Even this article IMO subtly demonstrates the mindset that leads nontechnical founders to not think they need a technical cofounder, by phrasing the search for one as “recruiting” as if they were a subordinate or code monkey. It should be a partner relationship, not a subordinate relationship.
This mindset that technical cofounders are essentially “coders” (a term I hate) is very prevalent among inexperienced nontechnical founders. I know I’m preaching to the choir here but a lot of technical people have deep industry/business/product knowledge and have social skills. It is very frustrating when some Ivy League 25 year old PM/management consultant tries to pitch you on their vision while treating you like an idiot savant they can easily take advantage of.
>> It is very frustrating when some Ivy League 25 year old PM/management consultant tries to pitch you on their vision while treating you like an idiot savant they can easily take advantage of.
I get calls weekly from people seeking technical co-founders. The biggest thing most CTO candidates dont realize is the power they have -- unless the "business co-founder" is actually bringing something to the table.
I'd LOVE to work with a "Business co-founder" who actually brings Purchase Orders, Funding, Transact-able Relationships, prior wins (esp publicly verifiable wins). That would be a dream.
It makes no sense to work with a "Business co-founder" who wants ME to put in hundreds of hours of technical work -- upfront -- often for equity "e.g., free" -- and retains the right to take all the upside and has none of the downside. Why would I need a "Business Co-Founder" at all in that case, I might as well be the only founder and recruit later.
I see tons of friends burnt by these types of "deals." The biggest red-flag is when the "Business co-founder" still has a job and no real skin in the game.
I have substantially less exposure to this space than you seem to, but even when trying to start projects with friends, this holds true. So often, I get pitched by pals who think the idea is what they've done, and at that point, it's up to me to "code up." What I would love to hear is, "I've been talking with these three businesses already, and they seem interested." or even, "I'm really worried about the sales and marketing side of things, so that's the problem I'm going to focus on."
Nobody's ever come even close to that. It takes zero coding to have those things already started, and yet nobody even goes down that path before looking for a "code monkey."
This is very common issue with software engineering in general but I'd say particularly with game development, the answer I've found to be the best is what converted me when I was getting started with game dev ("I have a great idea, I just need a team to build it"):
Why do you think we got learnt game dev/programming ourselves? Probably because we too had an idea we wanted to make a reality, so why would we put that on hold to make someone else's idea without some other incentive?
>> Nobody's ever come even close to that. It takes zero coding to have those things already started, and yet nobody even goes down that path before looking for a "code monkey."
In a sense you are lucky in a situation like this -- that have self-selected themselves out w/o any effort from you. Technologists dont need anyone with that little motivation sharing equity. Better to know that at the start.
How do you even find these people? I somehow managed to surround myself with highly technical individuals who are only interested climbing a corporate ladder, not any kind of serious entrepreneurship.
"Business co-founders" are usually finding me (not the other way around.) They are approaching me on linked in cold, or on linked in referred thru someone, or at Meetups (pre-pandemic) or thru community organizations.
The worst example of this is the "founding engineer" role. I get a lot of these offers, and it just feels like a scam every single time. Founders often sell that as some incredible opportunity, zero-to-one, full codebase ownership, huge scope, no eng team, etc, etc. All of that for an amazing 1% equity.
So yeah, the expectation is that I will build the whole project, drive product decisions, help hiring the rest of the eng staff, spend the next 1-2 years basically working on this project 24/7. They keep 99% and I get 1%. Great, thanks.
It's the same with YC: at the end of the day even the founders will end up owning only a small fraction of the company. The difference is that the VCs dilute you over time, not up front, to get the maximum amount of work out of you.
to be fair, if they took investment, it's rarely 99%, cuz investors took a chunk, and a pool of stock gets set aside for future employees, etc. But if the there isn't even any funding yet then 1% is just stupidity.
I get those too. Even if the founders gave away 10-20% to investors, actually building the project under the "management" of inexperienced founders and getting 1% doesn't seem like a fair deal. At this early stage when there is not even a product, hiring a founding engineer is a cheap way to sidestep the need for a technical co-founder who would be entitled for a much larger share of the company. The responsibilities are vast, I can't see that being worth 80-99x less than the contribution the founders make.
Many feel entitled to captain a ship - they are often just useless.
Definitely not always, but more often than it should be. I had this experience once - a family of people that already had money that were obsessed with "running their own business" off the backs of others. They didn't even contribute the money they had. All exploitation. Fortunately I shut it down and walked away with code. It was useless code, but at least I was also able to waste their time on top of my own.
My default mode as a technical person now is to vet the person actually has something they can bring. If they do less than bring us customers before we have a finished product, they've failed. I expect them to make connections and sell what we don't even have. That way I know we can both make something from nothing - the key ingredient to liftoff.
> and retains the right to take all the upside and has none of the downside
When you are paid in equity, the non-technical cofounder doesn't have all of the upside. But I completely agree that both parties need to bring something to the table at the beginning. It can't be "you build something and then after you've done that I'll go sell it". Both founders need to be putting in sweat equity simultaneously, to align incentives.
