What would do you need to see before joining an early stage startup?
8 comments
If you just have a proposal, I think it is going to be tough to attract the right talent. I am not necessarily a hacker (or maybe I am, who freaking knows), but I am taking that role on so I can make the first versions of my product. If I can show some traction, I know I won't be wasting anyone's time with my business. Furthermore, the first version doesn't have to be pretty, it just has to be good enough to get by.
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I was a technical cofounder and I have joined several startups as either the first employee or the first technical employee. This has evolved over the years, but the big thing that I look at is the person or team that I am going to join. It's cliche but true. That manifests itself in two ways:
1. "Smart People That I Like Having a Beer With" is a must have. There is so much that happens in a startup that its more like a family than a job. And in this case, picking your family is wisely is the path to happiness AND success. 2. Deep experience in their field and / or a clear way to generate early revenue (through network, former company, etc.). The hardest part of starting a company is early traction and if I can't bring it then I want it in the people I work with.
Notice that none of this is really about the idea because if you have someone with deep experience or early sales, then the idea will evolve over time as it finds the right Customer Need.
Good luck!
1. "Smart People That I Like Having a Beer With" is a must have. There is so much that happens in a startup that its more like a family than a job. And in this case, picking your family is wisely is the path to happiness AND success. 2. Deep experience in their field and / or a clear way to generate early revenue (through network, former company, etc.). The hardest part of starting a company is early traction and if I can't bring it then I want it in the people I work with.
Notice that none of this is really about the idea because if you have someone with deep experience or early sales, then the idea will evolve over time as it finds the right Customer Need.
Good luck!
Great advice! I'm currently making plans to exit a mild-moderate profitable company and I can attest to the fact that a startup is like family! We share the struggles, triumphs and everything in between.
Ability to focus.
Courage to try new things.
Willingness to accept some of those 'new things' aren't working as planned and change course or drop them.
Ability to examine situations logically, but also to get passionate about the offering.
Basic agreement that revenue and profit are king, and decisions should be made based on the numbers.
Clear vision for how money will be made.
Ability to articulate customer base.
Demonstrated ability to sell, or to find people who can.
Courage to try new things.
Willingness to accept some of those 'new things' aren't working as planned and change course or drop them.
Ability to examine situations logically, but also to get passionate about the offering.
Basic agreement that revenue and profit are king, and decisions should be made based on the numbers.
Clear vision for how money will be made.
Ability to articulate customer base.
Demonstrated ability to sell, or to find people who can.
Sure, and add to that:
Actual proof that the people already involved are doing something now beyond navel-gazing. Vision and courage and whatever the tin man was looking for are wonderful, but what matters more is doing. I'm not Toto. This isn't Kansas. If you want my work then show me your work.
Agreed. 'courage' and 'vision' aren't all that are needed. However, I've talked to enough people over the years to realize when even those are missing. Absent those, you'll never even get close to the doing. Sometimes the 'doing' part hasn't happened enough simply because people are overwhelmed with too many things to do and not enough time. If that's really all that's missing, but the other parts are in place, I'm more inclined to get involved (although still, I rarely do).
I would expect reasonable hours, some guarantee that the startup would be around for a year, a bigger potential pay-off than a big company, and that the other guy was a reasonable person with good ideas that was not a micro-manager.
If you expect reasonable hours, then an early-stage startup is probably not for you.
More than 40 is reasonable on an ongoing basis at a startup, but more than 60? more than 80? I don't think it's smart to expect creative people to work more than 50 hours a week on an ongoing basis. If they've got the requisite commitment and excitement then the other 62 waking hours will be well-spent subconscious time.
I'd not work 12 hours a day for a company, and then end up worse than if I had worked for a big company. If I would end up with a million bucks, then yeah, but if there is no advantage, I rather work for a big company then. As any reasonable person should.
Part of "reasonable hours" is not spending time on stupid things that end up being wastes of time. Obviously, this can be hard to determine in an early stage startup, but mostly this comes down to the personality of the other founders, that they aren't pushing for things that don't increase the chances of success or aren't constantly having the company change gears before finding out if the current route is going to flesh out or not.
I think that this sounds more like being the first employee of a company rather than a technical cofounder. When recruiting the first few employees, this is exactly the pitch that I give to them but if you are going to be a cofounder, then reasonable hours, working environment, etc. are really up to you and the other cofounder. Thus, you make what you want. The point about "reasonable guy" is thus paramount. In fact, I would argue you need much more than reasonable.
1) Compelling idea 2) Significant ownership stake (ideally 50%) 3) Funding to pay salaries for 1-2 years 4) Co-founder that's competent, hard working, and easy to work with.
