5 ms·

I 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 b

I 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 ago
Partnerships 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 ago
    I 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.
eezurr 1y ago
Hmm, if it were me, I would have asked how his 80% share would have made my 20% a good investment [than all the other options]. It's all about what each of you are bring to the table. It's possible he priced the tech side perfectly AND being the best option available to make you better off.
- lucasyvas 1y ago
  There’s zero chance this would ever be a fair split. They know nothing about building technology so are never in the right. This happens often enough that most startup accelerators pre-flag it as criteria to not invest in founders (with an out of balance equity split).
  - JumpCrisscross 1y ago
    > They know nothing about building technology so are never in the right I’ve easily seen more start-ups fail because the technical co-founder got pedantic about something with zero commercial relevance than I have where the non-technical founder rolled over their tech team. Mostly because the latter fail early while the former can sort of look like it’s not a trash fire for a little bit longer. As you say, the unequal split is a red flag. Not the direction it leans.
    - aspenmayer 1y ago
      > I’ve easily seen more start-ups fail because the technical co-founder got pedantic about something with zero commercial relevance than I have where the non-technical founder rolled over their tech team. Can you think of examples of the opposite? There are a few variables here for technical/business/commercial and fail/succeed so I won’t write them all out, just curious what you have seen to be honest.
  - randysalami 1y ago
    Maybe he has privilege and lots of connections? Some people have doors open for them just because of who they are and there is value in that.
JumpCrisscross 1y ago
Unless someone is putting cash on the table, or one partner is full time and the other is not, there is zero reason not to split founder interests equitably. (Even in the cash state, the better play is vesting, not an unequal split out of the gate.) If you want an unequitable split, hire an employee. If you can’t (or won’t), you’re not the hot shit you think you are.
- dgs_sgd 1y ago
  > Unless someone is putting cash on the table, or one partner is full time and the other is not, there is zero reason not to split founder interests equitably. When he asked why I thought 50/50 was fair, this pretty much sums up what I said. I'd be happy to take an 80/20 split with an industry insider or celebrity, someone who's guaranteed to attract buzz and attention. But he wasn't that guy.
  - JumpCrisscross 1y ago
    > with an industry insider or celebrity, someone who's guaranteed to attract buzz and attention Even then, I’d argue no. 50/50 to start. Performance-based options that get them to 80 if they deliver on certain things.
  - slt2021 1y ago
    should just ask him: what do you think stops me from taking your idea and implementing it myself? I will hire another MBA type of guy for 20% equity to do the work you wanted to do and keep the 80% to myself. flip the negotiating table
    - JumpCrisscross 1y ago
      He’s already showed his cards. Partnerships are based on trust, not (explicit) threats. If you’re both approaching the dais locked and loaded, call off the wedding.
  - fuzzfactor 1y ago
    Trust is important. But beyond that, a good partner might be one where you can first successfully try to come up with an arrangement that you would each be delighted with at the 50/50 point. Without any adversarial attitude, what can really work is that kind of baseline, which can be negotiated away from, but also returned to without disdain. There has to be a sense that each person at the baseline would generously actually be putting in 60% for the foreseeable future and love it because it was still an equal partnership and you were getting 120% accomplished consistently. Ideally you want to build consensus not by trying to limit contributions to keep from putting in too much, nor valuing other contributions for less than they are. When it is 50/50 it's more likely to be harmonious when both partners step up to the plate simultaneously and try to put in more than their fair share when needed, and see the other partner as an over-contributor just like themself. Like what if somebody thinks they're hot and can raise a million within one year, or less if you have something tech ready to deploy? Or they say they can sell your product through the roof. You could make that a contingency they would be proud to achieve or they would have to understandably not be up to their share. If you came to a tentative agreement like that, that you were both very happy with at 50/50, all you would be doing next is planning to "start your engines" soon. If the potential partner comes back a couple days later with a $4 million commitment within a month by selling some property or something, and it's for real, you will probably re-negotiate. The contingency would be over in a month then, and you would be flying. This wouldn't be too bad if it was non-adversarial from the get-go. You could end up at something way different that's quite fair anyway. Remember each engineer is worth a million in the right situation, now with their $4 million it's a 4:1 imbalance, so 80/20 might be easy to migrate toward then so you can still go forward.
_bin_ 1y ago
Very typical. I've run into cases where an "idea guy" basically says "you do all the product and tech half, I'll do marketing and strategy." Which is dumb, because sometimes I'm legitimately better at the strategy half too. Generally these people want ridiculous equity splits of that nature. It's worth anyone technical's time to build skills in strategy, marketing, finance, etc. The technical co-founder always gets screwed and suffers from a general lack of respect. In my opinion, it's usually unwise to take positions where you're strictly the technical co-founder, or where you're marketed as the same.
- JumpCrisscross 1y ago
