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The classic formula for a tech startup is that technical founder(s) build an MVP, get funding, and then bring on non-technical staff as required, this leaves the majority of the equity in the hands of the technical founder(s).

However, this is not always the case, Airbnb was founded with Brian Chesky as the CEO and majority shareholder, despite not having a technical background.

I'm currently being offered to join a fintech startup with promise as the CTO and technical co-founder. However, the founder and majority shareholder has no finance or software engineering skills and is not brining any initial cash investment to the table.

Among software engineers, there seems to be a sentiment that ideas aren't worth anything without the skills to bring them into reality, and thus that technical founders bring the most important skillset. However, clearly, this must not be the case otherwise founders like Brian Chesky would not have been kept on as a CEO and majority shareholder.

My question is, how can I evaluate and understand the skillset that my non-technical founder brings to the table that is vital to the success of the startup, and that means he deserves a majority share in the company?

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    Comments are not for extended discussion; this conversation has been moved to chat. – Neo Dec 16 '20 at 17:28
  • @Issel From what I understand of the question: OP would be starting the company just as much as the other two founders. – JS Lavertu Dec 17 '20 at 15:53
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Among software engineers, there seems to be a sentiment that ideas aren't worth anything without the skills to bring them into reality, and thus that technical founders bring the most important skillset.

People that think that are wrong: there is no point building a product unless there's a market for it. You can make what is technically a wonderful, brilliant system that does all sorts of cool stuff - but it's worth precisely $0.00 unless somebody (in the long run) wants to use that product.

Many technical folk are notoriously bad at actually understanding the market, customers and the need to produce deliverables which actually do something rather than just use the new shiny tech in a fancy way. Having someone in that company who does understand all that stuff is at least as important as having the right technical folk, because it's actually easier to change the technology you're using than it is to change the product you're building and the market you're selling that product into.

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    Although, the founder evidently has no background in finance either, so it's unclear to me what the cofounder is there for. – EJoshuaS - Reinstate Monica Dec 16 '20 at 19:23
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    To take AirBnB as an example, the technical side of the business is simple -- I could probably hammer out a minimum viable product single-handedly in six months or so. The hard part is convincing people to make their homes available for short-term rentals. – Mark Dec 16 '20 at 23:31
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    This feels like a generic commentary about technical vs non-technical value. This question brings more context than that: the non-technical founder is not bringing money (and I'm reading into that also they're not bringing funding) and it is not mentioned that they have superior sales, customer base or product definition experience. These should be clearly identified or it is becomes a reasonable question just what do they bring. – StephenBoesch Dec 17 '20 at 3:41
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    @Barmar Jobs is pretty much the perfect description of a founder that understood the market. He did have technical skills, but his business sense was MUCH greater. Apple is a great example, not a counter-example. – JS Lavertu Dec 17 '20 at 15:59
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    The answer very deliberately says "many technical folk", not "all technical folk" or just "technical folk". One exception doesn't mean anything really - of course there are some technical folk who understand business, but there are lots that don't, and a terrible attitude among many of them who assume that the only thing that matters is the ability to write code. – Philip Kendall Dec 17 '20 at 16:08
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Ask.

Ask about the history of the startup, what are the goals, who had the initial idea, and what the business plans are for developing the company.

There must be something in there to get this thing off the ground.

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  • The founder had the initial idea and created a business plan. However, is having the idea and creating a business plan enough to justify a majority stake in the company? How can I evaluate what the founder will bring to the business as it progresses and as I build out the product? – Adam Griffiths Dec 16 '20 at 12:08
  • Surely you'd be talking about these points in your interview/onboarding process? – Snow Dec 16 '20 at 12:10
  • His answer was he has some experience from a previous failed startup, and that he brings the vision and passion for the product. – Adam Griffiths Dec 16 '20 at 12:12
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    Having an idea, creating a business plan to make that idea a reality, is one of the hardest things outside of actually making that idea a reality. Lots of people have ideas, most never take that first step, the rest mostly fail at making it a reality. Don’t under estimate the amount of work that individual has brought to the table. If he is a founder and the “idea man” that’s pretty big. – Donald Dec 16 '20 at 12:14
  • @AdamGriffiths, failing at a previous startup can have some significant advantages, like having learned what not to do. – computercarguy Dec 16 '20 at 20:57
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Because it depends on who takes the risk.

Here's a simple illustration on this.

  • Situation 1. Alice the Business Savvy Guru and Bob the Tech Savant are friends and decide to try launching an idea they had, with each of them chipping in 10k and owning half the company.

  • Situation 2. Alice has an idea and she gets funding (self funding, friends/family, angel investors, whatever) so that she can pay a salary to Bob to execute it.

In the second situation, Bob is just a regular employee. He's being paid a regular salary. Alice is taking the risk - she stands to not earn a dime for her efforts to launch the company.

The companies founded by non-tech people tend to be ones where the non-tech person took the risk, and the tech people that implemented the project were paid traditional salaries. The companies founded by tech people were ones where, if the startup failed, the tech people were going without pay.

