Reddit reviews The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup (The Kauffman Foundation Series on Innovation and Entrepreneurship)
We found 15 Reddit comments about The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup (The Kauffman Foundation Series on Innovation and Entrepreneurship). Here are the top ones, ranked by their Reddit score.
Princeton University Press
Join us over on /r/Entrepreneur and /r/smallbusiness I own a small product design company, I'm solo with part time helpers right now.
Your question is like a whole book. I would recommend The founder's dilemmas http://www.amazon.com/The-Founders-Dilemmas-Anticipating-Entrepreneurship/dp/0691158304
and E-myth revisted, Founders Dilemmas doesn't tell you what's right but outlines the choices for why founders choose to structure a new company and the pro's and cons.
For an idea like yours I would look to finding a manufacturing partner company that will build on contract, then look to crowdfuning or smoke screening to build up enough pre-orders to become self sufficient. I would always test an idea before I think it's a blast. As with everything in life it's usually driven by marketing and positioning rather than tangible quantitative performance or features.
Best of luck, feel free to PM me if you have any questions. I'm roughly looking for a partner too but my sales don't justify it yet.
Sorry for being in this situation.
For others concerned about starting a company with others, I'd highly recommend that you all read the book The Founder's Dilemmas beforehand. It's really important stuff.
Yes, you are being unfair unless you are paying them market wages for developing in addition to the 5%.
I'll assume though, that currently you have $0 in revenue and you are paying $0 in salaries.
In that case, giving 5% in exchange for their labor is robbery. Even if they agree to it, once they realize their tragic mistake, you'll lose them and find yourself with half-written software.
I recommend you review:
http://www.amazon.com/The-Founders-Dilemmas-Anticipating-Entrepreneurship/dp/0691158304
and
http://www.amazon.com/Slicing-Pie-Funding-Company-Without/dp/0615700624
The former addresses a lot of the concerns I mentioned while the latter proposes an alternative approach based on contribution over time.
I've been through a number of startups and a number of different founders over the years and some were excellent while others, not so much. I've learned through experience that finding a suitable founding partner is far more complex than it first appears.
This is the book I wish I could have read before my first venture. I highly recommend reading it!
The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup
Probably the best thing you can do is start networking a lot because you'll never find a partner if you're not meeting people. Of course most of this can be done online, at least initially.
Your question is very important. Especially for early stage or even first-time founders, who don't have the right support network yet. There are many more resources like Facebook groups, and youtube channels that you can leverage to learn more about entrepreneurship, specific skills, and industries. Let me know if you're looking for something more specific. I'd be more than happy to give you additional pointers.
 
Here is a list of resources that I found very helpful on my journey:
 
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Reddit: I was impressed with the quality and depth that you can get by asking meaningful and targeted questions in the right channels such as r/entrepreneur and r/startups.
 
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All of the podcasts provide a great learning experience through case studies, founder interviews, and startup pitches. Believe me when I say that whatever challenge you're having someone more experience can very likely help you.
 
 
 
