
How to actually solve the technical co-founder proglem - rmason
https://medium.com/@nbashaw/how-to-actually-solve-the-technical-co-founder-problem-7cf49e54e930#.2vac09vue
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TuringNYC
@nbashaw expanding on my earlier comment, there is also a moral hazard issue.
The non-technical co-founder who has put in no initial investment is
incentivized in the short term to squeeze out as much value as they can, since
they have no skin in the game. I've actually seen this happen multiple times,
but examples of squeezing out value could be: demanding more and more changes
since the labor is free, scope creep, pushing for more features before sales
start. It is just a bad setup -- all equity owners should have equal skin in
the game so decisions are made in the best interest of the firm. "Free" equity
causes bad behaviors.

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nbashaw
Thanks for posting, @rmason!

Author here - I'd love feedback / questions from HN.

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TuringNYC
@nbashaw I agree with your conclusion, but I wish you explained better why "it
hardly ever works out." The reason of course is that being a technical co-
founder is a raw deal unless non-technical co-founders are putting in their
fair share.

The key problem here is opportunity cost: a reliable programmer can easily
make $60k to 200k+ full time. If you want them full time for free, they are
essentially "investing" that much into your startup. If you are envisioning
they work part-time, just scale down accordingly. Full time or not, that is a
pretty sizeable investment from the programmer, way larger than most Angel
investments. The problem here is -- what are _you_ (the non-technical co-
founder) investing for your share of the equity?

Things most programmers wont consider as Investments: Idea? No, ideas are a
dime a dozen. There are millions of ideas available for free, you dont deserve
all the equity just for coming up with an idea.

Vision? Don't say vision, most ideas are not visionary and have already been
done. If you truly are a visionary, you probably have a track record, some
history of wins, so why not just invest money in that case. If you don't have
any track record of wins, then anyone can be a visionary. Here are some
visions: flying cars, robot chefs, the list is long. I'm giving away visions
for free!

Business Skills? No go...problem here is your investment would usually come
__later __. We need to know what skin you have in the game now. If the
programmer is making an investment right now, you need to figure out what
investment you are making right now. Otherwise, you are just a "business guy"
who is sitting on the sidelines taking no risk and asking programmers to take
all the risk on your behalf.

Things that Would Excite Programmers (wish you mentioned these in your
article):

Pre-sales. Now we're really talking! Can you show kick-starter pre-sale?
Signed purchase orders? That really proves your worth, and can be your
"investment" contribution.

Money? Now we're talking. Fine, dont pay the programmer, but show some skin in
the game: incorporate and seed the company with money. Money perhaps that will
be used for ads, business development, etc. How much depends on the "free"
talent's going rate, how much they would work, and how much equity you are
giving them. If the programmer you are getting for free makes $175k/yr and you
need them for 6mo for 20/hrs a week, they are essentially "investing" $44k
into the business. Suppose you plan to be a co-founder with them equally,
sharing equity 50:50. Then you should also invest $44k into the business.

Track record. That is the best. If you have a proven, verifiable track record
of sales, wins, and success then people will easily buy into your vision. For
example, i'd work on Elon Musk's next idea for free, no question. But you
likely don't have this...if you did, then you wouldn't be worried about money.

Recruiting a technical co-founder is not impossible, but you need to show
equitable skin in the game and investment. If you truly are a "business guy"
you should be able to do some from the second list, realistically #1 -- pre-
sales or purchase orders. If all you offer is visions and ideas or
unenforceable promises of future sales effort, then you will only attract
foolish programmers and they will probably quit half-way.