I think we are in agreement. To elaborate more -- you are right, "the non-technical cofounder doesn't have all of the upside" -- I mean "they have all upside" meaning, they can only go up -- they have contributed nothing so everything for them is upside.
Yeah, I think the difference is between "they have all the upside" and "they have only upside". You shouldn't agree to either of those situations — they should be putting in sweat equity alongside you. But there's a big difference between them, since all founders end up with some upside — if you don't, then you're employee #1 (and even then, you're probably still getting a couple percent).
I think they believe in the "Build it and they will come" and then they just coordinate and tell you what to do afterwards, rather than making hundreds of cold calls (i.e. grinding).
I've similarly had so many technical friends burnt by this.
My new suggestion for "business co-founders" pitching ideas to technical friends where "business co-founders" propose techies do all the upfront work is --
If you have no Purchase Orders, no Funding, no Transact-able Relationships, no prior wins (esp publicly verifiable wins) -- then you put in money. Find some reasonable rate you pay for the upfront technical work. This "balances out" the skin in the game. If they have no money, i'd half-seriously suggest they go borrow money to pay the technical co-founder.
They need some risk, some skin in the game to make this an equal effort.
I get a lot of inbound in this form and after the first disaster I'm much more aware of what a nontechnical founder needs to be doing. I think part of the problem is that they imagine themselves as having CEO responsibilities at the start (e.g. setting vision, hiring, etc.). But that's not what a nontechnical founder does on day 1. On day 1 they are the sales rep, QA, point-of-contact, and customer interviewer. They are every entry level position at the same time, because that's what the company needs.
The big smell here is offering not-equal equity to technical cofounders who join early (first year). YC's proposed solution for later joining cofounders is just to give them equal equity but start their vest later, which I find very incentive aligning. The usual explanation is that they've done all the "market research + product/idea development" already, which is useless.
> while treating you like an idiot savant they can easily take advantage of.
I considered it a bit, and you know what, I'd wager that four-fifths of tech business dynamics flow from this statement. Technical expertise is the money printer onto which all manners of value extraction anchor themselves, like barnacles. If not at the creation, then, for a time, it is good. And then it happens anyway 5-10 years down the line.
That said, there are different failure modes for purely technical people not understanding business. But the market doesn't seem to reward them the same way. Root cause is outside the scope of this comment...
> That said, there are different failure modes for purely technical people not understanding business.
A common one, I think, is technical people thinking management or business expertise is easy (or even beneath them) because they're so smart in other areas--and any problems they might have can surely be solved with the same tools they use to solve engineering problems, right? Which is kind of the flip side of the attitude of the kind of nontechnical founders we're talking about.
Another thing I'm facing myself (as a technical person) is when I've successfully dipped a toe into a management role, I was lucky enough that the people I was leading were all also technical people whose personalities were mostly in line with mine. But I've had to remind myself that if I put myself in a leadership position again, it won't always be that simple...
Yes, this. I've been in many startups but only once as a founder. I was the technical one, the only one with deep expertise in the core business area of the startup.
Well, my title was founder. All the other founders were on the board, I was not. All the other founders controlled budget, I did not. So really, despite the words on the offer letter I was just an employee. The founder title granted me the right to work 90 hour weeks with no help and no support and no budget to hire help.
At least didn't waste too many years on that one.
Learn from me. Spend some of your money up front and hire a lawyer with tons of experience in startups to guide you through contract negotiations and if the company balks at your (lawyer-assisted) terms that's your giant red flag to run very far away.
>> Well, my title was founder. All the other founders were on the board, I was not. All the other founders controlled budget, I did not. So really, despite the words on the offer letter I was just an employee. The founder title granted me the right to work 90 hour weeks with no help and no support and no budget to hire help.
>> At least didn't waste too many years on that one.
Firstly, i'm sorry to hear about your situation. I'm curious why you didnt negotiate harder some time into this. It seems to be you held all the cards.
I'm fascinated by the number of "business co-founders" who think they can cut a 25k check to some random person on eLance/Upwork and replace technical co-founders.
My recommendation would be to say -- sure, try that. Lets talk in 6mo if you still need me, but i'll set the terms at that point. 6mo is about when most non-technical people realize they have no code in source control and some random person overseas now owns their company effectively.
I've dealt with someone like that once but if they are any good they will never sit around and wait for 6 months. That person hustled very hard, cycled through several upwork teams and CTOs. through ruthless arm twisting kept all the code and underpaid everybody, finally settled on a CTO with 0 self-esteem and slave terms, and ended up building a rather successful company by now.
> given enough money on the table and the opportunity.
In my personal experience it was never even that much money. Some people just really want to feel like they've pulled a fast one, even if all they really end up doing is wasting everyone's time. As a nerd who is generally not motivated by Machiavellian shenanigans, I have a hard time seeing these kinds of predators coming.
Yep. I used to be more charitable, but I've taken to being very short with founder wannabes who act like this. Bluntly, if they refuse to look past their preconceptions to see who they're actually talking to, why should I?
