5 ms·

He is not a cofounder, he is (potentially) employee #1. Cofounders don't get brought on to do sales. Employees do. Treat him like a good salesman- give all k

He is not a cofounder, he is (potentially) employee #1. Cofounders don't get brought on to do sales. Employees do. Treat him like a good salesman- give all kinds of incentive payments (commissions, bonuses) contingent on sales performance, but be very shy with the equity. Plan on firing him as a default unless he exceeds expectations quickly. Equity corresponds to risk and skin in the game, and it sounds like he has contributed (and will contribute) very little to either. Bonuses are paying him for what he accomplishes, equity is paying him for what you have accomplished. If he's any good, he'll make more from bonuses than even a 50/50 equity split. If he's not any good, then equity will be far more important to him, locking it in before performance is known. And having just reread your comment, a salesman who doesn't want to do sales but wants to do management? You need to interview more sales candidates. HUGE red flag. Have a beer with this guy and have a good time, but don't bring him on. The world is full of salespeople who can't sell and can't do anything else either. They get by through others' hope triumphing over experience. Say, while you're giving away your equity for free, can I be your cofounder too?

switchstance 9y ago
Great advice. Thanks for this.
- ajiang 9y ago
  It is not great advice. This early on, there is a big difference between someone who comes on as employee #1 vs a co-founder especially in terms of ownership, but not a big difference in terms of risk exposure. If you are positive you've found product market fit, hire a sales person but don't be surprised when the sales person can't sell due to a number of product problems. I would not expect that person to own the product in the same way as a co-founder unless you treat him as such. Parent comment places way too much premium on equity at a time when equity is worthless.
evrydayhustling 9y ago
There are good points here, but I'll present the other side. If you have MVP but no customers, funding, or employees, 98% of risk is still ahead. There are important, identity defining questions about the business ahead, from how you position yourself against competition when marketing, to your recruiting process, to a multi-stage financing strategy. From experience, it can REALLY help to have a co-founder who is motivated at the "I'll make this business succeed" level to discuss those things and to implement them. Is this that guy? It's smart to complement yourself with sales experience, but is he someone you want to have holistic business conversations with? If so, give him the co-founder title. If not, look for that person... going alone as a solo founder will be much harder if you are more of a builder than a seller. Equity is a different story. Put both of you on a vesting schedule. Start your own vesting earlier, so that on day 1 you have 100% of vested equity. Make the _rate_ of vesting roughly match the [responsibility split / contribution to value / endurance of risk] going forward. If the positions are roughly CEO / COO or CEO / CRO, his rate could be 25-50% of yours (corresponding to a 15-35% of fully diluted grant).
- ryanbrunner 9y ago
  I think this is a fair comment, but a couple of things give me pause based on the original ask: - Unwillingness / hesitation to do sales - In an early stage startup, and especially as a co-founder, you need to be willing to do what needs to be done, even if it's outside of your comfort zone. As the technical co-founder, you're still going to be involved in the business, and probably even selling yourself. People who are more interested in managing or high-level strategy than getting their hands dirty is a big red flag in my opinion. What would you think if your first dev hire was really more comfortable being a manager, but was "willing" to develop software for the time being? - Commitment level - if he's working a couple of days a week for an indefinite period of time, that's an indicator that he really doesn't have "skin in the game". If you want to go forward, I would consider something like bringing him on as a consultant, and making him a co-founder if and when he's fully ready to commit.
  - Blackstone4 9y ago
    Agreed on the commitment level. When working part-time, he would be a consultant (working for free) and would get equity when he comes on full-time. >What would you think if your first dev hire was really more comfortable being a manager, but was "willing" to develop software for the time being? Well put.... it's making me think twice...
  - projectramo 9y ago
    But you are comparing this guy in a vacuum. How many other people will have sales experience, commitment etc to a new product that has not even launched? Is there someone better than a person you trust (to be smart, competent, honest etc)?
    - ryanbrunner 9y ago
      I agree a little that experience can't be discounted, and a lot that trust can't be. That being said, it's all pointless if they don't have drive. And the one-two punch of hesitation of doing sales combined with initially only wanting to work a couple days a week tells me that this individual is definitely not ready to commit. I think that can be a trap especially with more experienced people - it's easy for the startup to be something speculative that they take a wait and see approach with than something that is their sole professional focus.
Blackstone4 9y ago
Why would he not be a cofounder? At the moment, I have an idea and an MVP. I have three advisers who I brought on in a semi-formal capacity. Two are senior investment managers and one is a serial entrepreneur having started companies in the same area. I speak to them maybe 1-2 a month to get advice and they are listed on my website. In reality I have zero revenue and it will take 5+ to build this company. I've barely started. I also read this article on YC: https://blog.ycombinator.com/splitting-equity-among-founders/ https://blog.ycombinator.com/splitting-equity-among-founders...
- wtvanhest 9y ago
  I have a similar backround as you with less coding experience (asset management blk). I also programmed my site at night and quit my job. When I started selling I resalized that I hadnt thought the product through properly. You need to learn whether you have by having direct conversations with customers. If you rely on a salesman you will blame him/her instead of figuring it out and making adjustments. After you get your first few sales, then hire your sales guy/women. YOU DO NOT NEED MANAGEMENT. There is nothing to manage.
  - Blackstone4 9y ago
    This was my original plan. The idea would be I sell the product myself. Win 2-4 clients and work closely alongside them to improve the product. Upon achieving product-market fit, I would hire a sales person using my savings. Possibly raising venture funding if need be.
    - the-dude 9y ago
      Do this (and keep your friend)
- jdileo 9y ago
  In the U.S. & around the world sales pro's earn multi-six & 7-figure incomes (Read: more than most physicians, attorneys, engineers, etc.), yet most founders fail to recognize their import. For example, startups regularly task a co-founder or, gulp, initial admin hire to engage a prospect list or subset thereof. It is an enormous mistake that yields suboptimal adherence to best-practice and crucially, a flawed data set that a founder may clumsily use to forecast growth, churn etc. The sales talent required to build processes, identify most promising inbound/outbound prospect funnels, execute script/price-point analysis & closing ratio's, etc. to bring a v1 to market is immense. Respectfully, your friend is woefully unqualified to serve your startup well. A B2B with pricing model you've suggested requires a 10x pro. Where are you located? Website?
CosmicShadow 9y ago
I agree. It sounds like you are asking this because he seems like he's almost the perfect fit, but you know he isn't and you want us to tell you he is not so you can feel better about it. I've been there, having an almost perfect fit immediately available is the easy path, otherwise you have to hunt and do dirty work and it can take awhile and you want someone you know well and you want it now, that is understandable. It doesn't sound like the guy wants to do what you want him to do, and it doesn't matter if you think he'd be awesome at it if he'll never do it, or only do it half-assed and begrudgingly. You can't be a cofounder with one foot in the door and one foot out. He's gotta be all in. I've had promising startups that relied on co-founders with expertise, but they wouldn't take the leap and good advisors said the same to me, so I bailed and they never went anywhere. A cushy job is very addictive. You have a need so the best thing you can do is find someone who will specifically fill that need with a passion. You probably don't have money to pay them, so you are looking for another way to compensate, but that's the rub. Good sales people will want to get paid, unless they are insiders who know they can make it work and just want to suck the equity from you and try to make the startup theirs. You could almost make that work, but good luck with that scenario. It's hard to bring in a cofounder this late, especially if they won't go all in, you are looking at giving away at most 10-15% if they really are awesome, all-in, and stay for 3-4 years (and probably not getting paid). If they are bringing money with them to invest, then it changes a bit.
- lazerpants 9y ago
  >Good sales people will want to get paid, unless they are insiders who know they can make it work and just want to suck the equity from you and try to make the startup theirs. I mostly agree with you but the above point is very cynical. The skilled salesperson that OP needs may well recognize that they want to take the company from 0-10MM in sales per year, but that they may be unable to help take the company from 10MM-100MM a year in sales. In that case, knowing that you are likely to need to leave a company you helped build, asking for equity makes sense.