  > worth anyone technical's time to build skills in strategy, marketing, finance, etc. This leads to jack-of-all-trades types. Good non-technical folk exist. They’re just not easy to find for obvious reasons (same as good technical founders who can see the forest for the trees). A good technical founder dilutes their comparative advantage e.g. negotiating with suppliers and prioritising payments ahead of a close.
  - _bin_ 1y ago
    It can, to be sure, and it's not ideal. But the perception that technical co-founders typically get gypped hard is very warranted. This is a thing where you can often still get a reasonably good result with a technical co-founder, not as good as were he solely focused on product/tech stuff, but enough that his individual outcome may be higher than letting the biz guys run it. Obviously good biz guys somewhat mitigate this but finding those is easier said than done.
    - JumpCrisscross 1y ago
      > the perception that technical co-founders typically get gypped hard is very warranted I’d love to see the data. Most start-ups fail. For any given category of founder, there are therefore more stories of disasters than successes.
      - 1y ago
pier25 1y ago
> wanted an 80/20 equity split in his favor. If they're so confident in their value they should just find some money and pay for the development of the product to a freelancer or employee.
- slt2021 1y ago
  they are so confident they are offering to pay with 20% of equity (basically vapor), instead of hard cash. imagine the chutzpah
- arresin 1y ago
  They may be a little surprised how much that costs. And then the running of it and the bug fixing and the feature expansion. It may be a little… “surprising”. My advice is to get idea guy to price it out haha.
spamizbad 1y ago
Yeah never take anything less than a 50/50 split. During the initial fundraising rounds (seed, Series A and maybe even into B) you're also going to be doing just as much lifting trying to get a deal done while also doing your regular day-to-day engineering responsibilities. Maybe in a world where it's 3 founders you can side-step this responsibility but at point you're not just the CTO you're also the de facto COO while your partners are trying to get a deal done.
pj_mukh 1y ago
You made the right call. I would never invest in this company, and neither would YCombinator [1] [1] https://www.ycombinator.com/library/5x-how-to-split-equity-among-co-founders https://www.ycombinator.com/library/5x-how-to-split-equity-a...
yibg 1y ago
Fairness of the equity split aside, it also indicates he doesn’t see you as an equal partner. Rather you are seen more as an employee that is going to be working essentially for free. So he probably also won’t value your input and contributions in the venture either.
LouisSayers 1y ago
> wanted an 80/20 equity split in his favor I would have been tempted to take the idea, partner with someone else and run hard with it in spite. I can't stand people with this mindset, and it's fair game if that's the cards they want to play.
verelo 1y ago
I’m running a business that’s currently doing around 32k a month at ~85% margin after 2 years in operations, no funds raised to far. I have a friend who is an MBA and only held corporate roles up until now. I’ve been running companies my entire life, and had one exit that was 42.5M US. We discussed partnering up, and when i mentioned a buy in or 10% equity split (with no buy in) or some combo of the two, he backed off pretty quick. Turns out he expected something around 40%-50% with no buy in. To me this is just unintelligent? Especially from an MBA.
- ZeroTalent 1y ago
  MBA doesn't mean that much by itself.
  - jongjong 1y ago
    I would say that MBA means nothing by itself. It's 100% about their social network. MBAs were a great way to network as a lot of elite kids got MBAs. An MBA is just a proxy for something else which isn't necessarily there...
    - Rastonbury 1y ago
      When we hire MBAs it means nothing except a minimum standard of work ethic and communication skills and usually (but not always) ability to grasp and breakdown problems. What they usually lack is expertise/applicable experience, we know this when we hire them, but any non-MBA candidate with relevant experience is preferred to an MBA. Like I said we don't expect fresh MBAs to know deeply about software but you do get pompous types who don't have the humility to realise they are out of their depth
  - cruzcampo 1y ago
    MBA is a red flag.
    - jackgavigan 1y ago
      Previous discussion: https://news.ycombinator.com/item?id=6662847 https://news.ycombinator.com/item?id=6662847 :-D
Ancalagon 1y ago
I had this exact scenario happen on the ycombinator cofounder matching of all places. Except the other cofounder (non-technical) wanted it 95/5. Yeah, I stopped all contact that same day. That project never got launched.
- TuringNYC 1y ago
  >> I had this exact scenario happen on the ycombinator cofounder matching of all places. Except the other cofounder (non-technical) wanted it 95/5. I've gone to some of these just out of curiosity and it seems like people on the hunt for suckers. Having been thru this myself and seen the drama play out with friends from back in the dot-com days to now -- CO-FOUNDING IS LIKE MARRIAGE You cannot just match to someone. There has to be a low-stakes dating period, an engagement period, and then "marriage". You have to be able to walk away early on w/o extensive entanglement. The best co-founder is someone you've known for a long time in various semi-tense scenarios, where you can evaluate their ethics under pressure. This ideally means having worked together or done many projects together.
- notfromhere 1y ago
  You should have countered with 95/5 in reverse, because if you can't code, nothing is getting done anyways.
  - Ancalagon 1y ago
    Maybe, if only for the schadenfreude. But the initial offer was so bad I immediately no longer trusted them and no longer wanted to work with them.
d357r0y3r 1y ago
You've gotten good at telling the machine what to do. He's gotten good at telling people what to do. The latter turns out to be a much more effective way to build power and influence.
- avmich 1y ago
  The point is he's not, as he can't prove.
- tonyedgecombe 1y ago
  >He's gotten good at telling people what to do. Not in this case as it seems he didn't get the outcome he expected.
