
Ask HN: Joining as 3rd co-founder, seeking advice - throwaway011235
I am a somewhat specialized engineer, currently working at a leading startup in the field.<p>A couple of months ago I was approached by an entrepreneur and his protege. They&#x27;ve been working together for a couple of years, and have just started a new startup in the same field.<p>They&#x27;ve asked me to join as technical co-founder with 20% equity, but are reluctant to give me the third board seat. The entrepreneur will be the chairman of the board, and the protege will be the CEO.<p>I&#x27;ve tried to start companies in the past; while they were commercially unsuccessful, I did learn a lot about customer discovery and product development. This entrepreneur has previously built a company to nine figures in revenue and IPO, and I think the protege would make a good CEO.<p>While doing my diligence, however, I happened to speak with the founder of another company that this entrepreneur was involved in at the early stages as an investor. This founder advised me not to work with this person, but wouldn&#x27;t tell me why.<p>I&#x27;m really excited about building the technology, and I believe they could sell it (they have a large network of potential customers), but I&#x27;m a bit worried that something may be amiss.<p>Therefore, I have the following questions:<p>1) Does this seem like a fair arrangement?
2) Is there anything that I&#x27;m missing and&#x2F;or that I should be worried about? 
3) What other advice can you give me?<p>Thanks HN!
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brudgers
[random internet remarks]

    
    
      20% equity != 20% control
    

Taking the offer means accepting that the business people don't rate you as
someone worth sharing business control. That may or may not mean that you are
someone worth sharing business control...i.e. their assessment may be
inaccurate. It may be an intolerable blow to your ego. But that's the world
described in your question (there might be more to it, but that's all I've
got).

If the offer comes with a market rate salary, it smells like an above average
deal and probably reflects a board that doesn't want you distracted. It also
reflects a board that has adequately capitalized the company for operations
(and that's the metric of the "business person" in a company). A market rate
salary is plausible compensation for the risk inherent in not having business
control. If the salary is below market rate, it smells closer to the "two
business 'guys' hire a programmer" end of the developer-as-entrepreneur risk
spectrum.

There's nothing amiss. It boils down to whether or not you trust the two
partners, your objectives, your current career and economic position, and your
assessment of the risk. Good luck.

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rahimnathwani
"Is there anything that I'm missing and/or that I should be worried about?"

\- Does the company already have any assets (tangible or intangible) or any
revenue? (This would help you to value what the existing founders have already
done.)

\- How will all founders' shares vest over time? (see
[https://avc.com/2018/03/founder-vesting/](https://avc.com/2018/03/founder-
vesting/) for a sense of what can go wrong if founders' shares don't vest)

\- Will any/all of you be drawing a salary? At a discount to market? (market
salary + 20% equity is very different from zero salary + 20% equity).

\- Are there different classes of shares, or just one class? (i.e. are the
shares you will get on the same footing as the shares the existing founders
have)

"This entrepreneur has previously built a company to nine figures in revenue
and IPO"

Can you talk to any co-founders or very early employees of that company? Did
they get rich together?

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notahacker
By the sounds of it the first thing you might be missing is how good your
current role might be...

You're clearly not being considered as an equal partner, which depending on
what you're considering walking away from, whether the others have already put
funds and sweat equity into the project and how relatively unique your
respective talents actually are (and when/if you can reasonably expect to
start earning a decent salary) might be acceptable or might not. You might be
able to negotiate the equity percentage but probably not that starting
assumption. The job title split also sounds suspiciously like the "chairman"
might not be doing as much day to day work as you and the CEO, though again in
some circumstances he might be backing it heavily enough for that not to
matter. (It's probably difficult for you to provide much more detail without
it being identifying though)

Seems perfectly reasonable to ask prospective cofounders about their
experiences with all the startups they've previously founded or invested in,
and possible his answers on that (or even just the tone of how he talks about
people he's worked with and backed in the past) could be revealing,
particularly if, unbeknownst to him, what you're really trying to find out is
why someone he invested in thinks you should steer clear.

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treis
>are reluctant to give me the third board seat.

I wouldn't be too hung up on this. If push comes to shove it sounds like you'd
lose every vote 2 to 1 anyways.

~~~
muzani
On the other hand, it seems unwise for them to not give OP a vote, because it
means no tiebreaker vote. Unless they're planning to give it to investors
later which could be worse.

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relaunched
A known quantity is offering you a 20% stake, that's huge. However, they
aren't offering you control; those seem like the terms. Previous success is
correlated with future success - so, the opportunity is sounds great. If you
can't live with that, don't do it.

The terms are great, but it doesn't sound like what you want. Realistically, a
board seat is a huge ask, and 3 people from the company on the board, isn't
typical, especially at this stage.

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dmarlow
Equity seems a bit low. I'd push for equal shares across the board. Is this
fully diluted percentage?

Try to get to know them better and form your own opinions of them.

------
JSeymourATL
> This founder advised me not to work with this person, but wouldn't tell me
> why.

This could be a Giant Red Flag, or simple personality clash.

If you can, follow-up with the Founder for a confidential 1:1.

