
Ask HN: New startup, how much equity for the idea - halfmatthalfcat
How much equity should the originator of the idea be offered, assuming they do nothing else except conceive of the idea? Also assuming there is one other technical co-founder who does all of the development, devops, marketing, sourcing out other tasks, etc.
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natalyarostova
There is a huge gulf between "Facebook clone, but for Babies." And "my idea is
based off of research I did in my graduate program plus a lightweight non-prod
quality library I wrote in Python"

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btian
But prototype is more than an idea though

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danieka
I think it makes sense for everyone who’s active in starting a company to get
an equal split of the equity. Starting a company is as much about the work
you’re going to put in as it is about what you’re bringing to the table. It
also makes sense to eliminate any areas for friction, you’ll probably have
plenty of friction as it is.

If the idea person isn’t going to be a part of the team I would actually be
hesitant to give them any/much equity. But that the depends on the idea.
Trivial ideas are a dime a dozen, but some ideas require deep knowledge about
specific fields of industry, in such a case the idea is worth more.

Also, what is your relationship with the idea originator? Friendships are
worth more than equity.

Anyway, I would probably give no more than 10% for just the idea. If the idea
person wants more I would try to get them involved in the company or simply
not start the company. There are a ton of great ideas to be had.

By the way, every time I tell someone I’m an app developer they say they have
a great idea for an app. I rode with one cab driver the other day who said he
had an idea for an app and “it’s like Uber but with one difference, but if I
tell you you’ll steal it and become a billionaire”. Sure pal, good luck with
that.

Edit: spelling

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malux85
What’s your idea? Tell us and we’ll tell you.

That was a joke by the way, but a half hearted truth into saying ideas are
worthless, it’s execution that’s important.

Also - typically you see a technical and non-technical founders the non-
technical will take on anything they are capable of doing - e.g. marketing, or
at least managing the marketing (doing it too initially)

If you’re just giving an idea and are then hands off, I’d maybe give you 5%
equity. Maybe.

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halfmatthalfcat
Yeah, the non-technical founder essentially handed the idea off to the
technical founder and was like "hey, here's an idea, if it makes money, throw
me some equity". They don't want to participate or be involved in any
meaningful capacity and I expect that they simply would like to make some
money if the idea does end up going somewhere simply for having the idea.

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claudiulodro
If an idea is literally all they bring to the table and it doesn't have a
patent or anything around it, I would give them something like an advisory
role and 2% equity.

If they don't like this, just take the idea and start the company without them
if it's a good idea. A person with an idea that cannot execute on it has no
leverage.

I don't know why you would be generous with this person. They will have no
risk and no skin in the game, so why give them a big reward?

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halfmatthalfcat
Yeah, I want them compensated in some way but I feel like anything more then
10% is way too much. They're of the type that they simply want to sit back and
"get rich" but aren't technically-minded and I get the sense that they don't
really want to be involved.

It wasn't so much "let's start a company" but more, hey here's an idea, if it
takes off, throw me some equity.

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ada1981
There is a cultural fiction in SV that gets repeated that “ideas are
worthless”.

Folks also love to say “execution is everything.”

Keep in mind, this idea tends to favor capital and insitutionalized power.

Executing a bad idea isn’t valuable and can cost you lots of money, time and
opportunity.

Since most companies fail to make a profit, I suppose we could argue that most
execution is worthless too.

So ideas can be seen as an exponent of sorts. An idea with a greater than 0
value will be useful for a team that can execute. Execution being equal, ideas
are everything.

But not only that, the people and contexts that create great ideas are even
more valueable.

Creativity is a resource that is always needed.

Uncreative people don’t like this at all, so they often try to devalue the
power of ideas.

Of course they are also the ones who will try to execute on them.

Smart people understand the value of both. They also understand their own
worth. They don’t need to devalue or belittle others in order to create
partnerships.

There are plenty of brilliant idea generators who are paid handsomely simply
for generating ideas and licensing them to existing companies.

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dominotw
zero