- deleted 1y ago
  [deleted]
TuringNYC 1y ago
>> I 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. I'm constantly approached by "business guy" with deals like this. Here is the truth -- even 50/50 isnt enough because technically, the tech-co-founder is often doing all the upfront work and taking all the upfront risk. The business-co-founder gets a free option to do work (or not) afterwards. All upside and little downside. IMHO good business co-founders are worth gold and make their worth obvious. They already have POs lined up, they have partnership agreements already in the works, they have VCs willing to invest based on past performance. Perhaps they already tried the business with some overseas teams doing POCs. Perhaps the business co-founder already has exits or a successful business and is willing to pay the tech-co-founder some nominal amount to show skin in the game. Those are all good signs. If those arent the case, and the "business-co-founder" is sitting back while the other is hard at work coding a prototype -- you dont need a co-founder. Just be the CTO+CEO and hire the "business" work yourself! In the absolute worst case, i've seen a "business-co-founder" continue to push the definition of MVP more and more and the "tech-co-founder" seeing the sunk-cost of the work they have put in, continues to ever-expand the MVP. Meanwhile the "business-co-founder" gets months or a year of free labour with a free option to participate -- or not.
osrec 1y ago
Good you walked away. In my experience, the heavy lifting in a tech start up is, by definition, the tech. The "idea guys" rarely understand that it's the execution that makes an idea valuable. Sales are important, but are a bit of a crapshoot. You can't consistently sell trash, no matter how good a salesperson you are. The guy was happy to roll the dice, while using your mental energy. Great deal for him, but not so good for you. You risk the burnout, stress and pressure, while he feeds you requirements and deadlines, and essentially becomes your manager. In my younger days I got a lot of similar proposals, but thankfully could see right through them from day one. Bootstrapping as a solo founder was the harder, but ultimately more rewarding route for me.
- notfromhere 1y ago
  The business side needs to have subject matter expertise in the market, running an org, fundraising, marketing, etc. 'ideas guys' are pretty worthless without that. 80/20 is an insane proposal; 50/50 feels reasonable, but I 100% agree with you that the technical side is way more crucial than the business side, since under $10m in ARR your biggest issue will be making the tech work well enough to attract customers.
- nand_gate 1y ago
  You can consistently sell trash, you just need a captured market.
  - osrec 1y ago
    Yeah, but that rarely lasts (I am assuming the absence of corruption etc etc). If you set the bar so low with your product that it's easy to outperform by a 10x margin, then you present your customers with a huge incentive to move away.
  - blackqueeriroh 1y ago
    And captured markets no longer exist
moralestapia 1y ago
>have this conversation [...] as early as possible Yes, it could be one of the things you bring up on the very first talk you get around this, and it's much easier to do it early than anytime later. "Hey, this thing you're telling me about, do you want my opinion or are you telling me because you want me to be a part of it?" (if: want to be part of it) "Nice, have you thought about how much each one of us will get? I always prefer to do equal splits." If equal splits or very close to that I might do it. If not, the deal would have to be exceptionally good from the start, e.g. "we'll give you 10% of a post Series A company that is already valued at XX million".
caseyy 1y ago
From my experience, about 1-2 in 10 co-founders are like that. They bring negotiation and networking to the table and demand compensation that no hardworking and honest co-founder would ever ask. I think Sturgeons law applies to co-founders, and if you haven't spoken to at least 20, you are likely talking to the crap ones. Not all crap ones demand excessive compensation, there are other types of crap. But there is a huge difference between the ones that will be good for business and the others.
jollofricepeas 1y ago
Yeah. The ignorance comes from lack of experience and it happens often on both sides. Engineers think they deserve a big equity package for writing CRUD apps. “Businesspeople” with no startup experience, never raised money and never worked in sales think they have value. If both co-founders have no prior startup experience then they both need to put in the same amount of money and split equity 51/49 or 60/40 (while considering dilution). No once can build a meaningful company alone so you need to have a team and that team must have a servant leader willing to break ties. It’s only inexperienced people that don’t know / understand this.
csomar 1y ago
Why don't you start the idea on your own now? Or find another co-founder? You owe each other nothing.
piltdownman 1y ago
Because you framed it as a Technical Partner needing a 'Business Guy' and approached someone from the post-2000 Cohort who uses the Wozniak/Gates power-dynamic as a best-practice case study (or RIM's example of Mike Lazaridis/Jim Balsillie). The fact that you spent months refining the idea and building out prototypes is irrelevant or even detrimental to your position. In fact it may have represented a delivery anti-pattern depending on how far along you were to realising your value proposition as a product. Engineers to build MVPs are a dime a dozen. Why were you wasting time as an individual contributor when positioning yourself as a (co)-founder? Why would a prospective C-Level Business Strategy Leader see you as anything other than an Engineer with a MVP and no GTM, previous exits aside? This is a common scenario for those who frame themselves as 'Technical Founders' - they end up being perceived as a cost-centre incapable of realising any sort of a GTM strategy, and as such are equity-weighted accordingly.
77pt77 1y ago
In his mind he was being generous since chatgpt could do your work for free. I guarantee you this was his rationale.

