13 ms·
Business co-founders in tech startups are less valuable than they think
- rKarpinski 1y ago"Idea co-founders" are less valuable than they think. Unless they are carrying a number (funding, sales, users etc.) they aren't even doing "business"
- tiffanyh 1y agoI’d say, what’s most important is to find someone who has opposite strengthens. If you aren’t strong in marketing or design, it’d be ideal if your cofounder was … etc.
- myst 1y agoAnd even less than that
- silexia 1y agoCofounders are not great anyways of either type. If you are a business person, learn the tech stuff you need. It's easier today than ever. If you are a tech founder, it's even easier to pick up business stuff than tech stuff. Investors always encourage it because it reduces their risk... One of you can be fired and they still have the backup. But when it is all on you there is no passing the buck. Source: solo bootstrapped founder of a company earning $1,200,000 a month for the last sixteen years.
- relyks 1y agoWhat's your product? :)
- Swizec 1y ago> Investors always encourage it because it reduces their risk... One of you can be fired and they still have the backup. But when it is all on you there is no passing the buck. The reason is reduces their risk isn’t firing 1 cofounder, it’s that “When you want to go fast, go alone, when you go far, go together”. Building a business is tough. Most early stage startups fail because the founders simply burn out and give up. Having a buddy you can lean on helps. It also makes it easier to realize when you’re digging down the wrong hole and need to change strategy.
- dingdingdang 1y agoHaving started businesses with the explicit lack of biz-co-founders I beck to differ. That is of course unless your da Vinci-like super modal capabilities allows you to feel unlimited joy when doing business plans, taxes & marketing alongside your (hopefully) core competency of product development.
- CharlieDigital 1y agoI also agree based on several failed startups I've been a part of and a few successful startups. The business side is the difference between side project and successful venture.
- _bin_ 1y agoI do actually know a few people who are like me and really enjoy both doing the biz plan/strategy half, and the marketing work, and product/tech. It's not as common but I enjoy working with them a whole lot more. We almost always create better results when the tech people are also biz people who understand how what we build needs to fit into the market. It's also super helpful to have some personnel fungibility when you have a small team where you're shelling out 5-20% equity for new members. In my ideal world basically everyone is like this and the walls between "idea guy" and "tech guy" are knocked down. I've heard a lot of folks get cynical about sharp technical types who get hired by big 3 mgmt consultancies, but ime they're often great places to find those who are both technically sharp and can make a killer deck.
- rchowe 1y agoI discovered I liked business planning, strategy, and marketing pretty early in my technical career. I also discovered that one of the thing business people bring to a company are connections, especially if they have already worked in a vertical, and few people want to talk to a bright kid about their problems.
- bix6 1y agoYour solution to bad business co-founders is for them to become sales people? The traits and failures you are describing could be attributed to anyone including an engineer. A good business person moves mountains while keeping builders free to build.
- j45 1y agoBusiness founders have to bring the distribution, technical founders bring the product. Require both.
- wolpoli 1y agoThe technical cofounder becomes less important as the company grows through.
- turbotim 1y agoCan you say a bit more here, genuinely curious as to why.
- wolpoli 1y agoI made an observation that, as a company grows, there are more opportunities for increasing revenue from the business side than from the technical side. Technical is important, but just saying that it is easier for the business side to toot their horn.
- karolist 1y agoSee also https://www.breakneck.dev/blog/no-tech-cofounder https://www.breakneck.dev/blog/no-tech-cofounder and related HN discussion https://news.ycombinator.com/item?id=39902372 https://news.ycombinator.com/item?id=39902372
- dgs_sgd 1y agoI recently walked away from a potential startup because my non-technical partner (MBA ideas guy) wanted an 80/20 equity split in his favor. I was the first to broach the discussion and proposed 50/50. It was a severe misalignment in expectations, and this was after 3 months of meeting regularly to refine the idea and build out prototypes (read: I was building the prototypes). My advice is to have this conversation with a potential business co-founder as early as possible to avoid wasted time. I could have saved myself months. Look out for business guys who severely discount your value as a technical founder. Not saying they're all like this, but a really skewed equity split is typically a red flag.
- j45 1y agoPartnerships should be about leveraging opportunity in the market, not partners leveraging each other. With business idea guys, the tech guy could own 100% of the shares until business founder shows up with paying demand and repeatable and scalable demand. The technical founder invariably builds and creates value in working software. It's tangible. If the business / "idea" person over values their share it's likely due to knowing the mismatch to begin with. Technical co-founders are perfectly capable of learning all aspects of business. Plenty of good books and resources out there at present.
- derektank 1y ago>Technical co-founders are perfectly capable of learning all aspects of business. If you assume the technical co-founder doesn't need to sleep or has a magical source of extra time, sure. But in the real world, failing to bring a product or service to market at the appropriate time can be the difference between failure and success. I certainly agree that a technical co-founder's knowledge is harder to replicate in the abstract (OP's story about a co-founder suggesting an 80:20 split is nuts) but trying to be a jack of all trades can leave you a master of none.
