A year has passed and I'm thinking of partnering with another two business guys. These guys came to me and explained their idea. I'm pretty impressed with it, but not yet sure if they'd make great partners.
What do you guys think I should do to "try out" the partnership? I'm thinking the following: 1. Offer him my software development skill as a paid (discounted) professional service. As this goes on, hopefully I'll figure out if we're aligned. 2. If through (1) I get along well with them, convert the professional service into partnership.
Do you guys think my plan is reasonable? If so, how do you think (2) should go? As a technical co-founder, what model should I take? Is it getting paid along with equity? Any readings on common-practice for this?
Thanks in advance! :)
Company 1: Started by myself, partnered with a sales guy 50/50 after a few months. Company took off after the sales guy because he was able to close large contracts.
Company 2: Started with two other people I knew well (doctors) who were in the field but non-technical. I ended up leaving company after 3 years. This was in part because they couldn't put in the same amount of work (never partner unless they can contribute full time).
Company 3: Started by myself, raised money by myself.
Moral of the story: Partner with a sales guy if you have something to sell, and make sure they have a proven sales track record. If you're building a product that won't be ready for a long time, work on it alone and test the markets as soon as you can, then partner. There is no right answer, but don't partner with somebody simply because they are on the business side. It's also much easier to pitch with a sales guy. And don't partner simply because the business guy has an idea.
Say if one of those doctors quit and did this full time for you pushing sales to other doctors, maybe it would have worked. But trying to build a product with people not at the same commitment level is hard.
But by far, I find that the strongest indicator of a good partner is whether you're adding them on Facebook.
For one thing, partners that avoid you on social media are a little dodgy. Some would even see you as an adversary - this guy they negotiate against, that they're going to leave when business is over, that we're splitting equity with.
And often there's some subconscious disgust to people you're not willing to add to your friends list. The reason for this disgust often becomes clear in about 3 months. But we have years of experience with people - if something is off about them, we'll know.
The best partners to work with are the ones who you want to get closer to. The ones who match with you on an ideological level. The ones you feel that you can learn a lot from. And more importantly, the ones who you consider a real friend, or truly want to be friends with, and are willing to go to long extents to help.
If you feel the need to test this person just because they have a nice business model, I'd suggest that they've already failed the test.
The 2 business guys thing is something to be wary of. I can't think of any tech startups that had 2 business founders.
The biggest problem is that it's tough for you to judge their output initially, since there is no product to sell. If they can get customers lined up without a product, that would be a good sign.
If they can raise funding on their own, and THE MONEY IS IN THE BANK, that's a good sign.
The worst ones are those who have "connections" and will sell only when the product is fully fleshed out. They just keep asking for feature after feature while sitting there, twiddling their thumbs.
If they are cagey about paperwork or details, it's a bad sign.
It's hard. I have been burnt once already. Sales is hard. REALLY hard. If you do decide to try it out, make sure they too have targets to hit.
Ideas are cheap, tech is the hard part. Why waste 66% if your equity on two guys with an idea? If their idea is good they can hire developers or raise VC to makd their MVP.
Have been on both sides of this. In most cases i dont think the random business guy is worth hooking up with.
If they can't develop product and they can't sell, they're useless to a startup. That won't take long to suss out.
Go all out, full marriage, full honeymoon. Have meetings as necessary. Work at it. The biggest problem with business guys is failure to close- either they don't put the time in or just can't sell.
Give it three months, and either pat yourself on the back or throw in the towel. Repeat until you find a successful venture or have to get a job.
One other warning about "two business guys". They tend to turn on each other more often than they turn on the tech guy. It's often sudden and unpredictable. Make sure you have that contingency covered in your formation documents.
As a non-tech sole founder I hired two developers in this mode. I called "freelancer as a test to CTO/co-founder". They both were interested in building a new web app from scratch using the stack they wanted so this allowed them to charge a discounted price.
I paid them by the hour totally trusting them on how many hours they had worked each week.
The startup ended up failing, but this arrangement was great for both parts.
If the startup had been a success, I believe the arrangement would be around the lines of some below market salary with large equity (but not co-founder level). Probably from 20% to 30% before any funding
Today, being a technical co-founder gives you an advantage. However, that advantage is really a broader pool of people and ideas that you can work with. When you get a match -- that's it -- you're now all in this together. Choose wisely, then commit strongly. Personally I'd be uncomfortable with a situation where I was getting paid and my co-founders weren't.
If it's early days, or you've just met, stress test the partnership. What sort of exits are you after? Ask some hard questions. What if we couldn't fundraise? What if we need to to layoffs? What is we get a generous, but not massive, offer in the first couple of years? Some of those questions will feel churlish when you've not even got any runs on the board (and they are), but they're essential to finding out if this is a work dynamic that will make you successful.
Really push it. You should (must) have some really uncomfortable conversations early on. You'll have them eventually, so better to know who you are together before investing too much more time.
The good thing about the above is that you can do that pretty quickly. Start with an afternoon, a weekend, a few working days. Then go from there.
In general, if you have a good thing going, you can’t wait for him or her to meet your friends, siblings, parents, the guy at the deli, and you wouldn’t have any qualms about presenting this person to professional acquaintances, people you knew in college, family friends, even your ex.
If you make a deal with some small portion of equity now, you set your price too soon. Making it harder to get equal partnership. Better to explore the relationship first with a easy and fair exchange of value (work for $).
Step 1 : go cross the atlantic on a boat just the 3 of you. Step 2 : you didn't wanted to kill eachothers ? Good. Now give them all your credit card numbers and keys to your house. Step 3 : You trust them enough ? Alright you're good to go.
I think the most advantage, that my partner impress me is he is really initiative, includes (not only) use our product, find bugs, fix UI, marketing, and everything.
I'm glad to work with him, and proud of our work. We got friendships first. I think i got my answer.