What is Reddit's opinion of The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup (The Kauffman Foundation Series on Innovation and Entrepreneurship)?

From 3.5 billion Reddit comments

• read this
• set up a cofounders agreement that covers you really nicely
• find the right cofounder or cofounders
• benefit!

if you're a tech guy and you notice a niche where you can build out a SAAS and solve a real world problem and you more or less already have you end users/customers and you're happy to generate sales via word of mouth then you can build out the whole thing. that's a case where being a lone cofounder works particularly if you have some money in the bank. getting an experienced technical cofounder who's made all the mistakes before and has a success profile to strengthen where you are lacking is fantastic because you immediately fast-forward 3/4 years of experience. you'll never experience the alternate reality where you fail because of some error and you learn the lesson.

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btw i'm available - what's the business?

ton of bad advice in here.

what are the MAUs for your app right now? sounds to me like it's a labor of love side project that has 'blown up' (tbh - 10k new users overnight probably doesn't men much unless you retain a good portion of this cohort and they're bringing their friends)...

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read this book.

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the guy 'is moving on from his last project and is interested in your's?' sounds so so so fishy. and he wants 33% of your company based on what? what's he bringing to the table.

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if you're giving up any equity you need goals and time based vesting. if he's saying 'i can scale your userbase to 1mil', you need to say 'ok, in what timeframe? at what cost to the business? are you prepared to put a clause in your vesting schedule to that effect?'

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we had mentors at the start of our company. they were alumni of the accelerator we were with and they took an interest in us. all of them gave us free mentoring sessions and continue to do so AND put money in the company. if you invest in something and have experience in how to make it successful, it's in your best interest to help the cofounders (without asking for money back OUT of the company).

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whole things stinks. do not give up 33% of something that you now deem a success to some stranger on the internet man, wtf.

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

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.

Whenever I see a discussion about founders of startups, and in particular questions involving what founders should do, I always feel compelled to strongly recommend the book The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup.

I have started several successful businesses as well as joined several successful startups, including one that went public during the dot com boom, and I can honestly say this is one of the most important and valuable books anyone considering founding a business, either alone or with partners, should seriously read BEFORE they jump in bed with their co-founders.

I think the all of the cofounders for any new venture should read and discuss this book before the jump in the sack together. Had I done this I would surely have avoided a few major mistakes along the road to success and would have arrived much sooner. There is a lot of discussion about compensation and ways to structure it.

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.

Have you shared this with him in detail? Cofounder disagreements are a very common way for startups to self destruct. If you can't get over this and/or you don't feel like he is going to acknowledge the problem, I would leave. It's not going to get better until you forgive and forget.

There is forgetting details and there is being unethical and only you really can tell the difference. If he's unethical, leave immediately because you and future employees will get screwed down the line again. If he's forgetful, this is a valuable lesson learned that you ALWAYS get things in writing. Its so shocking to me how money changes people in my previous startups. I always get things in writing now for any agreement. A simple email is even fine to start because it forces both sides to clarify what they heard and discussed.

One other thing is understanding the value each of you bring to the company and how it impacts how the company is divvy'd up. One book that helped me a lot early on was the Founder's Dilemna by Noah Wasserman. Really helped me see how important structuring the company correctly and setting proper expectations at the beginning has a huge impact on success. I would encourage you to read through this to help you make your decision on if this is a good situation for you to stay in. https://www.amazon.com/Founders-Dilemmas-Anticipating-Foundation-Entrepreneurship/dp/0691158304

Also, do not forget founder vesting! The last thing you want is dead equity! It can kill a company. That's in the book as well.

First, get this book: Founders Dilemmas

It has SO MANY of these exact scenarios and really really good advice and examples.

Second, is you’re in one of the most common situations for startup founders and it feels like shit to argue with friends over money. At the same time the workload it growing so you can’t see the performance or burden of others so you think they aren’t working as hard or get fooled that you are the one behind.

The book is essentially about this: get that legal/money BS out of the way quickly, and when shit comes up later you don’t even have to think or have any emotional decision making.

What’s troubling is that changing the pay, compensation, ownership, etc is so easy and informal. At first you say “yeah 50/50!” Or “I put in an extra $100k so I get more” but you’re the more valuable person or you put more of yourself in.

What I would do is say “hey man, I’m not really on the same page with that, but I hear you and clearly you’ve got things you feel you should be better compensated for or is more valuable. I realized our back of the napkin agreement doesn’t really work for how good we are doing and we should put more formal company bylaws/plans together for when ever more serious stuff like investors, Loans, hires come up.

Lets make a critical task to get one made by the end of the month, you get a personal lawyer and write up what your ideal compensation is and why you feel that way and I’ll do the same.

Next week let’s share our drafts and ask the lawyers to add in some boilerplate for things we aren’t even thinking about.”

If anyone in businesses ever pushes back on getting lawyers/contracts involved over something so important… be cautious.

Maybe add “I’m not wanting something like a dispute over random shares on paper or titles get in the way of our friendship and this new thing I love… and besides, we should make sure our asses are covered legally”

The book made me aware of SERIOUS things no one talks about.

What if your majority owner cofounder gets hit by a bus and his wife/brother/grandma now has absolute power because your legalZoom Corporation Template only talks about “ownership”?

What if the CFO Dad dies from Covid and he has to step away for 6 months? Who’s responsible for managing the books?

What if your CTO gets his laptop stolen at Starbucks and it’s got the UBER important API keys or Crypto wallet info?

What if he quits? Can the next Dev guys operate or is he the only one who knows the full build pipeline?

HUUUGEEE things later like when we bring on investors how is dilution handled?

Do we have a pool of shares earmarked for future critical hires or if we bring on a good COO does everyone dilute?

Who has the Bank info and is EVERYONE pre-authorized on the account?

What future expenditures are prioritized? Hiring 3 people or rent on a new office space?

The book has so many great examples and makes it clear that we humans get in our own way and even if painful or awkward now those conversations are absolutely critical.

Got a bit rambly at the end there… sorry!

This is covered in the Founders Dilemma: https://www.amazon.com/Founders-Dilemmas-Anticipating-Foundation-Entrepreneurship/dp/0691158304

Founding teams made up of colleagues from work where you already have working relationships have a higher success rate than teams made up of just friends.

Although the biggest successes of all time - Microsoft, Apple, Facebook, and others were all started by friends.

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!

Live an learn...whatever you do, get a good agreement in place now. Even (especially) if you are friends, nothing kills a partnership and friendships more than ambiguous roles and expectations.

Edit: You may want to read this book.