- j45 1y agoI assume neither, and have business skills to found and scale business and architecture as a technical cofounder. It's just that thing - getting the reps in to learn. Not just a function of time, but picking the things that have a greater chance of helping you grow. Depending on who you ask, one mark of a CEO is to be a generalist to keep everything moving, guided, supported, looking ahead. The age of the specialist went away before covid. Now the generalists see patterns and connections between different arenas in similar ways.
- jagger27 1y agoIf you have a shred of your own morals you’re less likely to have to compromise on those with an MBA who’s guaranteed not to have any.
- steelbrain 1y agoI don't man, I am fairly technical and have failed solo startups several times because I'm not good at the selling part (and I guess by extension build what people want). So in my limited experience, a co-founder that can sell well is really valuable.
- palijer 1y agoThat's exactly what the author was trying to convey...
- ivape 1y agoIt feels like the business layer has always successfully commodified the developer layer, but developers don't seem to have any desire to commodify the business layer. It seems like the developer layer naturally wants to eliminate the business layer entirely. It is basically extinction if you let developers sit on the other side of the coin, so I suspect anyone on the business side of things will have to be a cut-throat survivalist (there's no other way).
- jokethrowaway 1y agoBeing on the business side, you can just retain your equity and pay to build a prototype, instead of trying to get people to work for free.
- guywithahat 1y agoI realize this is all subjective, but the hardest problem in every startup is solving a real customer problem. I’ve never been part of a startup where the engineering was the hardest part, and I’ve been part of very high-tech companies. An accountant maybe doesn’t add much, but a business major who deeply understands a customers need can be more valuable than any engineer.
- deleted 1y ago[deleted]
- riskassessment 1y agoThis presupposes a business major is any better at understanding customer needs than an engineer. Given that most startups fail, I'd be willing to infer that neither the typical non-technical founder nor the typical technical founder is particularly good at this.
- loktarogar 1y agoit's not "a business major", but "a business major who deeply understands a customers need". just any old business major won't do.
- lurk2 1y ago> This presupposes a business major is any better at understanding customer needs than an engineer. You can still derive advantage from specialization even if one party has an absolute advantage in both activities.
- multiplied 1y agoAnd yet the saying goes 'Ideas are cheap, execution is everything.'
- echelon 1y ago> An accountant maybe doesn’t add much, but a business major who deeply understands a customers need can be more valuable than any engineer. 1000%. I'm a solo tech founder and raised $3M. There isn't a day where I wished I didn't have a business or growth person with me on this journey. The tech pieces are easy.
- greatpostman 1y agoLiving in NYC, I have been around a TON of venture backed startups with the classic non technical CEO, technical CTO. Some HUGE percentage of startups see the CTO fired once the tech stack and revenue are stabilized. The incentive from the CEOs perspective to remove a contender as well as claw back the equity is huge. Early stage the CTO is the most critical, but after real traction they can be replaced far easier than most want to admit. My advice for technical founders is to always place themselves first, from a legal and organizational perspective. For a technical founder with social skills, a non technical founder brings very little value relative to their vesting in the early stage.
- lurk2 1y ago> Early stage the CTO is the most critical, but after real traction they can be replaced far easier than most want to admit. If the technical founder can be replaced so easily, how does it follow that the non-technical founder is less valuable?
- greatpostman 1y agoOnce the business hits a certain level of revenue, the mvp is finished etc, whoever is the face of the company, I.e. CEO has way more power. CTO if they have shipped a complete product that’s getting paying customers can be replaced with an engineering manager. But not before Getting the product to some level of completion is a monumental lift
- TuringNYC 1y ago>> If the technical founder can be replaced so easily, how does it follow that the non-technical founder is less valuable? Because at that point, you can raise VC cash and hire for the job instead. The idea has been vetted. You can theoretically even rebuild the entire codebase from scratch just looking at the existing app. The CTO should maintain equal voting rights for as long as possible
- cutemonster 1y ago> Some HUGE percentage of startups see the CTO fired once the tech stack and revenue are stabilized. If you know about more to read about that, it'd be interesting
- quantified 1y agoVery pro-labor/anti-capitalist take. Not that it's wrong! > In reality, it should flipped! The technical person is the one who breathes life into an idea and should get the lion’s share.... The riches are in the execution. The work done. Labor is what makes capital useful. Otherwise it's just a pile of money sitting there.
- greesil 1y agoYou're thinking of VC vs startup, not business skills cofounder vs tech skills cofounder.
- quantified 1y agoTo be sure, I'm applying one dynamic's description to another dynamic.