j45 1y ago

Partnerships 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 ago
  I 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.

eezurr 1y ago

Hmm, if it were me, I would have asked how his 80% share would have made my 20% a good investment [than all the other options]. It's all about what each of you are bring to the table. It's possible he priced the tech side perfectly AND being the best option available to make you better off.

lucasyvas 1y ago
There’s zero chance this would ever be a fair split. They know nothing about building technology so are never in the right. This happens often enough that most startup accelerators pre-flag it as criteria to not invest in founders (with an out of balance equity split).
- JumpCrisscross 1y ago
  > They know nothing about building technology so are never in the right I’ve easily seen more start-ups fail because the technical co-founder got pedantic about something with zero commercial relevance than I have where the non-technical founder rolled over their tech team. Mostly because the latter fail early while the former can sort of look like it’s not a trash fire for a little bit longer. As you say, the unequal split is a red flag. Not the direction it leans.
  - aspenmayer 1y ago
    > I’ve easily seen more start-ups fail because the technical co-founder got pedantic about something with zero commercial relevance than I have where the non-technical founder rolled over their tech team. Can you think of examples of the opposite? There are a few variables here for technical/business/commercial and fail/succeed so I won’t write them all out, just curious what you have seen to be honest.
- randysalami 1y ago
  Maybe he has privilege and lots of connections? Some people have doors open for them just because of who they are and there is value in that.

JumpCrisscross 1y ago

Unless someone is putting cash on the table, or one partner is full time and the other is not, there is zero reason not to split founder interests equitably. (Even in the cash state, the better play is vesting, not an unequal split out of the gate.) If you want an unequitable split, hire an employee. If you can’t (or won’t), you’re not the hot shit you think you are.