This is made easier knowing founders with those sorts of blinders are likely going to fail anyway, so you don't want to be in the blast radius when it happens.
Technical expertise is very rarely where the core value of a product comes from. If you're really pushing some boundary and just have a better technology product, like original Google or ChatGPT, then sure, tech is your special sauce.
For 99% of software businesses, the tech can cause the business to fail but its almost never what makes the business succeed. Things like customer development and sales are actually far more important.
Its hard to build a well-architected web app that scales, but theres many people who can do a reasonable job at it. But translating that to business value is much harder.
Theres many people can build a React project in a week, fewer who know how to turn that React project into money. That should be self-evident on a site full of people who know how to make a React app, but begrudglingly work for others because they dont know how to turn a React app into money.
The thing about "the business guys" is most of them are actually pretty bad at the business side. And a lot of developers are actually better at the business side, because they have more relevant experience.
The "business guys" get their MBA and learn about merges and acquisitions for billion dollar business and do case studies about how GM optimizes their supply chain, information that's useful in some contexts but mostly entirely useless when it comes to getting your first 100 paying customers for your SaaS.
The developer is actually more likely to have the relevant business skills since they're more likely to have put some sort of SaaS on the internet and tried to get users for it, even if they failed.
I was on YC cofounder matchmaking for a while and was inundated with "business guys" who were just bad at the business side. It didn't bug me that they were non-technical, but their non-technical nature led to some bad business planning. For example, one guy who worked in VC wanted to make a GMail / Superhuman competitor oriented towards VCs. I suggested we start with a Chrome extension for Gmail, he insisted we build an entirely new email stack from scratch for the MVP.
Making a realistic plan is part of making a business plan and his lack of technical acumen made him bad at business.
If someone came to me and said, hey I have a super pared down MVP, it's just 4 screens in Figma with a minimal data model, and I have 100 people who I showed the Figma screens to and they signed up to pay $50 a month, can you build it ? I'd be thrilled to pair up with a "business guy" like that but they are far more rare than a good tech co-founder and the business types that get that far tend to offer things like "founding engineer" instead of actual co-founder because they, somewhat fairly, assume that the skills you're bringing to the table aren't actually that difficult to find.
But to recap, my high level point is that the technical expertise is not really the money printer. The money printer is mapping market demand to technical products, which is a business skill. And that business skill is worth a lot more than technical skills. Its just a type of business skill that you find more often in developers than you do in MBA, and so we don't associate it with "business guys". But it's the most fundamental of all skills to make money from software, other than a handful of "exceptions that prove the rule".
"But to recap, my high level point is that the technical expertise is not really the money printer. The money printer is mapping market demand to technical products, which is a business skill. And that business skill is worth a lot more than technical skills. Its just a type of business skill that you find more often in developers than you do in MBA, and so we don't associate it with "business guys". But it's the most fundamental of all skills to make money from software, other than a handful of "exceptions that prove the rule"."
As an ex-shitty business guy, I taught myself how to code thinking that would solve my problems. Nope. Now I'm just a shitty business person and a shitty dev. Forcing myself to do the actual work of talking to customers now.
I'm in a similar boat. I'm not lecturing anyone having learned from success but having learned from failure.
I just spent an entire year spent building software products and they almost all failed. I wrote a long retro (too long, not edited, more for myself than for others, but if curious: https://www.billprin.com/notes/one-year-retro ) and the #1 cause of failure I wrote down was not doing enough talking to customers and customer development.
The one project I have that has a tiny bit of recurring revenue was not originally a project I had set out to build. I cold-DMed some people in a Facebook group and pitched a different project, and one guy told me he didn't like what I built but might pay if I built something different in the same space. And that was the only product I have thats worked. Goes to show the obvious - talk to users!
I see a lot of indie hackers talk about "audience building", and my initial read of that the purpose was that if you get a ton of followers on Twitter, then when you launch a product, you have a bunch of people ready to sign up. Increasingly, I'm thinking the much bigger value of audience building is that it's easier to get people to tell you what to build in the first place.
So yeah, customer development is not some magical thing that requires you to be a "business guy" or anything else, but it's hard, it's important, and sounds like we both need to do more of it :)
> Nope. Now I'm just a shitty business person and a shitty dev. Forcing myself to do the actual work of talking to customers now.
This level of humility will take you far. You will get better at talking to customers over time, keep grinding, keep practicing, it gets easier. And one day the switch will happen, they will look up to you as the knowledgeable consultant instead of looking down on you as the 'shitty business guy' with nothing of value to offer.
> This level of humility will take you far. You will get better at talking to customers over time, keep grinding, keep practicing, it gets easier.
Thanks! I launched my first large-scale cold outreach campaign this morning after learning about it this week and building up leads. Tomorrow, I will try out cold calling.
>> For 99% of software businesses, the tech can cause the business to fail but its almost never what makes the business succeed. Things like customer development and sales are actually far more important.
I STRONGLY disgree with your take as a universal take. At the pre-Seed stage, the technology is the only thing. Without that, you dont have a technical business. You just have a pitch deck.