 
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Buy her a copy of The Founder's Dilemmas. It is a very well-written study from Harvard Business Review about how and why all the things happening at your girlfriend's company lead to disaster.
As an engineer, it blows my mind that so many engineers are so terrible at business.
As a senior engineer living in Silicon Valley, I get pitched to all the time by people with "an amazing idea" that nobody has thought of that will change the world. Any engineer worth their weight has heard the same thing left and right.
The fundamental problem is that these "idea guys" think a good idea is all that is needed and the only thing getting in their way of a multibillion dollar valuation is some engineer that won't build this one little thing for them.
The problem is this: successful startup are not just about the idea but also the execution. You've probably heard this all the time how idea is worthless, execution is everything. But what I'm talking about is executing on the business and customer development side. Executing on technology is easy, building a successful business is more than just building the app, it's also about building the business side of the company.
If you follow any of the Lean Startup methodologies, the last step of building a startup is building the product. You don't start building anything until you have paying customers. Prior to that, it's all about Minimally Viable Product to prove a concept. A MVP does not need to be an app; there have been very successful startups that started out with paper mocks as MVP and manual processes as MVP. Even Uber's MVP is a fraction of what it ended up being.
So, I won't laugh you out of the room; I am extremely patient with every pitch that I hear. However, if you want me to take you seriously, bring something to the table. Find me 10 customers that have paid or are willing to buy this product that you are going to release. If you cannot find 10 paying customers* to validate your idea, it tells me a number of things:
So, my advice if you want to be taken seriously, bring something to the table:
Honestly, as an engineer, the two groups that are hard to find are good product managers and UX designers. As an engineer, I'm looking for someone to complement my skills. I am looking for someone that can hustle, do customer interviews and market analysis of the target market. Tech is easy, finding the product market fit is hard.
Anyway, I recommend two books if you are serious about building your concept:
You should both sign a PIIA. This ensures that all of the IP you're creating belongs to the Company. I was a solo founder to start and signed one myself, even though the idea was mine. This will protect your Company in the long run. http://www.knowingstartups.com/protecting-a-tech-companys-technology-and-other-employment-terms-proprietary-information-and-invention-assignment-agreement/
I had a similar situation and had the difficult conversation. Get your incorporation docs and then have a discussion about how much equity makes sense based on what you each bring to the table:
You can read about how to have this conversation in a structured way in Founder's Dilemmas
https://www.amazon.com/Founders-Dilemmas-Anticipating-Foundation-Entrepreneurship/dp/0691158304
Get incorporated asap so you can set up your restricted stock agreements and then you'll each start vesting your equity. Recommend the standard 4 year vesting schedule with a 1 year cliff. Communicate each of your expectations regarding roles and responsibilities.
Have your cofounder (and you) sign an offer letter or contractor agreement with your terms of work. Set written OKRs and if they're not meeting them, you can fire them.
My first "cofounder" worked w me part time and I had the structured convo and she agreed to 5% for her was fair based on my rationale. She didn't make it a year but as soon as we raised money I paid her back pay as a contractor.
The second woman who started working with me asked for 10% and also started as a contractor. She didn't join me as a FTE until after I'd raised money. I took 70%.
So to her it was fair bc it was my idea, I had taken on all of the risk, put in my life savings, and raised money etc. but our agreement was she would work 30 hours per week and then once she signed, I started the "clock" on her vesting from her first date as a contractor.
I didn't ask her to step up as a cofounder until after we had worked together for 9 months.
FWIW this all happened in 2015. I am still the CEO and we are now worth $40MM. She's still my cofounder but her role will continue to change in the company as the needs of the company change (she knows this and is on board).
So, while these conversations felt super hard at the time, I'm grateful I had them and that we all agreed what was fair and why from a business side. It's good practice for more difficult conversations you'll have w your cofounder in the future, like if you need to hire over them. Everything you both do must be in the best interest of the company.
I hope you enjoy the book, it really helped me.
Be careful about your equity bc it becomes the most valuable thing you have. Open conversations help to squash resentment. You never know, maybe your cofounder doesn't expect 50% or perhaps they only want to work part time... or start later after you raise. There's no one "right" way to do it.
Very interesting as I'll probably be in a similar situation in terms of dealing with equity splits very soon. A few questions, how many other founders are there? How unique is your skill set and could they easily find someone else who can build a similar product? Coming from the marketing/business side, the reality is, products don't sell themselves and the success of a company depends more on it's ability to get customers than how great the product actually is. So the question is who is going to be the biggest contributor to growing the business and if that's you - you should be getting more of the equity. If it's the other founders, then they have more leverage. A good read is The Founder's Dilemmas, might want to check it out... http://www.amazon.com/Founders-Dilemmas-Anticipating-Foundation-Entrepreneurship/dp/0691158304/ref=sr_1_1?ie=UTF8&qid=1421213581&sr=8-1&keywords=founder+dilemma
While it's not related to real estate, check out Founders' Dilemmas by Noam Wasserman. It's not a page turner, but it definitely addresses a ton of the issues that come up in starting a new business that a founder faces. Noam looked at data from 10,000 startups and compared that to outcomes so it's not just stories (although it has that). One of my favorite take aways is that companies where the founders equally split equity failed at a higher rate than those with unequal splits. I won't spoil the explanation of why, but it's definitely worth a read!
A corollary to this would be the Founder's Dilemmas
I would be aware of the data used in this article. There is a "survivor bias" people aren't usually aware of - we only analyze success cases and not failures, and draw conclusions from them.
You can analyze 10 out of 20 successful startups and realize many have solo founders... but you might not be including the 150 out of 200 that had solo founders and also failed.
Professor Noah Wasserman released an excellent book called The Founder's Dilemmas (https://www.amazon.com/Founders-Dilemmas-Anticipating-Foundation-Entrepreneurship/dp/0691158304) where he presents research not very encouraging to startup founders. And his research included 1000 startups, if I'm not mistaken.
There are probably a lot of ways to answer this question, but here are some insights based on a combination of research and lived experience in a similar scenario.
First off, it's great you're at least thinking about this early. Plenty of people put it off in fear of conflict, due to naivete, or because they're too focused on other issues (which may or may not deserve priority). Having this conversation early is important since the longer you work the more expectations can be built around share size and the harder it is to negotiate a solution everyone is happy with.
Second, be wary of an even split. This might make sense if you both feel that you're both bringing an equal amount to the table, but you should both be sure of this. How you evaluate this is a personal choice. There are plenty of equity calculators out there (Foundrs.com has one that I've found pretty reasonable in some instances). A lot of this depends on how vital both of you feel your skills (and hard work) are to the success of the project. You may also get good feedback from others in this subreddit that have had to do splits in a scenario more similar to yours which may work just as well.
Another topic to think about is vesting. It may be unwise to pay out the shares immediately. Vesting helps make sure people stick around and that if they do leave early it's not as messy to buy back their shares so you can use that equity to bring in another person (if you still want to go forward). You can also tie vesting to things like milestones if you like.
Probably most important is that you split shares in a way both of you are comfortable with. Lots of people will say they're okay with a breakdown of shares to avoid having a hard conversation about money, but this can easily become a problem later on when someone feels unfairly compensated for their efforts. This can kill a company, no matter how awkward it may feel having a conversation (especially with a friend) about how much each of you are 'worth', it needs to happen to protect the future of what you're building together.
If you have time, I'd seriously recommend taking a look at the equity splitting portion of the book The Founder's Dilemmas.
I hope this helps. Best of luck to the both of you!
My businesses are not online. They make things!
I decided to work on them once I managed to get a bunch of angel investors interested on the first. That was the matter of getting a decent idea and putting a bunch of talent behind it.
I've got partners, yes. My partners bring skills I don't have, and expertise in domains I don't have. That isn't to say I know nothing, but they know a lot more.
A great book is 'The Founders' Dilemmas.' It goes through many of the problems you might face in starting your own business.
I highly recommend the book "founders dilemmas" https://www.amazon.com/Founders-Dilemmas-Anticipating-Foundation-Entrepreneurship/dp/0691158304/ref=sr_1_1?ie=UTF8&qid=1484509269&sr=8-1&keywords=founders+dilemma
It has a whole chapter devoted to equity splits and founder arrangements