He is not a cofounder, he is (potentially) employee #1.

Cofounders don't get brought on to do sales. Employees do.

Treat him like a good salesman- give all kinds of incentive payments (commissions, bonuses) contingent on sales performance, but be very shy with the equity. Plan on firing him as a default unless he exceeds expectations quickly.

Equity corresponds to risk and skin in the game, and it sounds like he has contributed (and will contribute) very little to either.

Bonuses are paying him for what he accomplishes, equity is paying him for what you have accomplished. If he's any good, he'll make more from bonuses than even a 50/50 equity split. If he's not any good, then equity will be far more important to him, locking it in before performance is known.

And having just reread your comment, a salesman who doesn't want to do sales but wants to do management? You need to interview more sales candidates. HUGE red flag.

Have a beer with this guy and have a good time, but don't bring him on. The world is full of salespeople who can't sell and can't do anything else either. They get by through others' hope triumphing over experience.

Say, while you're giving away your equity for free, can I be your cofounder too?

> He hesitates when it comes to sales because he does not see himself as a sales person. Having said that I think he could do it and his role would evolve over time away from direct sales into more of a management role.

I've made this mistake before. Just because that person is super smart, doesn't mean he/she can pull of what you want from the person. To find out, you MUST try working with the person for a bit.

What you need right now as you say is a sales role. Then you need to find a sales guy. You can always bring in your friend later on when you need a "management role".

If you really want to try working with him, one way to try this out is to NOT bring him in as co-founder but bring him in as an employee and pay him based on commission. That's how sales people mostly make money anyway.

Then after a while if you think he really is someone you are looking for, then you can "downgrade" his salary and propose equity instead.

We’ve had lots of sales people come through our doors and I highly suggest you interview several more here. A few reasons:

+ MBA degrees prep you for corporate success, and rarely teach you how to sell or create sales collateral

+ Hesitation re: sales means he will never be a sales person, at least with that attitude. Many (most?) sales people fail because they are afraid to cold call, prospect, do the grunt work, etc. This candidate sounds just like that.

+ Given this is your project and you are the expert, you’ll likely have to teach him how to sell it or spend a lot of time working with him to get him up to speed. I don’t think that’s possible on a part time schedule

Saastr is a good resource on this.

Happy to share more thoughts if you’d like.

-fresh MBA -no existing network -hesitant to join -wants to moonlight

All bad signs but you seem to think he would be a good person to work with so ultimately you have to decide. It sounds like what you need is 1 or 2 rich angels who have the connections to get your first few contracts, or an old guy like 50+ with actual connections and sales experience. (Pay him commissions.) Ideally you should be able to land your old employer as customer #1. Let your MBA friend strike while his job ticket is hot and get a stable job somewhere. Honestly sounds like you don’t know the industry too well either btw.

What I've learned burning through about 5 co-founding relationships over the years is that, whatever you do, you need to have a 3-month probationary period where both parties understand they can leave with minimal loss and no hard feelings. Moonlighting is fine over this period (see the point about minimal loss). If he's good and really sees value in your idea, he'll get a LOT done over evenings and weekends, if not, he's not co-founder material, period.

A cofounder needs to be ridiculously motivated, self-aware, and hard working. 95% of people who would make good employees wouldn't make a good co-founder.

Another tip: if someone is hesitant about sales, he is not for sales. Good sales requires genuine enthusiasm and persistence. Especially in the early stages, where it's all about winning hearts, and less about "sales playbooks" or established processes. I heard Dharmesh Shah (CTO at HubSpot) describe early stage sales pipelines with two words: non existent.

“He hesitates when it comes to sales because he does not see himself as a sales person.”

isnt this a warning sign to you? at such an early stage you simply dont want just a “strategy” person who doesnt want to get his hands dirty

I'd echo the sentiment around him being a top-level employee, not a co-founder. I had an option agreement as a CxO for 2.25% (never vested as I left before my cliff).

I'm not deep in the tech space, so don't know about the whats/what-ifs of it all, but would think single digits would work?

However, he doesn't sound like a good sales fit. If you value his strategic chops, can you cut him a much smaller percentage for strat work instead of sales?

It sounds like you are trying to get a sales person onboard without having to pay him up front and you’re trying to pay a friend with equity. Either you business is viable in which case this a a horrible idea or you business is not viable in which case it’s a horrible idea.

Find an employee that is willing to do high cut sales with a low salary. You don’t need a partner for that. If you don’t feel like setting up the sales engine is up your stream find a partner who’s experienced in running sales for a startup and suggest a partnering deal with him. The first thing he’ll do after getting a big equity cut is find a sales person who will do medium cut sales with a lower or nonexistent salary.

Mistake.

A "co-founder" with what sounds like ZERO experience that is shy to do sales and get his hands dirty is almost certainly going to be a failure.

These type of people are a dime a dozen and it sounds like you want to bring him in just cuz you like his personality. BIG MISTAKE.

If you ask me, bring in another technical guy and/or pay someone to help you with some market validation via sales (or do it yourself)

Trust me on this (you probably won't).. i've learned this the hard way. I've been a solo founder three times in both successful (30k customers) and unsuccessful startups.

I've worked with plenty of startups that bring on a top-flight sales person who is referred to as a co-founder, but typically the equity grant is much lower than a typical co-founder (more in the 5% or so range). There are a number of reasons for this, one of which is that the typical first salesperson comes on board after months if not longer of product development work.

That being said, there is a reason that salespeople are traditionally paid on a commission basis. Is there a reason you want to ignore that convention and, instead, detach compensation from being directly tied to each sale? This seems like an odd move, particularly when the prospective co-founder does not see himself as a salesperson.