Of course, once you prove out the idea and reach product market fit, that enables you to either have cashflow or raise funding -- so technology becomes less critical because you can use the $ to hire technologists.
If "mapping market demand to technical products" was really the money printer, every management consultant would be running a unicorn. Every MBB consultant would have a side startup. You actually need the technical product, or some MVP of it, to map a market demand to it, to do demos, to raise funding. If you dont, you just have a pitch deck. Sure, if you can raise on a pitch deck, that is winning, but how many can?
A pitch deck is something you make for investors. I'm not talking about investors, I'm talking about customers.
Lots of management consultants can make a pitch deck. Very few can actually find people willing to pay for an MVP of a software product.
That was pretty much the point of my post. Most "business" guys are bad at the business side. Making pitch decks and raising funds is not the business side - except in some people's little side-circus. Understanding what customers want and figuring out what's the minimal version that people will pay for is.
You show me a management consultant that actually has 50 people willing to pay for an MVP, and that person can easily have a side startup. In fact, please put me in touch. Very, very few of them can actually do that. And even if they don't have a developer, I imagine an investor would be pretty impressed by that too.
Again, I'm speaking in generalities. If your technology is "turn common trash into gasoline" or "teleports people across contintents safely", then yeah, you don't need many business skills. But if your technology is "a scalable web app", or "I forked stable diffusion and did something cute with it", then the business skills are more critical than the tech skills.
It somewhat depends on the product, but in the beginning, I think the tech only matters inasmuch as it allows you to iterate quickly and build a product people love. It can be a spaghetti code tire fire underneath.
What really matters is market insight to understand what people want, design ability to give it to them, and sales/marketing to get traction. You do need a good engineer to pull this off, but they need to prioritize iteration speed, not engineering quality.
> The money printer is mapping market demand to technical products, which is a business skill. And that business skill is worth a lot more than technical skills. Its just a type of business skill that you find more often in developers than you do in MBA, and so we don't associate it with "business guys".
I think you're underplaying the ability to map requirements to a feasible and sufficient technical product. Being the person who is also mapping the market demand to the technical product makes this process significantly more efficient.
I also think there's a lot of overlap with Software Engineering (with a capital 'E') in these skills - a lot of this is about figuring out what to build and making sure you've built it. I believe that's why they're more often found in developers than business types.
I want to say (as GP) good points. Thank you for disagreeing. When I think of the business, my worldview underweights the cases (the 99%?) where technology is only an enabler to the business case - I guess because I don't think it's as interesting as the pushing of boundaries.
The other parts of the business are labor as well. Products don't magically go to market. Business models don't magically create and evolve themselves.
>> The other parts of the business are labor as well. Products don't magically go to market. Business models don't magically create and evolve themselves.
You are right, but it is about which labor comes first. The first labor is taking 100% of the risk without others taking any risk. Others have all upside and no downside. They have a free-option for the upside as the technologist does all the upfront work.
The idea that everything that comes after initial unpaid technical work to get to where you can bring on investment is "all upside and no downside" is so divorced from the reality of anything I've ever seen in any company that I'm having trouble processing it.
It is a surprisingly common reality for numerous technologists.
That doesnt mean that there arent good situations. I would LOVE to work with business co-founders with these backgrounds
- They already have 10 customers in mind, have done mockups, have done validation with customers, and you can verifiably know that the customers are interested in the technology at a particular price point before you build
- They have a friend/colleague at a key major customer who is willing to be the first customer before the technology is even built, and this can be verified
- They can bring in purchase orders before the technology is built out
- They can bring in conditional purchase orders contingent on some technical milestone
- They can bring in VC to pay technical co-founder for upfront work
- They can get front-row seat with some key industry group or policy-maker with influence
- They have prior verifiable successes (e.g., Steve Jobs, Elon as extreme examples)
All the above are worth gold. What isnt worth gold is someone who wants to sit back and chill while a technologist codes away for six months.
> There are two reasons founders resist going out and recruiting users individually. One is a combination of shyness and laziness. They'd rather sit at home writing code than go out and talk to a bunch of strangers and probably be rejected by most of them. But for a startup to succeed, at least one founder (usually the CEO) will have to spend a lot of time on sales and marketing. [2]
> One is a combination of shyness and laziness. They'd rather sit at home writing code than go out and talk to a bunch of strangers and probably be rejected by most of them.
I think this is more complicated: the problem is not going out and talking to a bunch of strangers (which I would do if necessary, and I do claim that my tolerance of rejection is sufficiently high).
The problem rather is (this is something that a friend, who works as a business consultant, explained to me): to make a successful sale, you need a salesperson "who thinks like the customer". Lots of programmers simply think very differently from how the typical programmers, and thus are bad salespersons concerning these customers.
He really said that I have an insanely good intuition for what kind of software product would insanely help some specific industry, but also honestly told me that I (and honestly also he) would likely not be capable of selling such a product (if it existed) to a customer in this industry, simply because I think too differently from the decision makers in this industry.
Heading over to MIT to “find a coder” is something you’ll hear from HBS aspiring founders.