- deleted 1y ago[deleted]
- fairity 1y agoAs is the case with most complex problems like this, the correct answer is: it depends. In this case, it depends on what the crux of your business is. Sometimes the crux is building world-class technology. Sometimes the crux is customer acquisition. If the crux of your business is customer acquisition, then an exceptional business co-founder will actually be the most important ingredient to long-term success. This is one of the biggest weaknesses I've noticed in YC's mantra. In most industries, just building something people want doesn't lead to success - you have to excel at customer acquisition also. And, in these industries, as you business matures, you realize that customer acquisition, at scale, is actually the hardest problem to solve.
- dentemple 1y agoI think you've just argued yourself out of a position of "it depends." This is one of the few areas where there's no wiggle room. A worthy business co-founder MUST be able to bring something practical to the table, and in my experience as it also seems to be yours, there's only really two ways they can do so: - Be great at customer acquisition (or at least as the original article says, bring in a "customer waitlist") - Have or bring in actual funding If the business co-founder can't even bring one of these two things to the table, there is no justification whatsoever for them to hold a meaningful share of the startup's ownership.
- tptacek 1y agoIn reality, it should flipped! The technical person is the one who breathes life into an idea and should get the lion’s share Then you want an employer/employee relationship, not a cofounder relationship. I would run, not walk, from a company with a founder arrangement where some subset got "the lion's share" for reasons like this.
- 6stringmerc 1y agoAs a business guy, getting “it should be flipped” wrong and going to print / ready for audience viewing only emphasizes the importance of being able to meet certain expectations such as basic communication when wanting to be taken seriously. This is not a unique instance I have observed. It is not directed specifically at this writer, it is using this writer as an example of hypocrisy in self-serving pleadings. If you’re going to de-value the role of somebody who can do what you can’t, be prepared to get called out on it or brushed aside without explanation because you blew it. Harsh but true. I know this because I worked sales support with technical people and not technical people in high stakes business relationships. This is why startups don’t hire people like me because they don’t value what I do and frankly I’m okay with this mutually dismissive relationship. This forum is a frequent reminder of why so many startups are unsuccessful.
- tptacek 1y agoI'm actually not making a case for business cofounders being undervalued. Maybe they are maybe they aren't. But if you think they're overvalued, put up or shut up: hire them instead of partnering with them. That doesn't happen because strong business cofounders won't accept those terms, which to me is a pretty clear indication that "it should be flipped" is false.
- clbrmbr 1y agoIMO you want a business cofounder who has a tech background, but they have to be a sharp dollars person. Somebody has got to close deals, negotiate hard with suppliers, and keep the lights on. All things that engineers often don’t do so well.
- neilv 1y agoOne thing I've wondered about for awhile: How do you find a business co-founder you can trust? For one example, the article says that some of the best value that a business co-founder can contribute is disproportionately building the relationships. But those relationships can be more connected to the business cofounder themself, than to the company. It's a bit different for the technical co-founder, since your perceptible contribution is usually IP expressed in in artifacts like code that is owned by the company, and can't legally be taken with you. There's also the perception of the value of that IP: much like a novice programmer might think that most of the value is in their own software/knowhow/grind/brilliance, the novice business person might think most of the value is in their own ideas/leadership/network/hustle/brilliance. The business person might also perceive the technical contribution as being commodity skills, and ones that can increasingly be done by "AI" robo-plagiarism for $20. So, if the business person is, say, having second thoughts about the 50/50 split, they can make a backroom deal with investors to cut out the technical cofounder, or bring their new relationships with investors and/or customers with them to a different (or 'different') startup. Obviously, one defense is for the technical co-founder to somehow be a superhumanly valuable non-commodity, and to make sure that the business co-founder understands that. But, realistically, doesn't the technical co-founder probably need a lot of trust in their character and commitment of the business co-founder? Maybe even more than vice versa?
- JumpCrisscross 1y agoAnyone can do a back room deal to screw their partners. Mark Zuckerberg was a technical founder, for example.
- neilv 1y agoMaybe, although students in the dotcom boom was a different situation than now. (Source: Was one. Many people were trying to fund you, sometimes without you even asking. And you couldn't go to a student party without some Sloan or HBS student zeroing in on you, and wanting to talk with you.)
- fellowniusmonk 1y agoIf you are the technical co-founder who is writing code you should ensure you have legal protections before anyone else has access to what you have written. This can be a legal agreement or built in protections via copyright law. Same as any author who produces work that others can profit off of in perpetuity, don't sign your built in protections away.
- dust42 1y agoHaving seen plenty of businesses throughout my life, both successful ones and less successful ones I'd say the most important traits are: - the ability to execute - having drive, focus and flexibility to adapt - being able to manage a team and keep it focused, motivated and on track this is valid for both the technical founder and the business founder alike. In a perfect team the business founder has a very good understanding of the tech side and the technical founder a good understanding of the business and marketing side. Product is nothing without sales and sales nothing without product. Despite this being obvious I have seen several companies fail on this. Last not least it depends on the product. The more complex the tech is the higher the share of the technical partner should be and vice versa the more specialist business domain knowledge is needed, the higher the business partner's shares are.
