3 ms·

So many successful startups began as two or three good friends kicking around some ideas at dinner or drinks, or relaying some spike of insight they had during

by nhashem 15y ago

So many successful startups began as two or three good friends kicking around some ideas at dinner or drinks, or relaying some spike of insight they had during a seemingly insignificant conversation. Whenever I think I have The Next Great Idea, I know my first thought is, "man, I could be on to something here, let me talk to Joe about this, I bet he'd love to work together with me to see if this would work!" It is is definitely NOT, "oh well I'd better just go ahead and execute and get a product out and get customers all by myself, and then talk to Joe and cut him in for less equity, because I want to set myself up for needing only a $17MM acquisition to make $5MM." Now none of me or Joe's Next Great Ideas have ever panned out, so maybe we're doing it wrong. But I still don't think trying to optimize for a payout when considering co-founders is doing it right, either.

redsymbol 15y ago
I believe it depends on the personality of the entrepreneur. For some, working together with others is much more likely to produce success. Richard Branson seems to be in this category, and it sounds like you are too. At the other extreme, some founders' personalities are such that they almost have no choice but to build it completely on their own - a "lone ranger", as a investor I once knew put it. My favorite example of this is Felix Dennis, founder of Dennis Publishing (which publishes Maxim, and many other magazines). (That's not to say lone rangers build their company alone; if that's ever been done, I don't know about it! But the additional key people are employees, not founders, and may not even get equity.) Aaron (edit: grammar)
briggsbio 15y ago
I don't think this post was advocating screwing anyone. If you and Joe come up with an idea over drinks and decide to pursue it then splitting equity should be based on involvement/commitment/investment. However, onboarding multiple cofounders and splitting equity equally for an idea that you just had and has barely made it "off the napkin" (or that you've worked on for a while) is probably a bad idea. This post is really just trying to get people to "consider the maths" of startup equity for various structures and it's impact on your "take." I started a project with 6 guys (yes, 6) and cut everything equally. But it shouldn't have been an equal split, and thinking about the long-term dilution of multiple rounds and share of possible exit (discounted for execution risk, among other risks), it became a drag on my motivation. Which then made me mad at myself for getting influenced by the monetary aspects of the project, and a vicious cycle ensued. Needless to say, the project failed and we never got close to launch and disbanded. So this is an important post, and extremes should be avoided (Zuckerberg on one end, open-source on the other - is that a good spectrum?).

by nhashem 15y ago

redsymbol 15y ago

I believe it depends on the personality of the entrepreneur. For some, working together with others is much more likely to produce success. Richard Branson seems to be in this category, and it sounds like you are too. At the other extreme, some founders' personalities are such that they almost have no choice but to build it completely on their own - a "lone ranger", as a investor I once knew put it. My favorite example of this is Felix Dennis, founder of Dennis Publishing (which publishes Maxim, and many other magazines). (That's not to say lone rangers build their company alone; if that's ever been done, I don't know about it! But the additional key people are employees, not founders, and may not even get equity.) Aaron (edit: grammar)

briggsbio 15y ago

I don't think this post was advocating screwing anyone. If you and Joe come up with an idea over drinks and decide to pursue it then splitting equity should be based on involvement/commitment/investment. However, onboarding multiple cofounders and splitting equity equally for an idea that you just had and has barely made it "off the napkin" (or that you've worked on for a while) is probably a bad idea. This post is really just trying to get people to "consider the maths" of startup equity for various structures and it's impact on your "take." I started a project with 6 guys (yes, 6) and cut everything equally. But it shouldn't have been an equal split, and thinking about the long-term dilution of multiple rounds and share of possible exit (discounted for execution risk, among other risks), it became a drag on my motivation. Which then made me mad at myself for getting influenced by the monetary aspects of the project, and a vicious cycle ensued. Needless to say, the project failed and we never got close to launch and disbanded. So this is an important post, and extremes should be avoided (Zuckerberg on one end, open-source on the other - is that a good spectrum?).