If you have those four things you're in the top tier of awesome opportunities. Any entrepreneurial-minded great hacker is going to be interested.
If you have those four things you're in the top tier of awesome opportunities. Any entrepreneurial-minded great hacker is going to be interested.
With a 40-50% equity stake, what's a reasonable salary range for an experienced programmer? What's the minimum?
I would raise initial salary from my own pocket for the lead CTO, so I'm curious if I'd have enough. $90k+ is not feasible.
I would raise initial salary from my own pocket for the lead CTO, so I'm curious if I'd have enough. $90k+ is not feasible.
If I were getting a 50% equity stake, I wouldn't expect a salary. That's basically a cofounder role, and the risk/reward work out appropriately. I'd expect to live off my own savings - but I'd also expect significant input into the business, including the ability to change its direction if the original idea really wasn't working. Basically, if you give up 50% of the company, you're in this together, better act like it.
I might expect a relatively small (cover living expenses) salary if I were taking on, say, a 20-30% equity stake as a cofounder in a pre-traction startup. This is sort of a no-man's-land of risk/reward tradeoff, though. There's an awkward dynamic when you're paying someone else's living expenses and yet their salary is still well below market-rate. It's worked for a couple startups (Hotmail was one, Intuit may've been another, though the equity stakes for Intuit all got renegotiated when they almost went bankrupt), but you don't see it often.
Once you're down in single-digit equity stakes, it's expected that you'll pony up market-rate salaries. That's what fundraising is for. :-) The equity stake for early employees is there to compensate (and incentivize) them for the possibility that their salary may not be their tomorrow, not for the lack of a salary.
I might expect a relatively small (cover living expenses) salary if I were taking on, say, a 20-30% equity stake as a cofounder in a pre-traction startup. This is sort of a no-man's-land of risk/reward tradeoff, though. There's an awkward dynamic when you're paying someone else's living expenses and yet their salary is still well below market-rate. It's worked for a couple startups (Hotmail was one, Intuit may've been another, though the equity stakes for Intuit all got renegotiated when they almost went bankrupt), but you don't see it often.
Once you're down in single-digit equity stakes, it's expected that you'll pony up market-rate salaries. That's what fundraising is for. :-) The equity stake for early employees is there to compensate (and incentivize) them for the possibility that their salary may not be their tomorrow, not for the lack of a salary.
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Vesting schedules add further complexity to this analysis.
True, although if I were coming on-board as a cofounder, I'd expect to be there for the long haul, so they don't affect me all that much. I'd prefer to see both partners have pretty standard vesting, probably 4-year.
I do take vesting into account if I'm joining as an early employee and I expect the company to be bought out soon. I believe that acquirers can do whatever they want with an employee's unvested options, and this is a pretty easy way to get screwed.
I do take vesting into account if I'm joining as an early employee and I expect the company to be bought out soon. I believe that acquirers can do whatever they want with an employee's unvested options, and this is a pretty easy way to get screwed.
The minimum and optimal is enough to keep them break even financially, nothing more. That could be $40k/yr or $90k/yr. Totally depends on their specific situation.
Whoever pays that salary should get equity in exchange, whether it's you or an outside investor. Ideally it's an outside investor (who can afford to lose it). Either way it should be at a reasonable valuation.
Whoever pays that salary should get equity in exchange, whether it's you or an outside investor. Ideally it's an outside investor (who can afford to lose it). Either way it should be at a reasonable valuation.
#1 thing I look for is traction: people that obviously want to buy what you have to sell, as measured by them actually buying what you have to sell. If they have that, then I look at the size and interestingness of the market (I don't really care if you have traction as a consulting business, but if you have traction in an exciting consumer market, my e-mail address is in my profile). Then I'd meet the founders and other employees to see if its a good fit for me personally.
If you don't have traction, it's a much harder sell. In that case, the first thing I look for is the team. Are you someone I could hit it off with over drinks? Do you have deep expertise in your area of your startup? Are you driven by data or by dreams? Do you have a plan for how you're going to attack your market, or is it just "There must be riches out there somewhere"?
If you don't have traction, it's a much harder sell. In that case, the first thing I look for is the team. Are you someone I could hit it off with over drinks? Do you have deep expertise in your area of your startup? Are you driven by data or by dreams? Do you have a plan for how you're going to attack your market, or is it just "There must be riches out there somewhere"?
What would you need to see from someone with a web app company proposal to feel comfortable joining as CTO/Lead engineer? Let's assume that you did not yet know the person.
I'm asking b/c I have several plans that I am in the final process of developing but would like feedback on how to get real talent to join as co-founder. I know I can get your run of the mill coder easily, but what do I need to come to the table with to a top 10%er.