- FlyingSnake 1y ago> ability to execute How do we define what execution looks like? As a general rule we must be wary of “business cofounders” who sell pontification as execution.
- mlinhares 1y agoIf your "business cofounders" aren't closing deals and landing sales they're useless. So if you're going to join a "non-technical founder" they must both have the contacts or a in in the industry you'll be trying to join and must be a great salesman. If they don't have that, walk away, this person has no value.
- dust42 1y agoThe ability to execute means to deliver timely and on budget. I have seen people who would not be able to set up and manage a hot dog stand and yet they were trying to run a business with 50 employees. The only result was burning money like there was no tomorrow.
- neom 1y agoI was one of the "business guys" at DigitalOcean from very tiny to big. Execution looked like: 20% of the time in meetings discussing what the next period of time without seeing each other was going to look like and 80% of the time on flights and in hotels. My mantra was always "be directionally correct, go to market as hard as I can every single day, and fully trust the engineers building the products around me".
- goatherders 1y agoThis post is hilarious and details exactly why so many startups die in infancy. Yes yes, engineers are brilliant and without them nothing ever gets built. And even still, sometimes things get built and never turn into a real business precisely because of this hubris. And 99.9% of the time, the ones that DO grow over time would have grown much much faster if "the business guy" had been there all along.
- frenchmajesty 1y agoThis is true! I argue here that the right business co-founder who drives long term financial success to the company is super rare and super valuable. The problem is the average one you'll run into at a networking event cannot deliver on that. They are much more "I give the ideas and I want to keep 90% equity and you shut up and listen to me because I'm the CEO" guys.
- goatherders 1y agoAbsolutely. Idea guys are the worst. And a good business person is worth their fair share of equity in a SU environment
- jesseab 1y agoSweeping statements in HN posts are less valuable than they think.
- siliconc0w 1y agoFor B2B, it generally makes sense to have one person whose job it is find and talk with customers while the other can focus on building/iterating the product. It helps to be technical for this but they have to actually like talking to people and ideally have a decent network for what you're selling. This isn't exactly sales but it's closer to 'sales' than it is engineering and so generally benefits from that background/skillset. So in theory it makes more sense to team up with someone with that skillset than partner with another engineer but then one of you has to give up on the thing you're good at to do founding sales which you may-or-may-not be inclined to do.
- 827a 1y agoThe reality that I've experienced is: Most any function in a software company can be learned to an effective degree by anyone, if you take the discipline seriously, have the right mentors, and dedicate time to do so. Engineers can learn to be good founders and salespeople. Marketers and managers can learn how to commit code. The reason, I tend to think, why business-focused co-founders might be less valuable than tech-focused co-founders in a tech company is, in my experience, that all founders surface their own biases in how their companies are designed based on the comfortable experiences of their past; and you need those biases to lean toward the tech in tech companies, because tech can automate anything per the previous paragraph. I've seen this surface subtly: "Yeah, Stripe integration to take money makes sense, but its just not a priority right now. Sales can handle invoicing." (it never becomes a priority because once you give DepartmentX that responsibility they'll fight to defend their turf). I've also seen it surface less subtly: A VC-backed software startup with mid-eight figures of funding, all the investors thought the company was selling software, but it turns out the salespeople were never trained on that, and were instead told to only sell white-glove services, using the software, from another department. "Bigger contracts" etc. Engineering leadership was oblivious to this happening for at least two quarters, because who knows, users were still signing up, "sales handles the invoicing", they weren't tracking the right things, maybe some layer of intentional deception. Chicken & egg "the software doesn't sell" "you weren't even trying to sell it". Engineers are expensive -> Engineering layoffs. They're now a zombified services company, who took on 70 mil in venture capital to sell software, with zero full-time software engineers. The CEO's professional work history? Selling services of this exact kind for some provider for twenty years. They took rocket fuel to start a bonfire, and it blew up the block.
- ashalhashim 1y agoThe ideal business co-founder has to be strong in distribution AND eliciting product feedback. This is why the “MBA types” and ex-McKinsey consultants fare so poorly - they’re used to companies spending loads of money to hear what they think. As an early-stage startup founder, nobody gives a shit about your product and no one wants to hear what you think. Your job is to identify where demand is highest in the market and then turn that demand into dollars. They also need to be excellent communicators who understand or at least appreciate how much goes into building products. For those reasons, the best business cofounders in my experience, are former salespeople (for b2b startups), demand generation marketers (for b2c), and product managers.
- mannyv 1y agoReally, the business side is responsible for sales, investment, and maybe product. But if the business side can't sell or raise money then they're worth;ess
- ljw1001 1y agoEveryone is less valuable than they think, especially in a tech startup
- j45 1y agoVery true, unless they're growing as fast as needed, and in advance of need.
