A Guide to Co-Founder Fit
fundersclub.com
fundersclub.com
AND have a 6 month out-clause in case the non-technical co-founder does not perform.
I'm a technical founder, and I was sick of building software that went nowhere ... I was capable of building distributed, complex, bugfree software quickly, but I have no idea how to sell it.
So I searched for a non-technical co-founder, and I was getting sick of people who ended up being all talk and no action.
So I did this : I built 3 smaller products, with markets I knew fit, then I told the non-technical co-founders their job was to sell. Their job was to get relationships going, to get signatures on paper, and to get revenue flowing. No crap, no excuses, no endless feature requests, revenue.
I found a good co-founder this way, this guy is a lot older than me, but could sell ice to Eskimos.
Also I suggest founders earn stock, not options in the early days.
If investors want founders on a vesting plan an ISO plan can be created for them- but the shares they have earned previously are never to be subject to vesting. Unless investors will have their shares best as well. And none of them will because they money they put in is real money.... but so is the sweat founders put in.
You're taking on a risky business venture. You aren't getting a comparable salary that you could obtain at another company. You don't know if it will help, hurt, or be neutral with regard to your future career prospects. A startup is going to more demanding and stressful, and a bigger drain on your life outside of work. You could find yourself pushed out for unfair reasons, while you made legitimate contributions. If the startup fails easy on, you likely won't be eligible for unemployment benefits. All of these risks should be accounted for when considering your compensation.
If you can't accept giving up equity to people who will not be around when the company IPOs, then expect to pay a full market salary with benefits.
One year cliffs are just completely unfair, and at this point, absurd.
A 90 day cliff is fine by me, though I think it's still a bit intrinsically unfair, because the employee is always taking more risk than the company. But it's an acceptable compromise to me.
At the end of the day, the only real way is that you've actually worked with them in the past.
How about bringing in co-founders[0], but at the project level with a cliff etc? It will be obvious by 6 months as to who's cutting it and the group will self-select to stay on. That should minimize the risk.
[0] multiple people with staggered start dates
http://paulgraham.com/bronze.html
"Hackers are perfectly capable of hearing the voice of the customer without a business person to amplify the signal for them. Larry Page and Sergey Brin were grad students in computer science, which presumably makes them "engineers." Do you suppose Google is only good because they had some business guy whispering in their ears what customers wanted? It seems to me the business guys who did the most for Google were the ones who obligingly flew Altavista into a hillside just as Google was getting started.
...
And compared to the sort of problems hackers are used to solving, giving customers what they want is easy. Anyone who can write an optimizing compiler can design a UI that doesn't confuse users, once they choose to focus on that problem. And once you apply that kind of brain power to petty but profitable questions, you can create wealth very rapidly"
"Hackers are perfectly capable of hearing the voice of the customer without a business person to amplify the signal for them. Larry Page and Sergey Brin were grad students in computer science, which presumably makes them "engineers." Do you suppose Google is only good because they had some business guy whispering in their ears what customers wanted? It seems to me the business guys who did the most for Google were the ones who obligingly flew Altavista into a hillside just as Google was getting started."
(side note: I was at Altavista at the time after an acquisition, and that is exactly what happened)
Its a different set of skills, maybe you can learn them, maybe not. And even if you learn them, will you be as good as the person who has been honing them for years? Sure I can sell, but it does NOT excite me. And life's too short to do things you dislike.
Warning: I have been screwed by non-technical "late" founders. People who have not been there since the beginning but do see the potential of what I have created. One cost me 10's of millions, but que sera sera.