dgs_sgd 1y ago
> Unless someone is putting cash on the table, or one partner is full time and the other is not, there is zero reason not to split founder interests equitably. When he asked why I thought 50/50 was fair, this pretty much sums up what I said. I'd be happy to take an 80/20 split with an industry insider or celebrity, someone who's guaranteed to attract buzz and attention. But he wasn't that guy.
- JumpCrisscross 1y ago
  > with an industry insider or celebrity, someone who's guaranteed to attract buzz and attention Even then, I’d argue no. 50/50 to start. Performance-based options that get them to 80 if they deliver on certain things.
- slt2021 1y ago
  should just ask him: what do you think stops me from taking your idea and implementing it myself? I will hire another MBA type of guy for 20% equity to do the work you wanted to do and keep the 80% to myself. flip the negotiating table
  - JumpCrisscross 1y ago
    He’s already showed his cards. Partnerships are based on trust, not (explicit) threats. If you’re both approaching the dais locked and loaded, call off the wedding.
- fuzzfactor 1y ago
  Trust is important. But beyond that, a good partner might be one where you can first successfully try to come up with an arrangement that you would each be delighted with at the 50/50 point. Without any adversarial attitude, what can really work is that kind of baseline, which can be negotiated away from, but also returned to without disdain. There has to be a sense that each person at the baseline would generously actually be putting in 60% for the foreseeable future and love it because it was still an equal partnership and you were getting 120% accomplished consistently. Ideally you want to build consensus not by trying to limit contributions to keep from putting in too much, nor valuing other contributions for less than they are. When it is 50/50 it's more likely to be harmonious when both partners step up to the plate simultaneously and try to put in more than their fair share when needed, and see the other partner as an over-contributor just like themself. Like what if somebody thinks they're hot and can raise a million within one year, or less if you have something tech ready to deploy? Or they say they can sell your product through the roof. You could make that a contingency they would be proud to achieve or they would have to understandably not be up to their share. If you came to a tentative agreement like that, that you were both very happy with at 50/50, all you would be doing next is planning to "start your engines" soon. If the potential partner comes back a couple days later with a $4 million commitment within a month by selling some property or something, and it's for real, you will probably re-negotiate. The contingency would be over in a month then, and you would be flying. This wouldn't be too bad if it was non-adversarial from the get-go. You could end up at something way different that's quite fair anyway. Remember each engineer is worth a million in the right situation, now with their $4 million it's a 4:1 imbalance, so 80/20 might be easy to migrate toward then so you can still go forward.

_bin_ 1y ago

Very typical. I've run into cases where an "idea guy" basically says "you do all the product and tech half, I'll do marketing and strategy." Which is dumb, because sometimes I'm legitimately better at the strategy half too. Generally these people want ridiculous equity splits of that nature. It's worth anyone technical's time to build skills in strategy, marketing, finance, etc. The technical co-founder always gets screwed and suffers from a general lack of respect. In my opinion, it's usually unwise to take positions where you're strictly the technical co-founder, or where you're marketed as the same.

JumpCrisscross 1y ago
> worth anyone technical's time to build skills in strategy, marketing, finance, etc. This leads to jack-of-all-trades types. Good non-technical folk exist. They’re just not easy to find for obvious reasons (same as good technical founders who can see the forest for the trees). A good technical founder dilutes their comparative advantage e.g. negotiating with suppliers and prioritising payments ahead of a close.
- _bin_ 1y ago
  It can, to be sure, and it's not ideal. But the perception that technical co-founders typically get gypped hard is very warranted. This is a thing where you can often still get a reasonably good result with a technical co-founder, not as good as were he solely focused on product/tech stuff, but enough that his individual outcome may be higher than letting the biz guys run it. Obviously good biz guys somewhat mitigate this but finding those is easier said than done.
  - JumpCrisscross 1y ago
    > the perception that technical co-founders typically get gypped hard is very warranted I’d love to see the data. Most start-ups fail. For any given category of founder, there are therefore more stories of disasters than successes.
    - 1y ago

pier25 1y ago

> wanted an 80/20 equity split in his favor. If they're so confident in their value they should just find some money and pay for the development of the product to a freelancer or employee.

slt2021 1y ago
they are so confident they are offering to pay with 20% of equity (basically vapor), instead of hard cash. imagine the chutzpah
arresin 1y ago
They may be a little surprised how much that costs. And then the running of it and the bug fixing and the feature expansion. It may be a little… “surprising”. My advice is to get idea guy to price it out haha.

spamizbad 1y ago

Yeah never take anything less than a 50/50 split. During the initial fundraising rounds (seed, Series A and maybe even into B) you're also going to be doing just as much lifting trying to get a deal done while also doing your regular day-to-day engineering responsibilities. Maybe in a world where it's 3 founders you can side-step this responsibility but at point you're not just the CTO you're also the de facto COO while your partners are trying to get a deal done.

pj_mukh 1y ago

You made the right call. I would never invest in this company, and neither would YCombinator [1] [1] https://www.ycombinator.com/library/5x-how-to-split-equity-among-co-founders https://www.ycombinator.com/library/5x-how-to-split-equity-a...

yibg 1y ago

Fairness of the equity split aside, it also indicates he doesn’t see you as an equal partner. Rather you are seen more as an employee that is going to be working essentially for free. So he probably also won’t value your input and contributions in the venture either.