- crazygringo 1y agoI don't agree at all. Not even with the premise that "there are significantly more business guys looking for tech guys than the reverse". There are a lot of business and tech guys and most of all of them are pretty clueless when you randomly meet them in "gatherings". But a valuable business co-founder brings extensive domain expertise, a network of people, sales skills, management skills, and fund-raising talent. There's little point in arguing who is "more" valuable -- the business side or the tech side. They're both critical to have. For some reason, this post equates the "business side" to the person with the "idea". But that's a strawman. Having an idea doesn't make you a "business" co-founder. Being a business cofounder means having a experience and talent on the business side of things. And a good business co-founder generally doesn't have a lot of trouble finding good tech people, because that's one of those business skills that they're good at...
- frenchmajesty 1y agoHey, OP here. I view it like this: if you were to take all technical people on the market for launching a startup and plot them on a distribution to find the "valuable in early stage" subset, you would find that 35% are good enough to get a startup off the ground. They don't need to be extraordinary programmers, just good enough but with a lot of drive.* However, for non-technical folks that are on the market, the distribution is worse. Only the top 10% ~ 15% actually have sufficient abilities to pull it off. The remaining fall into the archetype I wrote about here. The caliber for what's in the market is skewed thus the technical person has to be a whole lot more picky than the other way around to avoid ending up with a dead weight. [*]: This excludes specialized skills like Deep Learning or chemical bio-engineering, etc...
- novaleaf 1y agohow timely. a few days ago I had a meeting with two non-technical founders wanting to make some cloud based finance software. The double whammy, is that with the powers of ChatGPT on their side, they honestly thought they figured out the big architecture problems and were very unhappy at me pushing back at their design decisions. They wanted me to validate their ideas, not ask what the core user scenarios were (to figure out what tech was needed for an MVP)
- w10-1 1y agoThe value of a business co-founder lies in their ability to build business relationships and extract value from them. The value of one founder to another lies in complementary skills and perspectives engaging start-up issues in a productive way, which usually means deep levels of mutual understanding and trust -- which can be antithetical to business relationships and personal comfort. So: hard. The CEO/COO split reflects the difficulty of scaling this. Is the solution to talk early? Maybe, or maybe that interferes with trust-building. The key thing I believe (here and elsewhere) is to avoid projecting what you want or fear into what you have. If it's important to success, validate it. For that, it helps to have people willing and able to be honest and truthful, particularly about unknown unknowns -- even if it is otherwise their mandate and mission to project confidence and gain trust.
- Gimpei 1y agoSomebody has to manage the business relationships and go out and sell. Somebody has to be in charge of marketing, payroll, and PR. Somebody has to be the public face of the company, out networking and attending trade shows. If you’re a technical founder and all this sounds like fun to you, then yeah, a non-technical cofounder would not offer much. But there’s something to be said for having more time to put your head down and build.
- edg5000 1y agoWell said. If the company is built around a certain specialism, the specialist will want to spend most of your time there, because that is where most value is created per hour. But many of the other things are critical, but happen to be very time-consuming. Such as traveling around. So in some teams you end up having one person do this specialist work while the other can focus on the more time-consuming things. I think you worded it much more elegantly, I'm just repeating what you said.
- n_ary 1y agoThe article reads… interesting. A business depends on its demand, competition, scale, operation costs and numerous other factors. If the product is a tech, a technical founder can have immense impact on future success but marketing, customer acquisition, sales, networking, fund raising and other huge headaches are often burdens carried by non-technical counter part. Of course, the person building something from a vague idea to life wields magical power, but the other aspects of business are more so important. As an engineer myself, I can see 500 ways I can improve things at my employer’s business, but while I have a technical vision, the non-technical founders of the business has broader picture and what I may wish to spend time optimizing might just be a pocket change issue not worth solving. We technical folks undermine the mountain of difficulties of marketing and sales as well as interacting with people to convince them to part with their money. Of course, I have seen a fair share of over confident wanna-be founder who would just be next trillionaire if someone would build the 10000th Airbnb clone but for pets so they could sell it and give 5% equity to the builder because their idea was the main thing, but in broad sense of things, tech is just a means to an end for a successful business and simply building is not the 100% of execution step.
- saucymew 1y agoGreat points. Good founders are on both sides of selling and building. If you don't believe in sellers, you've never worked with good ones.
- belinder 1y agoI'd love to build something from scratch but don't have a lot of ideas, where do you find a business co-founder?
- edg5000 1y agoAt networking events.
- triceratops 1y agoThe entire article can be boiled down into: a "business" co-founder is someone who brings in business. Otherwise they're the "idea guy" and idea guys are worthless.
- vjvjvjvjghv 1y agoA business cofounder who actually goes out selling and puts in the same effort and time the tech people do is worth a lot. Unfortunately not many business guys are like that. It seems that they get taught in business school that they are the leaders and the tech stuff is just secondary.
- esafak 1y agoIn the B2B case, if the co-founder knows the industry and has connections to potential customers, that is very valuable. A business degree per se is not.
