How to protect myself from uncommitted co-founders
Two of us came together to work on an idea for a web startup. We end up killing the initial product and a third person joined. A new product is built and launched.
It happens that I'm the technical cofounder and coded 80-100 hr/week building the product. The other two handle marketing and running the company but dont seem to be doing any real work, goes on trips and does not work on weekends.
We have neither incorporated the company nor had any formal legal agreements, just a casual agreement of 33% equity each.
Would you be concerned under such a situation, and what measures will you take to protect yourselves if your other cofounders are more involved in their marriage and daytime job?
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I think you answered yourself. Do a proper agreement and discuss the equity split and compensation with your partners. – Littleadv 12 years ago
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i am wondering if its normal for the coder to have a heavy workload and higher risks in the beginning and pass the baton over to the marketing and sales people as time goes on. – Nyxynyx 12 years ago
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As time passes by the marketing and sales get more engaged, but the technical people don't stop working, so do not expect your workload to reduce as theirs goes up. – Littleadv 12 years ago
3 Answers
There are few points you should always remember:
- The co founders who has the important business contacts( like buyers, retailers, Investors and clients) will be known as "your Organization". Nobody will know your existence if you never talk to anyone not related to your company tightly (e.g. regular customers, clients, outsource partners, etc.). Although you have worked weeks and weeks, people will know your friends as "your organization" and not you.
(e.g) I was a operation manager in xys and i was the founder too , later i included 3 partners A,B,C. Mr.A deals with clients and other third party people involved with the company. When there was a problem in the organization , Everyone pointed out Mr.A as hard worker and deserves more equity and that was a mistake since nobody knows who is working what and why ?!. - Don't worry about that, take leadership and start going for tours and get contacts and let people know you too. Talk to clients, partners and customers. Participate in marketing activities, etc.
- Ask them about their ideas, but implement yours. It will give you a social image between partners.
- Never let co-founders know that you're thinking this way (i.e. that co-founders are not putting as much effort as you). They may try to break the company and take legal actions, which will end up in disappointment, loss of money and valuable friends.
- Be a master. Try do everything once in a while. Code regularly as it's your part, but meet clients, go tours, sell and buy and participate in all activities that your co-founders do.
- When you take part in all activities and do things by yourself, they may ask you to do things and they won't do anything on their own (you gain influence here). So you do it or tell them to do things you want them to do (here you will become a boss, but never show it or behave like a boss).
- Wait until your company grows up and when work becomes so heavy that you need to employ more folks. Look to see if your co-founders are still interested. But whatever happens, before you incorporate decide who are the partners and who are not. And how much equity they deserve (33% or more/less). Be straight, but don't be money minded.
- This is very important: You're successful today because you're a team. If you had no such co-founders, would it be possible to achieve this level? Think 100 times before you take any decisions.
Good luck..
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I can't make any sense of your answer. I was going to edit the grammar to improve it, but I don't understand half of what you are saying. Can you please clarify your answer? – Zuly Gonzalez 12 years ago
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That is a bit harsh, it might not be perfect grammar but I understood his message :) – Ricardo 12 years ago
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@codebrain Agree with all of your points but the last two. Every co-founder needs to have their own tasks and get them done, if the amount of responsibilities between co-founders isn't equal, then the equity should not be splited equally. – Ricardo 12 years ago
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@Ricardo I'm serious. I wanted to fix it, but I couldn't understand a lot of the points. I wasn't trying to be harsh, I was just trying to be helpful. Since you understand, can you try editing it? – Zuly Gonzalez 12 years ago
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@ZulyGonzalez , Thanks for your concern :-) , could you please tell me exactly which part of my answer is difficult to understand , so that i can explain it in brief. – Codebrain 12 years ago
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@Ricardo , I am not a native English speaker, since Its difficult to understand for few people , I should rework on it. Thanks anyways for the support :-) – Codebrain 12 years ago
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@codebrain Thanks for the edit! Your answer is easier to understand now. I tried to improve your edit by fixing some grammar issues, but I think it could still be improved a little bit. What do you mean by "tours?" Are you referring to meetings? And I wasn't sure what you meant in the first bullet when you said "clients will be knows to the clients and the public." After reading it several times I think I now understand what you meant. Please verify that my edit is correct. I hope you didn't find my previous comment to be offensive. I was only trying to be helpful. – Zuly Gonzalez 12 years ago
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oops @Zuly , Its Official trips(tours). The person who has the business contacts of buyers, retailers, and clients will be known by the public.) is this ok ? – Codebrain 12 years ago
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@ZulyGonzalez I understand that you're trying to help :-) Thank you, and i edited and added more details. Before reading your comment completely i made a edit in the answer and now i dont find any link to verify your edit now. Thanks again.. – Codebrain 12 years ago
- Make every founder buy their equity. Coughing up money builds commitment for most people.
- Talk about and document expectations.
- Split equity based on contribution. Have an objective way of measuring this documented.
Alternatively, only pick people as cofounders based on how much you trust them.
This is the biggest downside of being the only technical co-founder that you feel like you are the only one who is working even if the others are contributing as much as you are.
Now that you are working 80/100 hours a week so i can assume that you don't have a day job as them so it would be fair if you ask them for some compensation for your work by increasing your equity. Yes , that would be a bit harsh and it could even lead them to pulling out of the idea as they don't have put a lot of work in it so they wont hesitate even a single bit before ending the company.
OR you could take matters in your own hands and you can tell them that how much you are working for this idea because you are really passionate about it and you want it to be really successful and now you want them to push for it to make this successful and for that you can tell them different ideas that what should they do in order for the marketing of the idea.
Yes it will increase your work load as you will be doing their supervision too but well if you are passionate about it , you will have to do it.
And if they still don't seem to listen , than sorry but you are in their with wrong guys.