switchstance 9y ago

Great advice. Thanks for this.

ajiang 9y ago
It is not great advice. This early on, there is a big difference between someone who comes on as employee #1 vs a co-founder especially in terms of ownership, but not a big difference in terms of risk exposure. If you are positive you've found product market fit, hire a sales person but don't be surprised when the sales person can't sell due to a number of product problems. I would not expect that person to own the product in the same way as a co-founder unless you treat him as such. Parent comment places way too much premium on equity at a time when equity is worthless.

evrydayhustling 9y ago

There are good points here, but I'll present the other side. If you have MVP but no customers, funding, or employees, 98% of risk is still ahead. There are important, identity defining questions about the business ahead, from how you position yourself against competition when marketing, to your recruiting process, to a multi-stage financing strategy. From experience, it can REALLY help to have a co-founder who is motivated at the "I'll make this business succeed" level to discuss those things and to implement them. Is this that guy? It's smart to complement yourself with sales experience, but is he someone you want to have holistic business conversations with? If so, give him the co-founder title. If not, look for that person... going alone as a solo founder will be much harder if you are more of a builder than a seller. Equity is a different story. Put both of you on a vesting schedule. Start your own vesting earlier, so that on day 1 you have 100% of vested equity. Make the _rate_ of vesting roughly match the [responsibility split / contribution to value / endurance of risk] going forward. If the positions are roughly CEO / COO or CEO / CRO, his rate could be 25-50% of yours (corresponding to a 15-35% of fully diluted grant).