- wenbin 1y agobesides speaking good english, what else do non-technical folks bring? maybe a good family name? /s
- totalhack 1y agoWell, pretty much everyone is less valuable than they think! I've bootstrapped and sold two startups, first time with 5 (!) equal cofounders and second time with 3. I've learned a lot along the way, obviously some of that through mistakes of my own. Have my cofounders been perfect? Heck no -- one lacks the same level of drive, the other is less trustworthy (always multiple irons in the fire kinda guy). But we all have strengths, are all generally better off together, and have the combined skill set to run super lean. Even if you think you can do some things better alone, you can never do it all, and that grind will take quite a toll. Related: over the years the topic of going into business with some of my best friends has come up, and I always say I would never do that. Running a fast-moving, high stakes business with multiple founders involves a lot of tough conversations and occasional relationship strain. My business partners are business partners first, friends second, and I think that's important to consider if you really value a friendship.
- mtlynch 1y agoThis article seems AI generated, at least in part. The opening image incorrectly refers to Erlich Bachman from Silicon Valley as "Erik." OP goes on to claim: >Paul Graham wrote in 2008 that Sam Altman was the best fundraiser he’s ever seen in his 30+ years in the valley. Sam was just 23 years old at that time! That's not what the linked article says. That post has a single paragraph about Sam Altman that says he's good at fundraising but never says he's the best pg has ever seen[0]: >Sam Altman has it. You could parachute him into an island full of cannibals and come back in 5 years and he'd be the king. If you're Sam Altman, you don't have to be profitable to convey to investors that you'll succeed with or without them. (He wasn't, and he did.) Not everyone has Sam's deal-making ability. I myself don't. But if you don't, you can let the numbers speak for you. Also, Graham was 43 when he wrote that essay, so he hadn't spent 30 years in Silicon Valley. Viaweb was based in Cambridge and Graham lived in Cambridge at the start of YC. I don't think Graham even moved to Silicon Valley until 2009, five months after the post OP claimed was based on his 30 year tenure there.[1] These errors are either due to AI hallucinations or lazy writing. I think the better article on this topic is Jeff Atwood's "Cultivate Teams Not Ideas."[2] [0] https://www.paulgraham.com/fundraising.html https://www.paulgraham.com/fundraising.html [1] https://web.archive.org/web/20170306095108/http://old.ycombinator.com/ycca.html https://web.archive.org/web/20170306095108/http://old.ycombi... [2] https://blog.codinghorror.com/cultivate-teams-not-ideas/ https://blog.codinghorror.com/cultivate-teams-not-ideas/
- DonHopkins 1y ago>Sam Altman has it. You could parachute him into an island full of cannibals and come back in 5 years and he'd be the king. The eating human flesh part rings true.
- jongjong 1y agoA non-tech co-founder can bring value in two ways; their social networks and deep market domain knowledge. Finding a good niche and refining a concept to find market fit isn't easy. As a tech guy, it's often not clear where the business value is. I recently implemented a feature for which I didn't see the full value initially. Once it was done, my co-founder said something like "This feature will make our target audience's eyes pop out of their heads." I can actually see it now but it wasn't clear to me before, yet it was always crystal clear to him as he himself fits within the target market. Anyway we'll see where this goes, there are a lot of factors at play but in any case, it's nice to have that degree of certainty that yes, we're addressing a genuine need. If your co-founder isn't within the target market then you're basically just guessing what users want and that's a bad approach. Sometimes it's more complicated than that though, and that's when you need social networks. For exampls, I've built solutions in pure tech (dev tools) but it's very different. Dev tools is a weird market because it's heavily monopolized by big tech and the target audience (developers) have little say over what tools they get to use on the job. So the fact that I'm in the target market doesn't actually add much value there. Even if the target audience loves something, it doesn't necessarily translate to sales. You have to have experience with developer tools from both a corporate and non-corporate perspective to understand that.
- bjornsing 1y agoI’m not sure it’s fair to say Zuckerberg’s only advantage over the Winklevoss brothers was his engineering skills. I think he quickly understood the whole dynamics of that potential business and had a more clear vision. Being able to digest a lot of seemingly disparate information (e.g. how college students responded to the “hot or not” prank) and create a compelling vision along with a path to get there, that’s both very hard and very valuable. But I do agree with the overall sentiment that these ex-McKinsey “business co-founders” often lack the most valuable skills. I’d even go as far as saying they are generally quite bad “idea guys”, in the sense that they are more Winklevoss than Zuckerberg. I even have a sneaking suspicion that Europe is so far behind the US in the startup game partly because the “ex-McKinsey guy on top” anti-pattern is the social norm here.
