
Ask HN: How to deal with a prospective third co-founder? - metachris
We are two founders about 1000 hours into our startup (currently starting private beta), and are currently looking for a third co-founder.<p>We try to find someone who has (1) technical or business skills and (2) someone who is motivated, good to talk with and who will pull the project with us (we  aim at a public release in 4 to 6 months).<p>Of course it's not easy to find a reliable co-founder if you don't know the person very well, so we figured if we find a promising candidate we could do something like this:<p>(1) Have a one month 'trial' period which either party can quit at any point. After the first month have a reflexion meeting and, if necessary, extend to a second trial month. If the new person quits during the trial period for whatever reason, we'd compensate his/her work with money.<p>(2) If everything works out and we have a third founder in the team, we'd start splitting shares equally based on the amount of work everyone puts into the project over the next 3 to 5 years.<p>One idea how we could split shares based on the work: Have a web-based tool where once a week everyone enters the hours (and topics) spent during the last week. If three people put 1000 hours a year into the project over five years, it's roughly 15000 hours in total. This would suggest 1% for 150 hours.<p>How would you handle such a situation?<p>Any ideas, suggestions, experiences would be highly appreciated!
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nedwin
My advice from little experience is to split shares equally three ways rather
than based on number of hours. The startup should be everyones primary focus
regardless of hours logged. If your business guy swings a huge contract that
makes your business but has put in fewer hours does he still get a small
percentage of the business?

Secondly I would vest all shares. After your trial if you decide it's all
likely to work create a vesting schedule that starts after 1 year and
progresses until the company is equally shared between the three of you. You
might also have acceleration clauses in the case of selling the company or
other milestones.

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metachris
Thanks, that's a valuable advice! And I fully agree that the raw numbers of
hours is not a very good metric.

But, from a pessimistic perspective, I'm unsure if 1 or 2 months trial will be
enough to be sure about that person, and to make such a strong commitment. One
worst-case scenario could be that the third co-founder works passionately on
the project for 4 or 6 months, and then for some reason looses interest /
motivation / time.

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csallen
If you have a 4-year vesting schedule with a one-year cliff, then anyone who
walks away before 12 months have passed leaves empty-handed. Anyone who walks
away before 48 months have passed will be giving up at least a little.

However, I think vesting only protects you from co-founders who quit. I'm not
sure how you can deal with situations where a co-founder simply stops
contributing (or only contributes an extremely minimal amount). HNers, and
advice in this area?

On a related note, splitting the company equally might not be the best
decision. People are different, and as a result will contribute differing
amounts. Later down the road, you don't want anyone to feel like he's doing a
disproportionately large amount of work. Sit down and agree on what you expect
from each other in terms of time, commitment, and effort, and make sure the
equity is split fairly based on that.

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rianjs
Time spent and value created are only barely correlated. Anyone who's worked
for someone besides themselves is keenly aware of this. ;)

This is true even in process-oriented jobs, though to a lesser degree than
creative jobs.

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ig0rskee
From my experience, complicated earn-out structures are a nuisance. They are
hard to set up fairly (a lot of edge cases) and even harder to deal with if
things go south.

I second what nedwin said about vesting & equal split. Instead of focusing on
putting equity value on every hour spent, think of the desired outcome (great
company equally split by three cofounders) with a lot of time allocated and a
kill switch in place.

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kljensen
Agreed with @nedwin on gut feeling to make him/her nearly equal. Hours
definitely not an accurate measure of value add _or_ your progress to date.

Heard this once: 90% of zero is zero. You want a split that incentivizes your
partner to make your part worth millions and the best way might be to give
them more.

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bjonathan
Define how the shares are split at the beginning. If you gonna track each week
what each of you have done, it's gonna create lots of useless tensions.

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techiferous
"We try to find someone who has (1) technical or business (or design) skills"

You don't know whether you need a business person, a designer, or a developer?
Then the question to ask is why get a third co-founder at all? It will
complicate communication, equity, etc., so you should actually avoid a third
co-founder until you really _need_ them.

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metachris
The main issue is that we are currently 1.5 founders, actually. I am
developing the product and my co-founder is involved only half-time (~20 hours
per week). We make a very good team, but he just does not have more time to
invest, and I would need support really pulling the project. That's why I'm
looking for another founder, whether more focused on the technical or business
side.

A developer would be great for brainstorming, for building a technically great
framework, and for bringing motivation and inspiration to the whole project. I
would enjoy working more on the business side of things too.

A third founder with business skills would be great too -- we need to
incorporate and do a lot of different business related things such as risk
management and research into law and the kind of guarantees we can give to our
customers, amongst many other things. If someone else would focus on that I
would be more free to develop the actual product.

We can go forward with 1.5 founders as well, but it would be a lot more fun
with a third person, would increase the motivation, the speed of iteration,
and overall the chances for success!

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aepstein
It sounds like you need a new 2nd co-founder if you want to take this
seriously, not a 3rd.

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faramarz
I disagree. Three is better than two. no more, no less.

Look at Youtube as the perfect case study. Jawad, the thrid foudner, gave up
operation dutities togo back to school. he still advised, and was paramount in
the early stages of the company/product.

If the OP has already found one right partner (it takes more than just
chemistry), then losing that person may harm you and your business.

At a same time, a 3rd founder who is a specialist could really help you in
this situation. I don't think I can add any more value about that than it's
been already said here.

Goodluck and make sure to post updates as to your founder search.