LouisSayers 1y ago

> wanted an 80/20 equity split in his favor I would have been tempted to take the idea, partner with someone else and run hard with it in spite. I can't stand people with this mindset, and it's fair game if that's the cards they want to play.

verelo 1y ago

I’m running a business that’s currently doing around 32k a month at ~85% margin after 2 years in operations, no funds raised to far. I have a friend who is an MBA and only held corporate roles up until now. I’ve been running companies my entire life, and had one exit that was 42.5M US. We discussed partnering up, and when i mentioned a buy in or 10% equity split (with no buy in) or some combo of the two, he backed off pretty quick. Turns out he expected something around 40%-50% with no buy in. To me this is just unintelligent? Especially from an MBA.

ZeroTalent 1y ago
MBA doesn't mean that much by itself.
- jongjong 1y ago
  I would say that MBA means nothing by itself. It's 100% about their social network. MBAs were a great way to network as a lot of elite kids got MBAs. An MBA is just a proxy for something else which isn't necessarily there...
  - Rastonbury 1y ago
    When we hire MBAs it means nothing except a minimum standard of work ethic and communication skills and usually (but not always) ability to grasp and breakdown problems. What they usually lack is expertise/applicable experience, we know this when we hire them, but any non-MBA candidate with relevant experience is preferred to an MBA. Like I said we don't expect fresh MBAs to know deeply about software but you do get pompous types who don't have the humility to realise they are out of their depth
- cruzcampo 1y ago
  MBA is a red flag.
  - jackgavigan 1y ago
    Previous discussion: https://news.ycombinator.com/item?id=6662847 https://news.ycombinator.com/item?id=6662847 :-D

Ancalagon 1y ago

I had this exact scenario happen on the ycombinator cofounder matching of all places. Except the other cofounder (non-technical) wanted it 95/5. Yeah, I stopped all contact that same day. That project never got launched.

TuringNYC 1y ago
>> I had this exact scenario happen on the ycombinator cofounder matching of all places. Except the other cofounder (non-technical) wanted it 95/5. I've gone to some of these just out of curiosity and it seems like people on the hunt for suckers. Having been thru this myself and seen the drama play out with friends from back in the dot-com days to now -- CO-FOUNDING IS LIKE MARRIAGE You cannot just match to someone. There has to be a low-stakes dating period, an engagement period, and then "marriage". You have to be able to walk away early on w/o extensive entanglement. The best co-founder is someone you've known for a long time in various semi-tense scenarios, where you can evaluate their ethics under pressure. This ideally means having worked together or done many projects together.
notfromhere 1y ago
You should have countered with 95/5 in reverse, because if you can't code, nothing is getting done anyways.
- Ancalagon 1y ago
  Maybe, if only for the schadenfreude. But the initial offer was so bad I immediately no longer trusted them and no longer wanted to work with them.

d357r0y3r 1y ago

You've gotten good at telling the machine what to do. He's gotten good at telling people what to do. The latter turns out to be a much more effective way to build power and influence.

avmich 1y ago
The point is he's not, as he can't prove.
tonyedgecombe 1y ago
>He's gotten good at telling people what to do. Not in this case as it seems he didn't get the outcome he expected.
deleted 1y ago
[deleted]

TuringNYC 1y ago

>> I 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. I'm constantly approached by "business guy" with deals like this. Here is the truth -- even 50/50 isnt enough because technically, the tech-co-founder is often doing all the upfront work and taking all the upfront risk. The business-co-founder gets a free option to do work (or not) afterwards. All upside and little downside. IMHO good business co-founders are worth gold and make their worth obvious. They already have POs lined up, they have partnership agreements already in the works, they have VCs willing to invest based on past performance. Perhaps they already tried the business with some overseas teams doing POCs. Perhaps the business co-founder already has exits or a successful business and is willing to pay the tech-co-founder some nominal amount to show skin in the game. Those are all good signs. If those arent the case, and the "business-co-founder" is sitting back while the other is hard at work coding a prototype -- you dont need a co-founder. Just be the CTO+CEO and hire the "business" work yourself! In the absolute worst case, i've seen a "business-co-founder" continue to push the definition of MVP more and more and the "tech-co-founder" seeing the sunk-cost of the work they have put in, continues to ever-expand the MVP. Meanwhile the "business-co-founder" gets months or a year of free labour with a free option to participate -- or not.