- jokethrowaway 1y agoAbsolutely agree with this article! My startup days are more than a decade ago but even then it was already well known - hence why tech founders with a bit of experience stay far away from these people. The best part of the article: > [...] you should demonstrate it in one of two ways that are relevant to your venture: > Generate a big waitlist (> 1,000) for B2C play > Get > 20 businesses to sign an LOI for B2B play Ideas are cheap. This is the business MVP worth spending 50% equity on and worth investing your time to build the tech prototype. My best tip to handle business guys pestering you with ideas is to say "Great idea, bring me some clients and I will build the solution, then we can revenue share". I usually never hear from them after this.
- realprimoh 1y agoThe real problem with most "business co-founders" is that they are lazy and don't put in effort. Full-stop. I've seen this happen with enough of my peers that a "business co-founder" is never called a "business co-founder", but rather an operator or salesperson.
- jillesvangurp 1y agoYou don't want clean separation between co-founders. They should overlap in skills and be multi disciplinary. Having a tech founder that can't talk to customers or a business person that doesn't understand what the company makes or sells is not a great recipe for success. That's two people that probably can't even talk to each other. That's not a team. I've learned the hard way that being a CTO means I need to talk to customers and it's one of the more important things I do. There's nobody more qualified in the company to explain what we do and how we do it than me. I don't initiate the meetings and I don't close the deals but having access to me is an important part of the process. It reassures the other side that we are bona-fide, can actually solve their problem, and they'll often do the same and bring in operational people on their side in follow up meetings. Once you have direct lines of communication like that, it becomes a lot easier to close the deal. Also, being exposed to that means I learn what customers need, want and expect. No ivory tower is going to produce that kind of insight. It allows me to adapt to what is needed rather than me trying to imaging what it is they might need based on whatever filtered down version I might get from a business person. There is no substitute for first hand information. And that works both ways. Business people without a connection to the product aren't very useful. They'll try to sell stuff that isn't there and they'll undersell stuff they don't even know is there. I've seen both happen. If you sell something that isn't there, you set up a deal for failure. You are misrepresenting the product and that's going to cause disappointment. If you don't sell what's there, you shoot yourself in the foot. Especially if it's something the customer would have liked to have. But business people are great for validating product ideas and trying to imagine how the business side would work early on is a good idea.
- siva7 1y agoIt really baffles me that people here don't realize that co-founders should be multi-disciplinary, so all should be able to do some kind of (!) business and/or tech part at least. A clear separation of skills would be a red flag for me that this team operates in an outdated mode. It's not 1990 anymore. If you're the business guy but don't value enough or even hate the tech work, I wouldn't believe in the company.
- aosaigh 1y agoThis is crazy. I’m a technical cofounder of two businesses and in both cases the product would be completely dead on arrival if it wasn’t for the business cofounder. They intimately understand the business landscape and have all the contacts and context required to find customers.
- anovikov 1y agoThe most numerous kind of people there, are nontechnical people who think they are technical, and nonbusiness people thinking they are business. Sometimes both at same time. Clowns. When you do custom development, these make up the majority of clients and they are the best clients to work for.
- braza 1y ago> As you can imagine, this is highly unattractive to skilled engineers who know their worth. No one sane wants to leave a high-paying cushy job to work for (not with) a bossy guy while battling the already intense stressors of Entrepreneurship. I can relate to that. I am creating a small product and more than the salary, I want to escape 9-5 because I want to exercise product and technical agency that I do not have in my current job, and going from that to not have an increased level of agency working for someone, especially for a co-founder.
- yapyap 1y agoGreat blogpost with some nice insights. Though I had to roll my eyes at the “inventing AGI” part. Also it’s Steve Glass not Steve Grass and when a word ends in an s sound you don’t have to add another s after the ‘ when making it possessive. So it would be “Steve Glass’ idea” instead of “Steve Glass’s idea”
- deleted 1y ago[deleted]
- friendlyprezz 1y agoTrue but lions share requires teeth
- Falimonda 1y agoA good rule of thumb I picked to from Founders at Work is that the idea person gets a 5% bump on equity, but no more than that.
- apercu 1y agoMy first and second "start ups" (90s) were peopled by very technical people and no "professional class" (e.g., HR, BizDev/Sales, etc.) beyond finance. I joined a third as an executive and it, too was missing HR and Sales. We added sales (later HR, sigh) and it was (eventually) transformative. My point is that you can have the greatest technical team and lack of sales and shitty toxic culture will mean no growth/stagnation/running out of cash. You can also be (this is probably the default state) a pure MBA-play where you are a "sales driven organization" that has shitty product and shitty technical culture. You can rarely have a successful business (unless you are large enough!) without some degree of both. So stating that "business cofounders" or "technical cofounders" are less valuable/overrated reads like low effort click bait that resonates with really inexperienced "professionals".
- bitbasher 1y agoLast summer I met two cofounders to take the leap as a potential founder. I wanted an equal equity split among the founders. They wanted to split the equity like 40/40/20. That 20 would have been me, the only technical founder building the entire product. I walked away.
