Thursday, June 02, 2016

How to Get Hired as a Technical Co-Founder

I recently left my tech job with a plan of finding a new challenge. In the brief time I was a free agent, I got a handful of emails from friends, acquaintances, and intros about joining them on a new venture. A couple of those turned into coffees and dinners.

All of them were people looking for their "tech co-founder". Some of them had some promising ideas and I deeply appreciated the offers, but in the end it wasn't what I was looking for.

Finding a technical co-founder is quite hard. Part of the reason that's true is that non-technical co-founders (looking to start a tech startup) will need some technical expertise at some point probably sooner rather than later. They can outsource it, or hire employee number one, but getting someone fully vested in the new company (and the idea) is a great path.

When someone technical has an idea, their first inclination is simply to go build it. I'm super critical of my own startup ideas these days but development tools are so incredibly good now that I still can usually build a quick (and crappy) version faster than I can veto the entire idea as something to pursue (which almost always happens).

Non-technical founders will follow a different path with more research and discussions with relevant people up front. Finding a tech founder is likely part of that process. It would seem that by design, there's typically more business co-founders looking for technical co-founders than visa versa.

Needless to say, if a business co-founder is recruiting you, it's also pretty much implied that they're planning on being the CEO. As one ex-business-co-founder told me, "Either of us could be CEO, but only you can be CTO because I can't code". Despite me being penalized for having a unique skill in the relationship, he had a point.

The part you should understand right off the bat is that all co-founders besides the CEO will be in the backseat for the rest of the company. On a case-by-case basis, that may be understated or it may be end up being supremely obvious but it will be the situation. By definition, you report to your co-founder. Your investors will get to know the CEO far better than you, that's who's calling the shots. During the courting period, your prospective new co-founder will tell you its a partnership (or even "family"). There's no question its a unique type of relationship, but its just as easy for those sentiments to disappear when money or opinions get on the line.

(Check out Reid Hoffman's thoughts on using "family" to describe an employment relationship)

A partnership is the right word - but is that really what they're offering? It will be before you join, but I've seen it go both ways thereafter. The fact that your co-founder is CEO and you're not is already an inherent inequity. That's already an unequal partnership.

When a prospective business co-founder now calls me, my first question is to ask what they are looking for and what they are offering. I mean the exact statements and exact numbers. I'm not saying I'm the right guy for the job, but I am saying they should know all that already and for the right technical co-founder, they should be willing to put it right on the table. The only reason to be coy about it is to hide the unequal parts of the deal.

For the moment, let's assume the situation is that they have an idea, investigated it to some degree, but have not yet raised money or built anything. Once in my life a prospective business co-founder gave me the following pitch:

I'm looking for a technical co-founder to be my partner in this new company. I expect that person to be able to fully deliver on the technical needs of the company including building the initial tech and the team. They also need to prove that to potential investors. Someone who believes in this idea completely and thinks they can make it work. Someone who will go all in on this once adequately informed. Someone I can trust.

I am confident of my ability to raise money and build the company. I believe in the idea and my ability to execute on it. I can sell it.

As I said, I'm looking for a partner not just a coder. I would be the CEO, that person would be CTO/President. My partner and I would split equity 50/50 and have equal salaries - for the life of the company.

Now that's a partnership.

I've always advised new startups to have all co-founders take equal salary and equal equity. If the company lives awhile, its a sure thing that at some point discussions will get heated. There'll be a time your co-founder needs to leave work early and you need to work through the night. Add onto that fact that he or she makes ten thousand dollars more than you per year, and the resentment will just keep growing.

Having perfectly equal equity and salary won't solve every problem, but it also won't become the focus of yet another one.

There are of course factors that can influence the equity split (salaries really should be locked, even when they're both zero) but keep in mind, the moment the equity is not equal - even for damn good reasons - you are no longer equal partners. That's forever. That will come up again. I promise.

If the business co-founder put money in already, the company should pay them back. If they came in with money already raised from investors, that's like the most valid point worth considering an equity inequity at the very early stage. Of course, if the company has been up and running for some time, the arrangement is completely out of scope for this article. A fair deal in that case looks quite different.

If I were to be pitched as a tech co-founder again I would want to hear what I heard above. What they want, what they expect, what they'll deliver, and what they are offering - in concrete numbers. If the business co-founder won't tell you the numbers right off the bat - it's surely not equal. They are selling you to join for less. Just like a used car salesman, after the sales pitch and the box of chocolates, at the very last minute, they'll slide the offer letter across the table with the value on there telling you what they think you're worth.

If you can't trust your co-founder, things won't end well. Part of that initial negotiation is telling you how they value tech and how they will value you. If they're talking you down before the company even starts, it's not likely that will stop when the money, fame, or credit (or blame) is handed out.

Technology is, like it or not, often just a means to an end. So its not all that uncommon for people to treat technologists the same way. It's up to you to defend yourself, and if nothing else, just make sure you get a fair deal.