I also deeply agree with the other part - there’s a class of technical leaders who have that depth and choose to work with technology as the primary day to day. But, they also don’t have HBS MBAs often.
Good VCs look for these founders I think, but otherwise the cultural treatment of that type can aspire one to get a MBA just to fix or re-align the perception.
Dalton says basically the same thing in the video. Lightly edited excerpt from the YouTube transcript (starting around 11:28):
What often happens - again, to go deep on this - is that the way they'll pitch the person is that they'll pitch them their idea, like, "I'm an idea guy, I've got a great idea, do you want to be my worker bee to go do all my ideas?" And of course the person that's the best person you've ever worked with does not want to sit in a cage and do all of the work that you give them. And instead I'm like, well have you asked them if they have startup ideas? And then you sell yourself, where you can come together, come up with the idea together, as co-owners, and it's shocking how often that appears to have never occurred to someone. Like they think the idea of finding a tech co-founder is to find someone who will basically submit to their whims and be, like, their assistant, and that's not the move.
They types still didn't learn that google, microsoft and every single disruptor out there has been founded and brought to riches by technical people. Business minded folks survive for a while, make a few millions, but never reach the levels of these companies. Quite the contrary - companies of this level plunge once business folks dominate. But that's good. Once google's dead others will take its place, and will be likely founded by technical people.
Over the years, when I meet a non-technical founder looking for a technical founder, I ask them if they're ok owning as little of the startup that they offer to the technical person, until they can deliver sales.
Technical people, in large do deliver a product and something that works. It might not be what the market wants, or the right thing, but speed of iteration, is again technical, and something the technical founder uniquely must bring.
There is a video from YC that says they can see it from a mile away when the non-technical founders have taken advantage of the technical person, founder or not, by not giving them equity equal to the difference they make.
This is an interesting idea — variable vesting based on milestones. It would be a great way to reduce risk, though of course there are issues that could arise that would make this complicated. For example, if the technical person vests based on hitting certain product-related goals, does he get penalized if part of the dev team gets hired by another company, which makes it harder for him to hit the milestones? Or for the non-technical cofounder, if the economy goes into a tailspin, and it's much harder to make sales than the cofounders anticipated, should he not vest, even if he's doing everything he can?
But overall, I think this is a really intriguing idea. Points could be assigned for what each founder is bringing to the table (concrete idea, market research, cash), and they would get some vested stock for that. Then the rest of the founder's shares could be put into a pool and vested to particular founders that hit their milestones. You wouldn't want to make it too adversarial, but it's possible the benefits of incentive alignment would overcome the downsides of the zero-sum game thinking that the system could engender.
Oh sure, but if the reason the employees were poached was because the non-technical founder refused to pay the dev employees more, then whose fault is it?
This is pretty well said. I tend to agree and as a founder of multiple companies, as a well an engineering-background co-founder myself, I have definitely had interactions with "non-technical" founders looking for people (like me) and totally got the vibe of the needing a "technical co-founder" because they just need some "coder" as if that's the missing key to success (or whatever).
That said, there are plenty of very smart, driven, people who are not software engineers who don't think of a technical co-founder that way. So it'd be wrong to paint with a super wide brush on this.
>> That said, there are plenty of very smart, driven, people who are not software engineers who don't think of a technical co-founder that way. So it'd be wrong to paint with a super wide brush on this.
Agree, I think business co-founders can add tremendous value. But that value needs to be shown -- upfront. Otherwise, why would any technologist sink hundreds of hours on a mere promise? Business co-founders should have already drawn out solutions, spoken to customers, perhaps gotten conditional sales POs from friends/contacts, raised funding, set up VC meetings, etc.
But a Business co-founder who hasnt done any of these, and just wants the upside after a bunch of technical work is done, isnt the type of Business co-founder you want.
It's really weird given how many tech founders have shown the value of tech talent by creating billion dollar companies. Why can't they see it?
Then again look in a mirror and techos tend to believe business people are total trash. Yes, many executives and salespeople are useless manglement and pointy-haired-bosses (just like there are useless engineers). But don't miss the valuable management gems. Techos: don't make the same mistakes as described about the non-techs in the vid by ignoring a 10x engineer. There are 10x non-techs too.
That’s because the people with money are not the people who actually do the things.
The people with money are the Ivy League 25-year-old PM management consultants.
Since everyone seems to prefer more money over more freedom, us nerds keep agreeing to or putting ourselves in positions where we are depending on non technical people for money.
I hate doing money stuff, I like building stuff
There are people who don’t like building stuff but like doing money stuff.
Which one do you think is going to get more money?
Which one has the power over the other one?
It’s totally inverted and changing this is going to take a century or more to fix
What term do you prefer over “coder”? I’ve had this issue with pretty much any term for what I essentially do. I don’t like “developer”, “programmer”, “techie”, “IT… guy”? (The last two being particularly bad)
Even “engineer” is a bit strange to me and I feel it doesn’t really fit, so I actually never knew what to call myself.
May I ask what a non-technical founder should look for in a technical co-founder?
