepreneur class at school and I created a business plan with financial statements. I have been working with a developer to make a 'wire frame mock-up' of the site design in line with my vision. The project will be done by may. I also have a personal loan for ~5k.

My next challenge is finding someone with a programming background to co-found this website with me.

How do I play this. How much info do I give him, and when. Do I interview them before I tell them anything about the opportunity? Basically, how much information do I need to divulge to see if there is a match in both skills, personality, goals, etc.

He wont want to co-found an idea he knows little about (do I show him my business plan, my financials, my mockup, etc?) and I dont want to tell the person until I find the right person to tell (my co-founder).

So my question is; What agreement/contractss are needed, and when are they to be made? Starting from the initial contact to a potential co-founder. When does he sign an NDA? Before or after he qualify his skills.

I plan on incorporating (WA) with my co-founder, with a 51/49 split. What if he is codes for 4 weeks and quits or drops out? What happens to his code, and the company, all the IP/cash I put it into, name, etc.

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Any luck finding a tech partner? – JeffO Jun 16 '10 at 3:01

6 Answers

up vote 1 down vote

You know what they say about co-founders... it's like looking for a spouse.

I'd say tell him everything about the idea, get him excited and don't worry about NDA.

But before you do that, socialize with the person and talk about dreams. Get a sense of his strengths and weaknesses, make a judgment on whether he will complement you. Talk about what's cool; see if you guys share the same values and visions.

Most importantly, make sure he's a stand up guy and got a sense of honor. This way he's less likely to flake out on you.

They didn't warn you it's tough ain't it :)

But looking at the bright side, most of these stuffs are something you might unknowingly do with friends anyway, without the pressure of committing into a venture. So now you just have to do the same and keep you eyes open for working opportunity.

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Show the person my complete business plan and financial statements? I have heard you are supposed to keep these things a secret. The mock ups too? I assume I interview them to see if they are capable before divulging EVERYTHING. Perhaps just a decent rundown, interview them, if they are technically competent, the whole speal? – Nick Apr 9 '10 at 0:15
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The point is to excite the person. If just the rough idea will do, then say just that. If it takes financial projections to get him excited, so be it. Look... your question is about selecting the right co-founder, not "is it dangerous to say too much". And to select the right co-founder, you need to test him and you need to give him enough to test you too. – GRex Apr 9 '10 at 3:23
up vote 1 down vote

To answer you question first and then provide my opinion, yes certainly show them everything. Everything right now consists of only an idea. Anyone actually qualified to be a technical co-founder would likely have more than one opportunity to look at. You are trying to convincing someone that your idea is the best idea out there and offers them the best opportunity. Keep in mind you are offering them no compensation meaning they must have the capital reserves to support themselves (and possibly a family) for an extended period of time at thousands of dollars per month.

As for my opinion it seems as though you need capital rather than a co-founder at this stage. You have a business plan and a mock-up which you should start pitching to friends and family. If you cannot convince anyone else to that your idea is worthy of their investment you likely won't find a decent co-founder. If your idea is good enough you should be able to raise enough money to have it built. From there, if things go well you will have some concrete metrics to provide potential co-founder candidates likely secure a higher caliber partner.

I would check out the following sites to help raise capital: VirginMoneyUS.com - facilitates loans between family/friends and yourself. Prosper.com - social lending where you can raise up to $25,000 from the websites community of lenders. Friends and family can also make deposits here which they in turn loan to you. LendingClub.com - same as Prosper.

Whatever happens, good luck.

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up vote 1 down vote

"Show the person my complete business plan and financial statements? I have heard you are supposed to keep these things a secret. The mock ups too?"

Says who? Why?

The only reason I ever kept my business in stealth was for the pipe dream that I might launch at TC50 (it's a requirement) but have since abandoned that plan - but I never kept it quiet from people I dealt with in relation to the business (even people less involved than a potential cofounder). The only supposed benefit to doing this is that someone might steal your idea - but really everyone is busy and there are a million good ideas - your power is in your execution.

Look at it from the developer's point of view, they are supposed to sign on to an idea where they work their asses off and get no salary on the hope of making it big - without even fully knowing the idea or its full potential? The reality is that no one good will sign up for that. Even if you get someone, it won't be someone competent.

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up vote 0 down vote

The conventional wisdom here is that ideas don't have much intrinsic value. Indeed each idea comes with a "maintenance costs", namely the costs of convincing people that the idea solves their problem and tweaking the idea until it does.

So take each cofounder interview as an opportunity to practice proselytizing your idea. The people you interview will provide valuable feedback. Ie. skip the NDA and divulge everything up front.

Vesting is important if you want the business to succeed long-term. You should institute a vesting schedule for both yourself and your partner(s). Founders often give themselves an accelerated cliff, but it's important to keep everyone's interests aligned over the long time it takes to build a business.

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I realize ideas dont carry much value, which is why I am doing everything I can to add value. Skip the NDA, and show him my business plan, financial statements, wireframe mock up, EVERYTHING? – Nick Apr 9 '10 at 0:13
Business plan and mock-ups: yes. Not sure exactly what you mean by "financial statements", but if the prospective partner is interested in your take on how the business will succeed financially, I think it's worth sharing. Your projections are likely to change anyway, so really all you're doing is showing off your financial skills and style. If a prospect would join a business without understanding how it will succeed financially, do you really want that person as a partner? – Joe Apr 12 '10 at 22:43
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There is a founder dating meet up in Seattle in 3 weeks, might be beneficial to you; http://founderdating.com/

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up vote -3 down vote

First of all, if you are just looking for a developer, unless he proves to be indispensable, I would compensate him in some other way other than equity. Even if you do give him equity, you should think deeply about making him an almost equal partner. Straight development work is pretty much commodity these days (trust me - my background is in computer science!) so you probably have a lot of alternatives here.

If you do give him (or anyone) equity, make sure that it has a provision for vesting. This means that he has to be involved for a certain period of time (usually 2 - 4 years) for the equity to really be his.

As for what he contributes if he leaves, it should be yours, but you really want a lawyer involved to protect your interests.

In short, to me this doesn't really feel like a co-founder situation. Good luck, whatever your decision!

-e-

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Can you expand on "Even if you do give him equity, you should think deeply about making him an almost equal partner. Straight development work is pretty much commodity these days (trust me - my background is in computer science!) so you probably have a lot of alternatives here." Why do you feel this is not a co-founder situation? The reason I am looking for a co-founder as I have no technical skills to code the website. I also dont have the ability to compensate outside of equity (not enough money), I was told it would cost $25,000+ to build. Thanks for your reply. – Nick Mar 30 '10 at 22:10
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I think programming can be commoditized by people who have experience designing software or have at least some idea how it works. I wouldn't expect every carpenter to know how to build a house by himself(and maybe use a bunch of unskilled laborers.); thats why we have architects and builders. – JeffO Mar 31 '10 at 10:54
Let me clarify. You are saying developing is a bigger task than 1 person and to give a person 49% of a company when they cant do 100% of the development is a bad idea? – Nick Apr 9 '10 at 0:17
-1. The reason to bring on a developer as a cofounder is not just as a source of code (though you should certainly think twice about bringing on someone who couldn't code the initial prototypes). It's also so you'll have someone who can give you feedback on the idea, what the technical pitfalls are going to be, what the product strategy should be, and other things that generally fall under the category of "technical" but outside the domain of "coding". If he does all this, he'll have earned his equity. If he doesn't, you've chosen the wrong cofounder. That said, +1 to vesting schedule. – Arkaaito Oct 15 '10 at 5:05

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