osrec 1y ago

Good you walked away. In my experience, the heavy lifting in a tech start up is, by definition, the tech. The "idea guys" rarely understand that it's the execution that makes an idea valuable. Sales are important, but are a bit of a crapshoot. You can't consistently sell trash, no matter how good a salesperson you are. The guy was happy to roll the dice, while using your mental energy. Great deal for him, but not so good for you. You risk the burnout, stress and pressure, while he feeds you requirements and deadlines, and essentially becomes your manager. In my younger days I got a lot of similar proposals, but thankfully could see right through them from day one. Bootstrapping as a solo founder was the harder, but ultimately more rewarding route for me.

notfromhere 1y ago
The business side needs to have subject matter expertise in the market, running an org, fundraising, marketing, etc. 'ideas guys' are pretty worthless without that. 80/20 is an insane proposal; 50/50 feels reasonable, but I 100% agree with you that the technical side is way more crucial than the business side, since under $10m in ARR your biggest issue will be making the tech work well enough to attract customers.
nand_gate 1y ago
You can consistently sell trash, you just need a captured market.
- osrec 1y ago
  Yeah, but that rarely lasts (I am assuming the absence of corruption etc etc). If you set the bar so low with your product that it's easy to outperform by a 10x margin, then you present your customers with a huge incentive to move away.
- blackqueeriroh 1y ago
  And captured markets no longer exist

moralestapia 1y ago

>have this conversation [...] as early as possible Yes, it could be one of the things you bring up on the very first talk you get around this, and it's much easier to do it early than anytime later. "Hey, this thing you're telling me about, do you want my opinion or are you telling me because you want me to be a part of it?" (if: want to be part of it) "Nice, have you thought about how much each one of us will get? I always prefer to do equal splits." If equal splits or very close to that I might do it. If not, the deal would have to be exceptionally good from the start, e.g. "we'll give you 10% of a post Series A company that is already valued at XX million".

caseyy 1y ago

From my experience, about 1-2 in 10 co-founders are like that. They bring negotiation and networking to the table and demand compensation that no hardworking and honest co-founder would ever ask. I think Sturgeons law applies to co-founders, and if you haven't spoken to at least 20, you are likely talking to the crap ones. Not all crap ones demand excessive compensation, there are other types of crap. But there is a huge difference between the ones that will be good for business and the others.

jollofricepeas 1y ago

Yeah. The ignorance comes from lack of experience and it happens often on both sides. Engineers think they deserve a big equity package for writing CRUD apps. “Businesspeople” with no startup experience, never raised money and never worked in sales think they have value. If both co-founders have no prior startup experience then they both need to put in the same amount of money and split equity 51/49 or 60/40 (while considering dilution). No once can build a meaningful company alone so you need to have a team and that team must have a servant leader willing to break ties. It’s only inexperienced people that don’t know / understand this.

csomar 1y ago

Why don't you start the idea on your own now? Or find another co-founder? You owe each other nothing.

piltdownman 1y ago

Because you framed it as a Technical Partner needing a 'Business Guy' and approached someone from the post-2000 Cohort who uses the Wozniak/Gates power-dynamic as a best-practice case study (or RIM's example of Mike Lazaridis/Jim Balsillie). The fact that you spent months refining the idea and building out prototypes is irrelevant or even detrimental to your position. In fact it may have represented a delivery anti-pattern depending on how far along you were to realising your value proposition as a product. Engineers to build MVPs are a dime a dozen. Why were you wasting time as an individual contributor when positioning yourself as a (co)-founder? Why would a prospective C-Level Business Strategy Leader see you as anything other than an Engineer with a MVP and no GTM, previous exits aside? This is a common scenario for those who frame themselves as 'Technical Founders' - they end up being perceived as a cost-centre incapable of realising any sort of a GTM strategy, and as such are equity-weighted accordingly.

77pt77 1y ago

In his mind he was being generous since chatgpt could do your work for free. I guarantee you this was his rationale.