I have two customers for slightly different businesses. The deals are made, I am building MVP's myself and JVing with established tech companies to get products to market.
I have a supply chain with a 30% cost advantage with customers.
and
I have a hardware software system that significantly improves hire businesses that has customers and development partnerships with research organisations and funding applications in progress.
Both have customers and large B2B growth potential.
I am building the MVP's myself while selling and JVing as necessary but would happily partner equally with a technical expert in Microsoft365 and PostgreSQL and PostGIS.
I'm an expert in business design and love technology without being talented or experienced building it. Someone with a business mind and opinions plus the technical skills to build an MVP and hire a technology team would be perfect. I can license my way to market but it will a clunkier more painful start. If I could work with someone who has deep experience with making microsoft365 work smoothly, for small volumes of data and a small number of users initially, then they would add value to both businesses instantly.
My question is should I grind through this myself with JV's where needed using architects on contract for the tricky bits and build the technical knowledge to be a really good technical work partner enabling recruitment of a better technical co-founder or should I recruit the best technical-cofounder I can and get on with growing the businesses.
I would happily take a smaller salary from cashflow than a technical co-founder initially, recognising their market value remuneration as soon as the business is able - likely early year 2. I would even consider technical guidance/mentoring for some equity if someone was interested.
And I know you are supposed to focus on one thing at a time but the software for the two business systems is similar, and I have systems and people to drive the sales and management for both so will offering a technical-co founder 2 bites at 2 potential rapid growth businesses make them think they were increasing or reducing their odds of success?
What questions would I ask to make sure the partnership will be enjoyable for the technical co-founder?
Are there any books/experts on keeping technical co-founders happy?
> May I ask what a non-technical founder should look for in a technical co-founder?
Breadth of expertise, ability to learn quickly, open minded when it comes to technology. Loves to work with clients and solve their problems more than they love the tech.
The B2B and PostGIS part caught my eye. I'm technical, but leading both the business and the technical sides of my spatial analytics company. I would be happy to share at least some of my technical knowledge. From infrastructure, DevOps, through database and data layer, and all the way to the frontend - I've been doing this for years and there could be a thing or two that may be useful to you.
On the other hand, I can always do better when it comes to B2B sales, so I am looking to learn too. Maybe we can have a chat sometimes.
Not to mention that you take approximately the same risk minus a couple of hundred K in total comp per year but - tadaaaa - in return you get 0.0025% stock that will vest over the next five years.
It would be nice(-er) if people said: "Look, my parents know people, my classmates and their parents know people, and while we unfortunately can't let you past the bike room, we'd like to work with you".
Show me a meritocracy and I'll show you the winners corrupting it for their friends and kids.
> This mindset that technical cofounders are essentially “coders” (a term I hate) is very prevalent among inexperienced nontechnical founders. I know I’m preaching to the choir here but a lot of technical people have deep industry/business/product knowledge and have social skills. It is very frustrating when some Ivy League 25 year old PM/management consultant tries to pitch you on their vision while treating you like an idiot savant they can easily take advantage of.
This is nicely worded, but I would like to expand on it. This is coming from someone who is a businessperson who programs — I’ve been programming since I was 10, but I’ve never had the job of a programmer.
tl;dr - I think that both programmers and business people can be delusional about their value add, but folks who can do both are easier to work with, and folks who can do both have more opportunities than just hyper-growth startups.
In generalities, there are four groups of folks on the tech-business continuum.
1. Pure tech folks with little or no business acumen. Some of these folks think “sales” or “marketing” are fighting words. I find many of these folks very difficult to do business with. To be charitable to the “Ivy League” folks you refer to, they have probably met enough of these pure tech folks (some of whom are actually idiot savants) such that they erroneously over-generalize to think that all tech folks are like these pure tech folks.
2. Tech folks with business acumen. The business side usually comes from experience. I think pg advocates for tech folks who do start ups to develop into this. Overall much easier to do business with, but sometimes they make product-oriented decisions that miss the forest for the trees. The best tech businesses come from this group, but they get outclassed on the business side unless they embrace the business side aggressively (Zuck and Gates being prime examples). I think the “Ivy League” folks lose a lot of business due to lack of respect for this group.
3. Business folks with tech acumen (this is me). Great at taking over tech business that are poorly run and optimizing them either as a c-suite executive or as a buyer (this is what I do). While I don’t refer to programmers as “coders”, and I don’t treat programmers as idiot-savants, I know how to find and pay programmers to solve my business problems. Interestingly, I run into some programmers who are doing commodity work who want a percentage of the business. My offer is always the same — zero. I’m not building a startup or complex software. Their skills are largely fungible to me, since most of the value is in finding the solution rather than the nuts and bolts of development. The exception is for folks in group 2 who want to move to group 3, but at that point they become a businessperson rather than a programmer.