You can grant equity on a non-time-based vesting schedule (i.e. performance-based vesting based on sales performance), if you are not ready to start paying cash or want to grant equity for some other reason.

But this person is simply untested in this role and you will not know in a couple of months whether he should have a significant equity stake in your company. So, traditional time-based vesting (and particularly with a magnitude of shares like that that would typically go to a co-founder) is a choice you are likely to regret.

Instead of a fixed equity allocation, have you considered a dynamic allocation system instead?

All contributions (cash, time, relations etc.) are converted into “slices”, with a certain multiplier for risk. For example:

* if someone contributes $X cash, they get 4X slices

* if someone contributes work that normally has a $Y hourly rate, they get 2Y slices for each hour

* if someone brings in a client for which they would have normally charged a $Z commission, they get 2Z slices

You freeze the pie when you are bringing in sufficient revenue to afford paying everyone a market salary.

% equity = slices owned / total number of slices

You can learn more about this method at https://slicingpie.com (not affiliated, just think it's a better way of going about this)

Your ARR per annum per customer is upto $100k, trust me this is not going to be an easy sales to make, your sales cycles will be longer and will be challenging for even professional sales people. Given these conditions the credentials for the gentleman doesn't look up to mark and you should see more people, go to LinkedIn find seasoned sales people and engage them on target/comission basis before offering something as permanent amd valuable as equity.

If you want to go "full tilt into sales mode" (your words) hire a professional sales person, pay them a tiny salary and very decent commission on completed deals.

Anybody who doesn't see themselves as a sales person is simply NOT a sales person ! True sales professionals are proud to be professional and are motivated to be successful selling an excellent product. I presume that you MVP demonstrates that your product is truly excellent.

> who is a friend

Do not cofound with a friend, as simple as that.

If you really want to be that generous with your work, get him on on commission and no flat until he can put in full time. Make it generous if you wish, even up to a third if it is sustainable, but never share ownership/voting power with family and friends.

Also, two cofounder is a good way to get stuck in decision bickering. Aim for three or one, any even number managing product direction is not going to work.

I feel like there is a general sentiment around my question which says "you shouldn't bring him on as co-founder but an employee". Why is that?

Paul Graham advises founders to "get a co-founder"

http://fortune.com/2014/02/25/y-combinators-paul-graham-get-...

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I wouldn't take on anyone who does it part-time, as a cofounder. Startups require a lot of focused energy. And I've never seen any succeed from part time founders.

If he's holding back, then don't take him as a cofounder. He doesn't believe in the idea or the team enough. You can still give him an employee deal, e.g. salary + up to 5% or so.

My bigger question is why do you want to bring in a co-founder? Admittingly I didn't read every response here, but bringing in a co-founder entails lots of specifics and has a ton of good, but also a lot of baggage (not all baggage is bad, it is just there).

Are you trying to get external financing? Are you expecting to apply to an accelerator? Do you just not have the cash so giving equity is easier right now? Are you wanting to break up the load? How does employee #1 differ from co-founder in your mind?

My 2 cents. MBA's are fine degree's (and people usually), but in a startup I generally avoid anyone with an MBA unless they have been in industry for quite a while (5-10 years and at multiple companies). And as an early employee or co-founder an MBA is a red flag to me unless that person was part of the original team.

Honestly he sounds more like employee #1, but if you are looking for a co-founder to help offset the load you can absolutely bring him in as a co-founder. Just remember if the company is already legally formed there are a lot of little details you'll have to go through on the stock issuance/vesting/taxes etc -- e.g. get an attorney & CPA to help you.

Also, if you just need sales help that is much cheaper and easier to find than going down this path. If he isn't interested in sales you really should figure this part out. That said, co-founders have to do jobs that they wouldn't normally do until companies grow, so it isn't the end of the world. But in the case of sales, it is literally the lifeblood of the company, so it is pretty critical.

My last point. A Co-founder is essentially someone you will spend more time with than a spouse for the next 10 years. You will literally be seeing and talking to this person daily for hours everyday (at least in most situations). You are essentially married to this person, and they will call you at crazy hours and you them and you'll be under stress together and separate which means you have to support each other. If you have any questions as to this person get them out and into the open and make sure they do the same before you sign any agreements. If they smack their lips when they eat and that bugs you, get it out now cause when you are stressed and pissed and on the fourth meal of the day for the third straight day you'll eventually blow (I know stupid example but hopefully you get the idea). Personally, I'd rather keep a friend and not have a co-founder than think I got both and than lose them both in a year.

"He hesitates when it comes to sales because he does not see himself as a sales person".

"... is holding back a bit"

"he would work one day a week + weekends (his work situation is flexible) and eventually go full-time"

HUGE red flags right there. Do not give him equity.

He is interested in startups..

That's nice and all, but unless you're selling software to startups it's completely irrelevant. You need a salesperson who is interested in the verticals your business is in.

If you want a salesperson, hire a salesperson. This guy sounds like he a) doesn’t want to do sales and b) isn’t qualified to do sales.

Forget about making your sales rep a cofounder. Just pay him for selling.

https://blog.ycombinator.com/splitting-equity-among-founders...

Sales guy here. I like being paid in cash because having ownership runs counterintuitive to my work.

Better, I get cash compensation and other benefits but not ownership/equity.

I’m a tech-background person in London, checked out this and your other post and am curious if you would want to meet? Not sure how one goes about doing that on HN, but basically I’ve worked in software engineering for several years, am intrigued by what you’re up to, would want to meet you out of interest and also to maybe get involved.

I guess if you’re interested, reply by comment and we’ll figure out the rest?

Saya ingin bergabung dengan kalian Klompok cyber..!