

Thanks but No Thanks – Things to Avoid When Recruiting Co-founders - irfanm
http://grasshopperherder.com/thanks-but-no-thanks-things-to-avoid-when-recruiting-co-founders/

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danshapiro
I understand the spirit behind "don't nickel and dime me". But remember that
stingy is a trait that comes in handy for negotiating investments, supplier
agreements, pricing, and exits.

There's a crucial difference between someone who's stingy because they don't
value your contribution and someone who's stingy because they're cheap. Run
from the former, but you may find you like the latter once you're on the same
side of the table... which you will be for many years to come!

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jacquesm
The key distinction is 'are we making money of each other' vs 'are we making
money together'.

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raganwald
Never forget Rachel from Bladerunner. If a CEO offers you 1%, you aren't in
the business, packaging up your skills and selling them on to other investors
so the CEO can cash out while you stick around for your so-called options is
the business.

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raganwald
_If you offer me 1% of the equity, I’ll do 1% of the work. If you offer me 25%
percent, I’ll do 25%. If you offer me 60%, I’ll insist on only taking 25% and
I’ll work 24/7 for you._

My favourite line.

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aneth
I see this sentiment it it's non-sensical. You're going to join a start for
25% and put in a quarter effort? I don't think so. You're seriously going to
give up most of you're equity just to demonstrate your generosity? Nfw.

There is that nice story of the two cofounders who both tried to give the
other 60%. Ok maybe, but this 60/25 statement is just grandstanding. If you
would seriously do this you are too foolish to be a founder.

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raganwald
Refusing 60% equity is nothing like refusing free money. Think of it this way.
I start something. I come to you and give you 100% of it. 100%! You take it,
code, contacts, everything.

Now, you need a co-founder. Hey, what about me? What are you going to offer
me? You can pick any number you like, but the point is that if I really am the
best person to be your co-founder, you have motivation to offer me a
substantial stake in the going concern.

So don't think of the author as "giving away" equity, think of him as taking
100% equity and then granting the CEO and original founder 75% to motivate him
so as to maximize the value of the equity he keeps.

You might pick a different number, 50%, 49%, whatever, but you get the idea.

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aneth
That's interesting, but I think wrong. First, a founding CEO doesn't need 75%
versus 50% to keep them motivated. Second, if your are both going all-in, and
your partner thinks you are worth 60%, you'd better have good reason to think
you're only worth 25%. I could understand talking yourself down to 50/50 or
40/60, but 25%? That's makes no sense at all.

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raganwald
As I said, "You might pick a different number." I'm only arguing that
declining all the equity you are offered isn't a WTF in and of itself.

As for the specific numbers... I really couldn't say anything without knowing
the parties involved. Maybe these are completely fabricated to make a simple
point, which is that he doesn't want to be lowballed, and he isn't
outrageously greedy either.

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mcantor
Wow... the grass thingie on the bottom is so distracting that I almost can't
read the article with it there! Thank goodness for Chrome Dev Tools. Right
Click -> Inspect Element -> 'display: none;'

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ryanpetrich
Easier still: Right Click -> Inspect Element -> Delete key

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chc
Works in the Safari inspector too.

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jburwell
From the perspective a potential founder interviewing with a company, beware
of any partner who insists on maintaining their majority position --
particularly if you will be the third or greater partner. It good indication
you will not be a partner, but an employee. A second bad smell are companies
without revenue and no audited valuation that require a significant buy-in.
This behavior indicates a lack of the critical business acumen required to
succeed.

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jayzee
I have always felt that one of the saddest tragedies is that percentages have
to add up to 100.

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PakG1
Only in zero sum games. ;) OK, that was cheeky. :)

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carlgrimm
One jaded ex co-founder for sale! Wisdom does not need to come in such a
bitter form.

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EGreg
What if I offer you 61%? :)

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ohashi
I'll inventify more time to work for you.

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TheSOB88
Yawn - seen all this before.