4. Business folks with no tech acumen. These are the “Ivy League” folks (and a lot of VCs, tbh). These are the “idea people”, the people who are clueless about tech and tech development, often the people who are also bad at business, but they happen to have access to money and/or critical buyers. Fwiw, many of these folks treat other business people even worse than programmers — they just treat most people like idiots, sans the savant. I sometimes have a hard time doing business with these folks, because they frequently don’t know the value (or lack thereof) of their business, and/or they are only looking for suckers to do business with. Many/most of these folks are all style and no substance. If they had some substance, they would be in group 3 (or try to be).
Obviously these are people on a continuum that are separated into somewhat arbitrary groups. That said, these archetypes exist.
How do these archetypes matter for tech businesses?
If you’re in group 1, you’re at the mercy of whatever business person you can work with. You hope that you end up more like Woz than most of the pure tech folks who get restructured out as the business grows. I strongly recommend that the pure tech folks focus on getting paid primarily in cash rather than equity, since any non-benevolent business person will structure out the tech person’s equity as soon as possible.
If you are in group 2, you are in a strong position to develop a successful startup or successful tech business. Just realize that you are a cog in the VC machine, and they only value you for your potential to hit home runs. You can make more reliable money (think 8 or 9 figures) in a “lifestyle business”, but it is not likely you will become a billionaire… unless you shift to group 3.
If you are in group 3, you need to realize that most of your value will be by doing very boring shit. Billionaire status is possible, but it will be a boring trip, and you are not likely to appear in any sexy tech write ups unless you engage in aggressive self-promotion in these areas (some should, most probably shouldn’t). The biggest mistake I see group 3 folks make is to think that they are in group 2, especially if/when they try to develop a consumer-oriented product without getting a group 2 cofounder.
Group 4… well, group 4 is what they are. There is some jiujitsu by which their egos and ignorance can be used for greater good. If you engage with these folks, I would only do so with that type of interaction in mind. If you engage with them on their terms, you will almost certainly lose.
Why did I write all of this? To clarify options for various level of tech people.
The HN/Ycombinator narrative to push for technical co-founders is very valid for start ups (the pg kind that are built to grow fast), but there many other ways to make money as a tech person or a tech-oriented business person than start ups (especially now in the 20s compared to the 90s or 00s), and some/many of these are more reliable ways to get to a “fuck you money” level. I don’t think a lot of highly skilled tech folks realize this.
Could you name some (not commonly known ways to get fuck you money)? As a young tech guy doing stuff in startup spaces, I'm genuinely interested.
Of course, "no silver bullet", especially to make big money, but I'm curious, from the perspective of someone who'd place around 1.3 on the spectrum you described.
> Could you name some (not commonly known ways to get fuck you money)?
To clarify, I put “fuck you money” at about $10m-$20m. This amount enables a relatively comfortable life in perpetuity without touching the principal.
The ways are all commonly known, but they aren’t commonly followed.
tl;dr — it’s boring.
As a tech person:
1. Learn sales.
2. Learn business operations.
3. Solve business problems, possibly using tech.
A great way to scale into this is starting an agency. The agency can do programming, web development, ad tech… anything that direction.
It’s cash as you go, you get to learn while getting paid, you get a front row seat to business problems, and you can make useful contacts.
Once you have enough cash / cash flow, you can buy or joint venture with companies that have good product-market fit but weak operations, and you provide the part that they are weak at.
These businesses are everywhere at price points in the $10k to ~$500m range (at around $500m, the big boys start getting interested).
Many of the operational failures are in sales/marketing (all aspects thereof like pricing, channels, etc.), organization structure (too many bodies), misaligned incentives, etc.
Some of the easiest changes I’ve personally made is pricing changes. Specifically, changing a large irregular one-off payment to a much lower recurring payment (one that is preferred by the customers), and adding three-tier pricing with appropriate value add at each level. Imho, these decisions were not made by the original owners because either they were afraid of change or they didn’t talk to and listen to their customers (or both).
> The easiest way to get fuck you money is to reduce your consumption.
If you work at a very high paying job in finance or at a place like Google or FB, I might agree with this. Some people in those groups make a lot and spend a lot (sometimes more than they make).
For people with more modest salaries, I think that this is tragically wrong for fuck you money, but probably right for relatively modest “nest egg” money.
There is a limit to how much a person can gain by cutting, but that same person is essentially uncapped in earning potential.
The easiest way to get fuck you money is to start a business that solves business problems. Knowing sales, business operations, and tech is a relatively easy way to access this market. Not easy overall, but relatively easy compared to other options that lead to fuck you money.
Personally, I quit my job at a time I had $300/mo in income from my startup and lived in an old suv. Yes there is a bottom limit but it’s much lower than you might think. A big limitation many people have is their family, since if they aren’t onboard (mine was) then it cannot work out. But in that case it’s no longer fuck you money, since you’re trying to earn enough to maintain your family relationships first, an honorable decision to be sure.
Do you work in private equity or something where you buy out businesses and run them?
I'm technically a type 3, but an idiot one that wasted a lot of time chasing sexy ideas with no connection real-world problems. Trying to get better now.
I have some cash cows. I buy tech businesses and streamline the business side.
> but an idiot one that wasted a lot of time chasing sexy ideas with no connection real-world problems
I hope you aren’t beating yourself up for this — that’s the kool-aid that is being served, and your path is very common.