- ghc 1y agoOk, but technical co-founders in tech startups are also less valuable than they think (as this blog post shows). In reality there are four critical skillsets (outside fundraising) for a new tech venture: Operations, Sales, Product, and Engineering. I've seen plenty of startups with a heavy focus on product and engineering flail about because they suck at operations, product, or sales. The harsh truth is your CEO better be excellent at one of Operations, Sales, or Product, and your CTO better be excellent at one of Sales, Product, or Engineering. And if your CEO isn't competent at operations, you're going to need someone who is. Dealing with HR, accountants, investor relations, lawyers, contracts, HR, and all that stuff is a big job that's hard to completely outsource. Overall, if your founding team isn't at least competent in all four areas, you've got a gap that will be difficult to fill unless one of the founding team is willing to step up and learn that area fast. Sales (or marketing, for consumer apps) might be the exception, because in my experience everyone on the founding team will wind up needing to learn it early on.
- nostrademons 1y agoWhat stage of the startup’s lifecycle? When it’s just a couple founders in an apartment, there are really just two key skillsets you need or want: sales, and then engineering for a tech-heavy startup or operations for a tech-lite startup. Product is a distraction at that point: the product will emerge as you talk to and acquire more customers. It’s very helpful if the sales cofounder has a keen product sense so they can scale up the company as it grows, and it’s helpful if the eng/ops cofounder is pretty fluent in the other competency. But buttoning down operations at a company whose primary product is software is usually a waste at the founder stage; things change so often that anything you systematize becomes obsolete. And great software for a company whose primary product is an app or website that requests some manual, physical work is also often a waste. As the company grows past a few dozen, then you need to get the missing core competencies that you mention.
- ghc 1y agoI'm generally speaking of the stage right after a startup closes an institutional seed round. Across 75+ such investments over the past 10+ years, I've seen gaps in each of those areas be catastrophic. It definitely doesn't require "a few dozen employees" to mess up. Especially on the operations side, I think engineers underestimate the amount of stuff there is to do. Have a distributed team? Welcome to state taxation hell. Have some pilots? You're going to have to deal with a lot of NDAs, cooperation agreements, onerous contracting requirements, building trust by connecting advisors (but not using them too much), etc. Mess up your banking and miss payroll? Your best employees will leave. Fail at reference checks during hiring and hire someone who results in a sexual harassment allegation? Your investors will have your head. I think you're also misunderstanding what I mean by the product skillset. There are plenty of founders out there who can write amazing backend code, but couldn't deliver a usable product to their customers if their life depended on it. Sometimes that's ok, but most of the time being able to deliver a useful product can work even if your backend engineering is lacking -- not so the other way around. Ideally your technical co-founder can do both, but sometimes, especially when all the founders are engineers, a product-oriented CEO and an engineering-oriented CTO can work really well. While sales is important, it really should be all the founders learning it, and good investors will go through great pains to help, either by sending founders to "sales school", recommending specialized advisors, or even pitching in themselves, using their connections to get you in the door at "big logos". In my experience, having a founder whose primary skill is sales can either be a positive or negative, depending on what else they bring to the table. If they bring nothing else, it's usually a negative.
- therealzrealest 1y ago[flagged]
- grahamgooch 1y agoI’m sure you’ve heard this. Rough pre rev valuation! Every engineer +$500k Every MBA -$1m.
- vr46 1y agoJeepers, I worked on two startups where I met a “business” person (first was a finance-type, second was a doctor, and we (I) proceeded to do all the work in gathering requirements, building prototypes, etc etc. In both instances, neither of the “ideas” people had any experience of being in any kind of project, and both wanted to discuss equity way too often. And in the event, neither of them as CEO did a blind bit of work. Classic management-by-walking-around. When I suggested to the second one that we might want to find an actual CEO he went nuts and started raving around how he had done all the work of setting up the company and coming up the idea - reader, there was nothing on paper, he hadn’t written anything down, he just wanted to explain it and have everything magically happen.
- Loxicon 1y agoI have been on both sides. And I agree. I have been a "business co-founder" for many years. I learned to program at a professional level 5 years ago. Today, i spend most of my time as a "tech-co-founder". Now that I am on the tech side (and argubaly, product development side), my value is through the roof. Here is what I mean: - The business co-founder types will convince you that "selling" the product is the main thing. They are right. But sales starts with WHAT you build. That is, with product development. What you decided to build and what you are able to build is very much a part of the marketing. - Selling a well positioned product (where position starts during product development) is much easier that 'force-raming' your product to people who do not want it. 'force-raming' is the main marketing skill most people have. - Ideas mean absolutely nothing. - Marketing is important but it's not hard to learn the important parts. In fact, I can give it to you right now: (1) start your marketing at product dev time. Decide which specific problem you will solve, then solve it, (2) Find a community to share your finished MVP to them. Don't just spam the community, join it for a while, make friends, chat, add to the conversation and (3) refine the early product with the early users from said community. Then supercharge marketing with some ads (FB or Google). ^^ this is the 0-1000 user plan. And developers can do this without a "business co-founder"