ryanbrunner 9y ago
I think this is a fair comment, but a couple of things give me pause based on the original ask: - Unwillingness / hesitation to do sales - In an early stage startup, and especially as a co-founder, you need to be willing to do what needs to be done, even if it's outside of your comfort zone. As the technical co-founder, you're still going to be involved in the business, and probably even selling yourself. People who are more interested in managing or high-level strategy than getting their hands dirty is a big red flag in my opinion. What would you think if your first dev hire was really more comfortable being a manager, but was "willing" to develop software for the time being? - Commitment level - if he's working a couple of days a week for an indefinite period of time, that's an indicator that he really doesn't have "skin in the game". If you want to go forward, I would consider something like bringing him on as a consultant, and making him a co-founder if and when he's fully ready to commit.
- Blackstone4 9y ago
  Agreed on the commitment level. When working part-time, he would be a consultant (working for free) and would get equity when he comes on full-time. >What would you think if your first dev hire was really more comfortable being a manager, but was "willing" to develop software for the time being? Well put.... it's making me think twice...
- projectramo 9y ago
  But you are comparing this guy in a vacuum. How many other people will have sales experience, commitment etc to a new product that has not even launched? Is there someone better than a person you trust (to be smart, competent, honest etc)?
  - ryanbrunner 9y ago
    I agree a little that experience can't be discounted, and a lot that trust can't be. That being said, it's all pointless if they don't have drive. And the one-two punch of hesitation of doing sales combined with initially only wanting to work a couple days a week tells me that this individual is definitely not ready to commit. I think that can be a trap especially with more experienced people - it's easy for the startup to be something speculative that they take a wait and see approach with than something that is their sole professional focus.

Blackstone4 9y ago

Why would he not be a cofounder? At the moment, I have an idea and an MVP. I have three advisers who I brought on in a semi-formal capacity. Two are senior investment managers and one is a serial entrepreneur having started companies in the same area. I speak to them maybe 1-2 a month to get advice and they are listed on my website. In reality I have zero revenue and it will take 5+ to build this company. I've barely started. I also read this article on YC: https://blog.ycombinator.com/splitting-equity-among-founders/ https://blog.ycombinator.com/splitting-equity-among-founders...

wtvanhest 9y ago
I have a similar backround as you with less coding experience (asset management blk). I also programmed my site at night and quit my job. When I started selling I resalized that I hadnt thought the product through properly. You need to learn whether you have by having direct conversations with customers. If you rely on a salesman you will blame him/her instead of figuring it out and making adjustments. After you get your first few sales, then hire your sales guy/women. YOU DO NOT NEED MANAGEMENT. There is nothing to manage.
- Blackstone4 9y ago
  This was my original plan. The idea would be I sell the product myself. Win 2-4 clients and work closely alongside them to improve the product. Upon achieving product-market fit, I would hire a sales person using my savings. Possibly raising venture funding if need be.
  - the-dude 9y ago
    Do this (and keep your friend)
jdileo 9y ago
In the U.S. & around the world sales pro's earn multi-six & 7-figure incomes (Read: more than most physicians, attorneys, engineers, etc.), yet most founders fail to recognize their import. For example, startups regularly task a co-founder or, gulp, initial admin hire to engage a prospect list or subset thereof. It is an enormous mistake that yields suboptimal adherence to best-practice and crucially, a flawed data set that a founder may clumsily use to forecast growth, churn etc. The sales talent required to build processes, identify most promising inbound/outbound prospect funnels, execute script/price-point analysis & closing ratio's, etc. to bring a v1 to market is immense. Respectfully, your friend is woefully unqualified to serve your startup well. A B2B with pricing model you've suggested requires a 10x pro. Where are you located? Website?

CosmicShadow 9y ago

I agree. It sounds like you are asking this because he seems like he's almost the perfect fit, but you know he isn't and you want us to tell you he is not so you can feel better about it. I've been there, having an almost perfect fit immediately available is the easy path, otherwise you have to hunt and do dirty work and it can take awhile and you want someone you know well and you want it now, that is understandable. It doesn't sound like the guy wants to do what you want him to do, and it doesn't matter if you think he'd be awesome at it if he'll never do it, or only do it half-assed and begrudgingly. You can't be a cofounder with one foot in the door and one foot out. He's gotta be all in. I've had promising startups that relied on co-founders with expertise, but they wouldn't take the leap and good advisors said the same to me, so I bailed and they never went anywhere. A cushy job is very addictive. You have a need so the best thing you can do is find someone who will specifically fill that need with a passion. You probably don't have money to pay them, so you are looking for another way to compensate, but that's the rub. Good sales people will want to get paid, unless they are insiders who know they can make it work and just want to suck the equity from you and try to make the startup theirs. You could almost make that work, but good luck with that scenario. It's hard to bring in a cofounder this late, especially if they won't go all in, you are looking at giving away at most 10-15% if they really are awesome, all-in, and stay for 3-4 years (and probably not getting paid). If they are bringing money with them to invest, then it changes a bit.

lazerpants 9y ago
>Good sales people will want to get paid, unless they are insiders who know they can make it work and just want to suck the equity from you and try to make the startup theirs. I mostly agree with you but the above point is very cynical. The skilled salesperson that OP needs may well recognize that they want to take the company from 0-10MM in sales per year, but that they may be unable to help take the company from 10MM-100MM a year in sales. In that case, knowing that you are likely to need to leave a company you helped build, asking for equity makes sense.