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    There is a third variant. Alice has an idea but no funding. She gets Bob to execute it for free (payment will come later when the product is successful). In that case Bob takes a big portion of the risk. You can often see this variant with strangers or friends. – some_coder Dec 17 '20 at 9:34
  • Yes, the third variant is the situation I am in. – Adam Griffiths Dec 17 '20 at 11:28
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    @AdamGriffiths Then it seems that you are providing the venture capital. She raised the funding from you. – moooeeeep Dec 17 '20 at 13:23
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ideas aren't worth anything without the skills to bring them into reality, and thus that technical founders bring the most important skillset.

This is slightly wrong. True that ideas aren't worth anything. It's the execution that counts.

However, technical skills are a very small piece of the puzzle, even in a tech start-up. Most software developers can make something that would make money but lack all the other skills required, such as:

  • Sales
  • Marketing
  • Branding
  • Legal
  • Operations
  • Accounting
  • Project management
  • Business management
  • etc...

You could ask the same question about a technical founder. What value do they really bring. A founder with funding can start a company and just employ an agency to build their product.

Usually you would expect a non-technical founder to bringing something to the table. Other than non-technical skills listed above, this could be resources like:

  • Funding
  • Contacts
  • Patent and IP
  • etc...

I've worked with a lot of tech start-ups and usually the non-tech founder provides funding, contacts, sales and business management skills.

My question is, how can I evaluate and understand the skillset that my non-technical founder brings to the table that is vital to the success of the start-up.

with promise as the CTO and technical co-founder

Are you taking a share (becoming a stakeholder) in the company or just a job. If it's just a job, then is it really your business to evaluate and understand the founder? (rhetorical)

As you're joining as a CTO, literally ask. Ask about the company and what the founders do. If they don't bring anything to the table, then it's up to you if you work for them or not.

Founders deserve whatever shares they have. They founded the company and take the risks that come along with that, they may or may not provide anything else, but people rarely get what they deserve based on their skill set or how hard they work.

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  • If it's just a job, then is it really your business to evaluate and understand the founder? The one thing is that you would at least want to know either that the founder is a good leader or that they'll at least get out of the way and let someone else be a good leader in their stead. If a startup suffers from bad leadership, you may be out of a job pretty fast. – Panzercrisis Dec 17 '20 at 20:39
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Among software engineers, there seems to be a sentiment that ideas aren't worth anything without the skills to bring them into reality, and thus that technical founders bring the most important skillset.

Think about how many people you know who have the skills to program something. Think about how many people you know who have the skills to raise 10 million dollars. Which skill set is rarer? Which is more important?

To be successful, you need a good idea, good marketing, good execution, and MONEY.

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    Raising large amounts of venture capital requires the ability to inspire confidence. You have to be a confidence man, better known as a conman. Like Donald Trump, or Alan Bond in Australia. In both cases the businesses were not profitable but by force of personality they convinced people to keep bankrolling them. Alan Bond in particular was very popular for taking the America's Cup away from America. He wasted an incredible amount of investor money on 12m yachts doing it, but it certainly reinforced the perception of him as being a winner. If you can run the con, a good idea is incidental. – PAW Dec 17 '20 at 4:41
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AirBnB does not involve any technical innovation, it's just a brokerage business with an app.

As such, the only technical skill the business needs are people proficient in building apps, who you can hire easily, and you wouldn't draw these from a pool of people you'd have to give equity to.

In the same way, I'd expect the investors to question what value a CEO brings to the venture. If they don't, then that is to some extent their loss, but be prepared that they still expect a company worth their investment in the end, and if you are the only contributor to that value, you will have a stressful time ahead, doubly so because you will also need to document your contributions.

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The key questions for a startup really are:

"What problem are you solving better than it can be done now?", "Who will pay you to do this - and are there enough of them?" "How can you maintain your lead over competitors?" "Do you/your team have the requisite skills, contacts, and drive to make this happen?"

Maybe the problem you are solving for customers is solved with some unique technology that is being developed. There are some great companies doing this.

But often it is about someone having insight into potential customers' needs, deep understanding of how value can be delivered differently, and the networks, skills, and motivation to pitch it, raise money, and take action.

You see plenty of ideas that are solutions in search of problems. You need to be solving a problem that matters.

Most functions within business tell themselves stories about how they are really the most important one (and should have top level executive committee posts too). Marketing is everything. Finance is everything too. So are the people. So are operations. Software engineers are no different in believing they are the people who really matter.

Lately I have seen precious few new financial sector startups where the value proposition is truly based on some unique technology ("but it uses the internet" no longer qualifies). It usually has more to do with an idea for meeting an unmet customer and/or exploiting some structural issue within the sector.

So ask yourself: Why can only the founder do this? What is their novel insight? What is the valuable opportunity they have found?

(I would say as a word of warning that there are a lot of me-too "fintech" startups around now. Ask yourself why this one is one different.)

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What does a non-technical founder bring to a tech company?

Not a lot, unless he has the network to make things happen and the marketing skills to attract funding.

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    "Not a lot, unless they bring a lot"... – JS Lavertu Dec 17 '20 at 16:13

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