Hot answers tagged founders
19
One piece of advice I frequently give startup founders: don't try to invent two things at once.
You've got enough problems inventing a new product which you are trying to launch. That is the entrepreneurial risk you are taking. Don't risk the whole thing by also trying to invent a new way to allocate equity.
You're going to need every brain cell you've ...
15
Having been a CEO of several small tech companies in Silicon Valley, here is a summary of what I've found the job to be:
A CEO's #1 job is to empower his/her team to do the job that needs to be done. It is the CEO's job to put energy into the business.
A CEO is responsible for drawing out, synthesizing, and articulating the vision for the company both ...
11
I'd like to offer you a different perspective.
So, yes. 51% percent of the company means he's got the controlling vote. But is it such a bad thing? If he's very experienced and well known in the startup arena - it's a good thing. His leadership can take you places you've never dreamed of and open doors otherwise closed to you and your fellow students. He ...
10
I look at most of those "most important entrepreneur traits" articles as absolute garbage. Success attribution is one of the worst skills in entrepreneurs and those who analyze them.
But there was something I have heard recently that really struck the chord with me:
"With passion and vision comes delusion. Good entrepreneur has the ability to recognize when ...
10
Your partner in coding would have joint copyright of the code. This does not mean he is directly entitled to a company that you start, but it does mean that he has a claim to the intellectual property you are trying to assign to the company. Therefore, he probably won't allow use of the code unless he gets some form of compensation, and equity is one them.
9
More founders = more opinions, conflicts, meetings = less getting done. Someone has to make the tough decisions and steer the ship.
There also the $$ aspect. "Founders" are expected to get founder shares in the business. If you plan on raising money and putting some shares aside for employee options, you're left with say 50-60%. If you dilute that too much ...
8
You can try to buy them out. Depending on what type of agreement is in place (what do you mean you don't have a shareholders agreement?) the method, price, and structure of such a buyout would be determined.
However, bear in mind that there are 2 major issues raised in your question, though you only ask about one of them. The one you ask about, getting rid ...
7
Paul Graham said he looks for companies with at least two founders, because it proves that the idea was good enough to convince at least one person. That reasoning make sense to me: if you haven't been able to convince one person that your idea is going to work, your chances are significantly dimmer.
7
It's true that often they look for multiple founders, because you'll need multiple people and it's nice to see the team is already there, rather than having to fill a key function (like CTO).
But don't let that stop you. Just make it clear that you know the holes in your knowledge and that you expect them to plug them with people they like.
VCs and angels ...
7
Since you started this two years ago and alone, I believe going below 51% is not a good choice. When tough decisions come and they both disagree with you, the stock distribution will not help settling the issue.
Next time you start a business you've been cooking yourself, remember to approach your potential partners with a specific proposal in mind. A ...
7
It seems to me like the simple answer is... it depends.
You should pay yourself if:
Your company is generating enough cash to!
You're funded and have properly set salary expecations
You're not going to run out of money by doing so
You should NOT pay yourself if:
Your salary will put you out of business
If you believe your longterm model is sustainable ...
6
I think the reason single-founder-startups rarely get funded is that if the problem you're trying to tackle is "small" enough for you to be able to solve it reasonably well on your own, you're probably not VC-material.
VCs care about BIG problems that can make them MILLIONS of dollars. If your idea is BIG like that you'll likely not be able to even get to ...
6
Elie makes an excellent point. SCORE can help you with this or you can go to Nolo to see what they have, at a reasonable price. If you want to go it alone, there are the critical things that should be in a founders agreement:
Business Definition: Defining the potential venture is an important piece of any agreement. Describe it in as much detail as ...
6
Entitled to equity in the company? No.
But, depending on the details of what happened, he may be considered a joint author of the software you hacked together or possibly even a full owner of part of it. Either one of those things could really impact your company's ability to succeed, so it may make sense to give him some equity in the company in return ...
6
Of note: an experienced large company person may not have the correct skillset to run a startup. I know some may disagree, but it is one thing to have a staff / secretary / expense account, and quite another to have to sweep the floors before you leave the building every night (because no one else will do it).
I would take a look at the vesting - any ...