The cool thing is that you probably developed some useful knowledge and skills along the way.
For full disclosure, I “wasted” a lot of time in my former career as a research professor. I’m glad I did it. It helped me grow as a person. It gave me opportunities to learn important things that I did not know. It was where I needed to be for that part of my life.
That said, although it’s time I won’t get back, I’m very happy about the path I’m on, and I’m not sure a younger me could have navigated this path as successfully.
> How did you get the initial capital to buy businesses, just from your savings as a research professor?
Much like Andrew Wilkinson, I started an agency. Agencies are great cash cows.
In retrospect, I could have just started with savings (I had enough). It probably would have added stress I wasn’t looking for.
That said, the agency was and is still great cash flow. It’s also a useful business space for learning how to build a business that (mostly) runs itself.
Successful tech agencies that have been started by people I know:
- programming
- digital marketing
- social media
- web development
- SEO
- data science
- AI (this is emerging)
The agency is a business that goes to other businesses and offers to solve one or more of their business problems for a fee. Sometimes these fees are one-time payments, sometimes they are recurring, sometimes both. I recommend having recurring payments being baked into your agency model.
It’s a relatively easy way to get “ramen profitable” (or more!) along with some money to invest.
would you consider a small saas product in this realm? that is, is there a clear distinction for what could be considered an agency vs a saas product? or is the line blurred in some contexts?
Yeah. If you have a SaaS that has product-market fit, you are way ahead of the game.
Cash cows don’t have to be agencies, but agencies are easier to spin up than a SaaS.
In terms of nomenclature in general, productized consulting is a thing. Whether you can spin a healthy amount of recurring revenue from it depends on the SaaS product.
Great question, and I thought about mentioning Sam specifically.
First, these nice little boxes I made are somewhat arbitrary and imperfect. That said, they have a use.
Sam is currently a 3 imho, but he has enough tech chops to be able to work with 2s effectively. I think any sufficiently large tech company, especially if the tech is complex and/or consumer-oriented, needs at least one 2 and one 3. OAI is a great example of this.
I’m pretty sure Sam can’t do any of the AI work on his own, but he knows enough (or learned enough) to be able to empathize with the AI leads, clear roadblocks for them, and otherwise support their work in an effective manner.
How would you go about moving from Group 1 to Group 2? As a mostly technical person, I'm not allergic to the business side of things, but I kind of don't even know where to begin. I understand the product side of things reasonably well, but things like LLCs, accounting, finding lawyers, figuring out how to hire marketing people etc. are pretty opaque to me
> As a mostly technical person, I'm not allergic to the business side of things, but I kind of don't even know where to begin.
I’m kind of biased. I think b2b sales experience selling anything is a great way to learn core business skills — things like finding the true business problem (it’s rarely what your customers say), navigating the gatekeepers and decision makers, negotiations, etc.
As I have said elsewhere, starting a small agency is a good way to start. If you know some 1s, figure out ways to do sales and business operations for them. Many 1s are terrible at sales and hate the scut work of business operations. Just make sure to charge enough so that you can pay them well and pay yourself enough to be worth your time. The key is learning how to add value above and beyond supplying access tech talent.
Note that this is not easy. There is a lot of suck in sales (and agency management), and there is a reasons sales people make a lot of money. But if you can’t do this, you probably shouldn’t start your own business. Running a business is a lot of dealing with day-to-day suck and embracing it.
> LLCs
This is a one-day or less research project.
> accounting
Word of mouth in your area. Possibly online if you’re in the US. Also possible in a day (or maybe 8 hours across a few days).
> finding lawyers
Same as accountants. The good ones will jump out at you by the way their clients talk about them with effusive praise and specific examples.
> figuring out how to hire marketing people
Ahh… now this is a tough one.
The short answer is that you have to be the 3 in marketing — that is, you need to know enough to hire and work with specialists who aren’t willing or able to do the business or tech work on their own, and you need to know enough not to be bamboozled by the charlatans (and there are a lot of charlatans in marketing/sales).
At early stages of a business, you should probably do it yourself, and you have to be good enough to do that. A 70% effort is usually enough to get a solid business revamp off the ground. This is all learnable.
Once you hit growth and revenue, you can hire an agency. The best agencies will not try to milk you, since they have enough business. Pro tip — don’t be an agency’s smallest client.
If you are savvy, you will ask around for folks who have had good marketing people, and you will get to know these folks. Tap them and/or their network when you need people.
A lot could be written about this, but I will just say that learning marketing has a huge roi, and having access to a good network of marketers also has a huge roi. Communities like the Dynamite Circle or Hampton are low key ways to help develop these networks.
This mindset that technical cofounders are essentially “coders” (a term I hate) is very prevalent among inexperienced nontechnical founders. I know I’m preaching to the choir here but a lot of technical people have deep industry/business/product knowledge and have social skills. It is very frustrating when some Ivy League 25 year old PM/management consultant tries to pitch you on their vision while treating you like an idiot savant they can easily take advantage of.