4 ms·
Ask YC: Who is a founder?
I'm heading a small startup that's looking to get funding. Despite our lack of money, I've managed to recruit a programmer, a finance person, and a marketing person; we're moving ahead with development and marketing plans, even as we look for angel or VC funding. I have a separate agreement with each team member, giving them options in the company as well as some compensation if we get funding but don't work together. I'm happy with all of the agreements we've reached to date.
It's pretty clear that we need a graphic designer. We think that we've found a good and talented one, and she seems inclined to join us, once we negotiate exact terms. But she has asked to be described as a "founder."
Now, I was developing the business idea, including market research and technical analysis, for about a year before anyone else joined me. It's clearly my vision, including my overall marketing plan and technical architecture -- although clearly, there's no way that I could have gotten as far as I have without the other (amazing) people I've recruited. But we've now been working together since October, including meetings with each other, VCs, and angels. None of the other people have asked to be called founders; as far as they're concerned, it's fine for me to be the only founder.
My question is this: Should I call this designer a founder? Would that mean calling everyone else, who has been working with me much longer, a founder as well? Or should I just keep things as they've been so far?
My gut feeling is to keep things as they are, with me as the only founder. But if it's typical for all of the pre-money people to be called founders, then I'm happy to share the title. I just want to know what's typically done, assuming that there is any typical case.
- ALee 19y agoFirst, unless you have a prototype, you shouldn't be worried about this. It's this type of stuff like LLC v. C-Corp that startups focus on and they shouldn't. Second, think of founders as your YC group (if you were to apply). If she would be part of your YC group (the group that is the core of the company at this stage), then she's a founder. Usually being a founder also implies a class of stock. Third, you should always hire people smarter and give them compensation that makes them happy and aligned with your company. If she's worth it to moving the company foward, then go ahead and call her "founder." She's got to be in it for the long haul though. Meaning getting paid peanuts banking on those options/equity.
- Todd 19y agoI think if anyone is willing to work with no income for options, it's OK to call them founders. Anyone pre-VC is basically a founder anyway. There will never be any doubt about who the 'real' founder is. In the end, it's more important for you to know that you're the majority shareholder than for others to know who the founders are. You get to sit on the board and you get to have the most control.
- cperciva 19y agoBy definition, the "founders" of a company are the people who "founded" it. If you join after the company is founded, you're not a founder. That said, there's a lot of pressure to interpret this liberally: Early hires (such as the designer mentioned) want to be called "founders" since it sounds far more impressive, and potential sources of funding (YC included!) are happier if people are described as "founders" because it suggests a greater degree of commitment. My personal view is that the set of "founders" should at very least be limited by the set of individuals who have worked for a company while receiving any cash compensation. If you're paying someone a salary plus stock options, they're an employee as far as I'm concerned.
- reuven 19y agoFor the record, everyone working with me on this startup is currently getting options, plus the promise of a job when (not if!) we get funding.
- tyohn 19y agoMy next statement might go against the grain of YC startup programmers but in my opinion; Design should be at the core of the entire business... think Apple. If you've found a great designer make her a founder. It could be the best move you'll ever make.
- reuven 19y agoGood design will make or break our product; while we're doing a lot of cool things, simplicity is key. I myself use a Mac, and had a NeXT machine oh-so-many years ago, and agree that design is a key differentiator. The question isn't whether the designer is a key person we need, but rather whether joining six months after everyone else entitles her (or everyone) to the "founder" title.
- iamelgringo 19y agoDoes she want a founder's share of the company or just the title? If she wants a larger cut of the shares, it seems like you'll have to decide if you're okay with that or not.
- sonink 19y agoI think what you are trying to do is extremely dangerous. 'Founder' is not just a title, its also a role - that role does not exist in your startup - understand that and let her also know the same. Otherwise you will just be lying to her and both of you will figure out in sometime which could lead to a major disagreements which is the biggest startup killer. If she is willing to take as much risk with as much commitment you can offer her a huge percentage of stocks which is something that she will value as much. Also, incase she thinks that your setup is a good match and understands the extreme difficulty of getting a committed startup team together she shouldnt have a problem with it. Getting a committed and talented team which can work together is the hardest part of a startup.Everthing else almost always works out. Consider this the biggest opportunity as well as the biggest challenge you face.
- aarontait 19y agoI personally think that founders have a more sentimental value. These are the people that strongly believe in the vision of the company. They will be their working with you when the cash has dried up (or even before you have funding). If the people that are working with you where to stop getting paid (in cash), would they still be their? If not, I would consider them to be employees, not founders.
- skmurphy 19y agoIf you are unsuccessful and the only founder it won't matter. If you are successful and there are many founders, it won't matter. Since you are paying everyone with equity only at this point (at least as I read your post and comments) it's entirely legitimate to describe everyone as founders from my perspective.
- petesmithy 19y ago"I am the Co-founder of a growing company" is fine. You really don't need to get hung up on this. Call her Queen Amidala if it'll let you get back to creating value. Sounds like you've got a well-balanced team, an idea you all believe in, everyone's happy with their shareholdings - move on!!