5
One of the things you will have to establish early on is what you want to do about dilution. This refers to what happens when the pie gets bigger - that is, you each own 1/3 of the pie, but suddenly each of you owns a smaller percentage of a larger pie.
Say, for example, that you each own 33% of the company. You have determined, prior to the investor ...
5
Single founder companies do get funded. All the time. I've angel-invested in a few myself.
Having said that, I'd still advise finding one or two co-founders. Even if you are exceptional at various things (sales, product, marketing, finance, etc.), startups can become a lonely business and it's nice to have someone you like, trust and respect to work ...
5
I would ignore your $5k investment. It's not that much money and clouds the issue a bit.
A lot depends on what degree of investment/sacrifice people are going to make. If one or the other is working at far below market value, I'd factor that in. I like to think not about how much equity I want to retain, but how much equity it will take to attract the ...
5
You already know the answer. You're just asking fot a safe way to do it.
It seems your friend is really after the "status" of being a "co-founder", but along the way he forgot that co-founders, need to actually work to get a startup up from scratch, and work hard. The ideal scenario is that co-founders are in the same room, office, garage or whatever - ...
5
It's great that you want to start your own company.
You can't do this while running another company for someone else unless you get an agreement in writing that your current employer is completely comfortable and waives any interest.
My recommendation is to have a candid conversation and work out a mutually acceptable departure date and then go full speed ...
5
Vesting: Yes, you should absolutely have vesting. Its very common for the founders shares to vest so that one guy doesn't do 2 weeks of work, leave, and come back 5 years later when its a success claiming that they own 25% of the company. You don't necessarily need to do the same one year cliff that you do for employees - I'd recommend vesting 1/48th of ...
4
It doesn't matter how many "founders" there are. What matters to VCs (I am one) is that you have a team by the time you approach us and that there is enough equity allocated to your senior management team (both present and planned).
If you're looking for seed funding you can get away with just one senior person (you). For an A round I think you'll ...
4
If I were you, I wouldn't worry much about it. People misname stuff all the time, and the usage of certain words is not really precise.
According to an online dictionary, a co-founder is someone who "established or found (something) in concert with another or others." Strickly speaking, to establish a company can take some time, so there's room to have new ...
4
As the original idea guy, you should clearly get more. You also want to maintain control over the idea until you need to get outside investment. I also assume that you are the CEO of this venture, since it was your original idea and that warrants more as well.
Take a look at it this way. You have spent two years getting it off the ground, it was your idea. ...
4
I'm certain you'll find a ton of valuable advice and anecdotes in this Hacker News post asking the same question: Ask HN: What's a Non-Programmer to do? (134 Points, 78 Comments)
Spencer fry wrote an entire blog post elaborating on his comment.
4
First, the founder vesting is very important and I agree with your firm stance on this. Although, in particular given the part time nature of your co-founders, you have to define in the agreements exactly what actually constitutes participation in the company so that the vesting (or lack thereof) actually has teeth.
Beyond that, I assume your question ...
4
I have seen plenty of software startups in my time in the industry. From my experience, the startup founder in many of these firms was often incapable of making any type of coherent sales call to anyone. These founders were brilliant software developers, not brilliant sales people.
Without an idea and a product there is nothing to sell. Someone with a ...
4
and welcome to this site.
Hmn, I'm having some trouble recalling all the provisions we used last I had this kind of issue. The following list may be incomplete. Under all circumstances, this is really a question I recommend you go talk with a professional about -- i.e. go see a good lawyer please.
Regarding minimum price for buying up shares: I question ...
4
If I can give you an advice that took me so long to realize myself:
If you feelyou want to start your own company, don't hesitate and don't wait for others to join in. Actually this is the biggest mistake you might do, because you won't make your startup.
What you should do is start directly even if you are alone. Just focus on the idea yo have work for 2 ...
4
I can tell you from experience that getting rid of him sooner is better than later. It took me 6 months and the endurance of attacks, insults, and threats of lawsuits to part with a cofounder from whom I needed to separate.
One thing you need to be clear on is what he has actually contributed. If you minimize his contributions, it could be the basis for a ...
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