

Ask YC: Sharing ownership with nontechnical founder? - silencio

I'm involved in my first startup (cry or laugh I can't decide yet), and we're planning on discussing how to share ownership (and other similar concerns) sometime next week, and I was hoping to get some advice from here beforehand. As far as I know, we'd be considering a CA LLC, we're a mix of self-funding and bootstrapping, and the startup is (mainly) a website.<p>Simply, there are three people, one is nontechnical and the other two would be doing all of the development and some of the nontechnical stuff as well. Between us two devs, the third guy who I brought in last is going to be doing most of the work and I'm going to pick up the rest (iPhone app anyone? :D ) and do all the leftover nontechnical miscellany..and I'm fine with a small share in exchange. But it's the nontechnical one who had the idea in the first place and is currently the sole source of self-funding by choice (piggybacking on her existing hosting and paying for domains and whatnot).<p>How do you deal with this kind of situation? How much weight should we be giving to the idea compared to the execution, which is most of the work but wouldn't exist without the idea? How much weight to give to someone funding everything, no matter how trivial it may be? It's pretty easy (to me) to determine how us two devs would be splitting it based on the work we'd be doing, but then when we have to consider all three of us it's hard to determine, and I don't know if an equal 3 way split would be okay with everyone (and I'd feel uncomfortable with that unless I were more involved...). Any insight would be much appreciated.
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mixmax
Split three ways evenly, it's the easiest and once you go down the slope of
differentiating the ownership it starts to become really complicated really
fast. You'll spend a lot of time nit-picking and a lot of "yeah but you have
more shares so you should do this" talk.

Besides, ownership only matters when you sell in which case there'll probably
be plenty for all of you. In the daily business you'll (I guess) all take the
same paycheck from the company. So it doesn't matter so much.

That's based on my experience anyway.

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davidu
I think this is a terrible idea. I definitely believe in the one founder
mentality. There needs to be one person who drives the vision, and a team to
execute on it.

If I was going to have two co-founders, I wouldn't consider offering the other
founders more than a 52% / 24% / 24% split, with one person clearly defined as
the leader (be it me or one of the other founders) and driver of the vision.

If you aren't comfortable with that from a voting standpoint, simply require
all important votes (sale of company, transfer of equity, dilution) to require
a supermajority vote. Lawyers have standard language that clearly define these
kinds of scenarios.

But 1/3 1/3 1/3 is just asking for trouble on minor details down the road when
one person needs to clearly be in charge.

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silencio
With 52% ownership of a web startup specifically belonging to a nontechnical
cofounder (she would be the logical "leader" with the vision) is that who
knows what will happen on a bad day. I've already shot down one suggestion of
hers because it was irrelevant to the service we were going to offer. While a
supermajority vote makes complete sense for important votes, 52/24/24 with the
two 24% to the developers would be impossible on the less important votes if
it was technical in nature and she just didn't get why they may be
problematic/impossible.

I'd feel a lot more comfortable with a 52/24/24 split if only she knew more.
But she's relying on us to provide everything design/development-related
without being fully knowledgeable about it, and without us she's dead in the
water.

~~~
davidu
She should be delegating all technical decisions to you. That's a part of
being a leader. It requires leadership and knowing when to trust and delegate
to your team.

