

Ask YC: Who is a founder? - reuven

I'm heading a small startup that's looking to get funding. Despite our lack of money, I've managed to recruit a programmer, a finance person, and a marketing person; we're moving ahead with development and marketing plans, even as we look for angel or VC funding. I have a separate agreement with each team member, giving them options in the company as well as some compensation if we get funding but don't work together. I'm happy with all of the agreements we've reached to date.<p>It's pretty clear that we need a graphic designer. We think that we've found a good and talented one, and she seems inclined to join us, once we negotiate exact terms. But she has asked to be described as a "founder."<p>Now, I was developing the business idea, including market research and technical analysis, for about a year before anyone else joined me. It's clearly my vision, including my overall marketing plan and technical architecture -- although clearly, there's no way that I could have gotten as far as I have without the other (amazing) people I've recruited. But we've now been working together since October, including meetings with each other, VCs, and angels. None of the other people have asked to be called founders; as far as they're concerned, it's fine for me to be the only founder.<p>My question is this: Should I call this designer a founder? Would that mean calling everyone else, who has been working with me much longer, a founder as well? Or should I just keep things as they've been so far?<p>My gut feeling is to keep things as they are, with me as the only founder. But if it's typical for all of the pre-money people to be called founders, then I'm happy to share the title. I just want to know what's typically done, assuming that there is any typical case.
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tyohn
My next statement might go against the grain of YC startup programmers but in
my opinion; Design should be at the core of the entire business... think
Apple. If you've found a great designer make her a founder. It could be the
best move you'll ever make.

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reuven
Good design will make or break our product; while we're doing a lot of cool
things, simplicity is key. I myself use a Mac, and had a NeXT machine oh-so-
many years ago, and agree that design is a key differentiator.

The question isn't whether the designer is a key person we need, but rather
whether joining six months after everyone else entitles her (or everyone) to
the "founder" title.

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sonink
I think what you are trying to do is extremely dangerous. 'Founder' is not
just a title, its also a role - that role does not exist in your startup -
understand that and let her also know the same. Otherwise you will just be
lying to her and both of you will figure out in sometime which could lead to a
major disagreements which is the biggest startup killer. If she is willing to
take as much risk with as much commitment you can offer her a huge percentage
of stocks which is something that she will value as much. Also, incase she
thinks that your setup is a good match and understands the extreme difficulty
of getting a committed startup team together she shouldnt have a problem with
it.

Getting a committed and talented team which can work together is the hardest
part of a startup.Everthing else almost always works out. Consider this the
biggest opportunity as well as the biggest challenge you face.

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cperciva
By definition, the "founders" of a company are the people who "founded" it. If
you join after the company is founded, you're not a founder. That said,
there's a lot of pressure to interpret this liberally: Early hires (such as
the designer mentioned) want to be called "founders" since it sounds far more
impressive, and potential sources of funding (YC included!) are happier if
people are described as "founders" because it suggests a greater degree of
commitment.

My personal view is that the set of "founders" should at very least be limited
by the set of individuals who have worked for a company while receiving any
cash compensation. If you're paying someone a salary plus stock options,
they're an employee as far as I'm concerned.

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reuven
For the record, everyone working with me on this startup is currently getting
options, plus the promise of a job when (not if!) we get funding.

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ALee
First, unless you have a prototype, you shouldn't be worried about this. It's
this type of stuff like LLC v. C-Corp that startups focus on and they
shouldn't.

Second, think of founders as your YC group (if you were to apply). If she
would be part of your YC group (the group that is the core of the company at
this stage), then she's a founder. Usually being a founder also implies a
class of stock.

Third, you should always hire people smarter and give them compensation that
makes them happy and aligned with your company. If she's worth it to moving
the company foward, then go ahead and call her "founder." She's got to be in
it for the long haul though. Meaning getting paid peanuts banking on those
options/equity.

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Todd
I think if anyone is willing to work with no income for options, it's OK to
call them founders. Anyone pre-VC is basically a founder anyway. There will
never be any doubt about who the 'real' founder is. In the end, it's more
important for you to know that you're the majority shareholder than for others
to know who the founders are. You get to sit on the board and you get to have
the most control.

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skmurphy
If you are unsuccessful and the only founder it won't matter. If you are
successful and there are many founders, it won't matter. Since you are paying
everyone with equity only at this point (at least as I read your post and
comments) it's entirely legitimate to describe everyone as founders from my
perspective.

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petesmithy
"I am the Co-founder of a growing company" is fine. You really don't need to
get hung up on this.

Call her Queen Amidala if it'll let you get back to creating value. Sounds
like you've got a well-balanced team, an idea you all believe in, everyone's
happy with their shareholdings - move on!!

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iamelgringo
Does she want a founder's share of the company or just the title? If she wants
a larger cut of the shares, it seems like you'll have to decide if you're okay
with that or not.

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aarontait
I personally think that founders have a more sentimental value. These are the
people that strongly believe in the vision of the company. They will be their
working with you when the cash has dried up (or even before you have funding).
If the people that are working with you where to stop getting paid (in cash),
would they still be their? If not, I would consider them to be employees, not
founders.

