Starting Up: 1 or 2, 3 is Too Much | Hacker News Reader

Starting Up: 1 or 2, 3 is Too Much

bothsidesofthetable.com

24 pointsalanthonyc12 comments

"Well, duh, if you have 3 equal co-founders you personally have just diluted by 66.66% and you haven’t even raised a penny!"

This argument is mistaken. If the third person can do as much work as each of the first two, they will each have less of a proportionately more valuable company.

If the dilution argument were correct, the optimal number of founders would be 1, and that is certainly not true.

We find from experience that 2 or 3 founders is optimal. If famous companies more often have 2 founders than 3, it's probably mostly because people who want to start their own companies are rare; obviously clusters of 2 are going to be more common than clusters of 3.

I agree with your point on dilution.

The problem is that finding a co-founder with the requisite skillset, motivation and personality match is hard...it's almost like finding someone to marry. However, I know need at least one. The sheer amount of work to be done makes it a necessity, especially while I'm finishing out my current contract as a consultant.

But until I find the right person, it's going to just be me, slogging away.

"I recommend that you start a company by yourself and own 100% of it. Once it’s set up I recommend bringing in a co-founder and giving them 10-30% of the company depending upon when you bring them in. I advocate treating them like a co-founder in every way except when they join and how much equity they get."

I'm glad he said this. This has been my plan, not so much by design but just by circumstance, but it's nice to have validation.

Ditto. I hadn't heard anyone specifically endorse this before, but it's what circumstance gave me with my startup. It's a good way to do a 2-person startup with no danger at all of a power deadlock.

I've heard the recommendation to never equally share power or you will risk deadlock. Always agree to either have a neutral arbiter or go with the old 51/49 split so that if it ever comes down to it the issue can be decided decisively instead of resulting in delays and over-compromises.

Is it possible that having to use one's 2% majority share to force a decision is just as bad as a deadlock? (as far as affecting morale, a founder leaving, etc.)

We've had the 51/49 split driven into our heads for so long, I wonder if anyone out there can share the ramifications of actually having to use it.

My co-founder and I took a different tack: "50/50 and a quarter".

- 50/50 split on equity

- Decisions are made by consensus when possible (so far, always).

- If we absolutely cannot agree, we flip a coin (a quarter)

- If either of us decides to leave the company, the other must buy him out. So, if we ever actually get to a coinflip decision, we just ask ourselves "do I care about this so much that I'm willing to walk if I lose, or will I live with it?" Whatever the answer is, the decision can go forward.

I like this solution. A lot.

Thank you for sharing!

Do you use the shotgun clause for buyouts? (http://en.wikipedia.org/wiki/Shotgun_clause)

I have no experience with this, but a 49/51 split seems weird to me. It basically means the guy with 49 spends as much time/money/effort as the other guy, but never gets a say? I'd rather be in for 30% and invest less, or something.

I think there may be a danger in labeling yourself based on your weaknesses. It could lead to subconsciously shutting down options because they involve your "weakness". Essentially, if you don't explore your weakness and try to gain strength in that area then you risk letting it atrophy.

For example, if you're a "technically-savvy, introverted programmer" and you hire in a "outgoing marketeer" to handle all the customer relations then you may find that you loose touch with customers and loose sight of the company as a whole.

While it is true that anything you don't exercise will atrophy, like you said, but - at the same time - you can't be a master at everything.

The person that can be a master programmer and a charismatic salesmen is very rare indeed. In fact, so rare that I would be surprised if they exist at all.

So I agree, you shouldn't completely ignore tasks that don't fall under your speciality; but also, work on those tasks only enough to maintain a certain level of competency and skill. Then you can hopefully stay in touch enough and not "loose sight of the company as a whole."

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