Ask HN: Solo founder and MVP. New co-founder equity split?

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?

Great advice. Thanks for this.

It is not great advice. This early on, there is a big difference between someone who comes on as employee #1 vs a co-founder especially in terms of ownership, but not a big difference in terms of risk exposure. If you are positive you've found product market fit, hire a sales person but don't be surprised when the sales person can't sell due to a number of product problems. I would not expect that person to own the product in the same way as a co-founder unless you treat him as such.

Parent comment places way too much premium on equity at a time when equity is worthless.

There are good points here, but I'll present the other side.

If you have MVP but no customers, funding, or employees, 98% of risk is still ahead. There are important, identity defining questions about the business ahead, from how you position yourself against competition when marketing, to your recruiting process, to a multi-stage financing strategy. From experience, it can REALLY help to have a co-founder who is motivated at the "I'll make this business succeed" level to discuss those things and to implement them.

Is this that guy? It's smart to complement yourself with sales experience, but is he someone you want to have holistic business conversations with? If so, give him the co-founder title. If not, look for that person... going alone as a solo founder will be much harder if you are more of a builder than a seller.

Equity is a different story. Put both of you on a vesting schedule. Start your own vesting earlier, so that on day 1 you have 100% of vested equity. Make the _rate_ of vesting roughly match the [responsibility split / contribution to value / endurance of risk] going forward. If the positions are roughly CEO / COO or CEO / CRO, his rate could be 25-50% of yours (corresponding to a 15-35% of fully diluted grant).

I think this is a fair comment, but a couple of things give me pause based on the original ask:

- Unwillingness / hesitation to do sales - In an early stage startup, and especially as a co-founder, you need to be willing to do what needs to be done, even if it's outside of your comfort zone. As the technical co-founder, you're still going to be involved in the business, and probably even selling yourself. People who are more interested in managing or high-level strategy than getting their hands dirty is a big red flag in my opinion. What would you think if your first dev hire was really more comfortable being a manager, but was "willing" to develop software for the time being?

- Commitment level - if he's working a couple of days a week for an indefinite period of time, that's an indicator that he really doesn't have "skin in the game". If you want to go forward, I would consider something like bringing him on as a consultant, and making him a co-founder if and when he's fully ready to commit.

Agreed on the commitment level. When working part-time, he would be a consultant (working for free) and would get equity when he comes on full-time.

>What would you think if your first dev hire was really more comfortable being a manager, but was "willing" to develop software for the time being?

Well put.... it's making me think twice...

But you are comparing this guy in a vacuum.

How many other people will have sales experience, commitment etc to a new product that has not even launched? Is there someone better than a person you trust (to be smart, competent, honest etc)?

I agree a little that experience can't be discounted, and a lot that trust can't be.

That being said, it's all pointless if they don't have drive. And the one-two punch of hesitation of doing sales combined with initially only wanting to work a couple days a week tells me that this individual is definitely not ready to commit. I think that can be a trap especially with more experienced people - it's easy for the startup to be something speculative that they take a wait and see approach with than something that is their sole professional focus.

The other part that's worrisome, and this could just be me reading too much into it, but it feels like Blackstone4's perspective is slightly paternalistic towards this potential cofounder. He's younger and recently graduated. He wants to push him into a growth area. He talks about giving him equity rather than how much equity the cofounder should get or deserves. But nowhere in the description is what this potential cofounder could bring to the equation. What is the startup missing that this cofounder would add? In what area would this cofounder be the authority because he's more capable than his cofounder?

That makes me wonder whether this person would be an equal in the endeavor or would he always be a second. A cofounder should be someone that covers your weaknesses and can support you during the trying times, because very few startups don't have those times. You should be wary of a dynamic where one person is more of a mentor to the other.

Why would he not be a cofounder?

At the moment, I have an idea and an MVP. I have three advisers who I brought on in a semi-formal capacity. Two are senior investment managers and one is a serial entrepreneur having started companies in the same area. I speak to them maybe 1-2 a month to get advice and they are listed on my website.

In reality I have zero revenue and it will take 5+ to build this company. I've barely started.

I also read this article on YC: https://blog.ycombinator.com/splitting-equity-among-founders...

I have a similar backround as you with less coding experience (asset management blk). I also programmed my site at night and quit my job.

When I started selling I resalized that I hadnt thought the product through properly. You need to learn whether you have by having direct conversations with customers.

If you rely on a salesman you will blame him/her instead of figuring it out and making adjustments. After you get your first few sales, then hire your sales guy/women.

YOU DO NOT NEED MANAGEMENT. There is nothing to manage.

This was my original plan. The idea would be I sell the product myself. Win 2-4 clients and work closely alongside them to improve the product. Upon achieving product-market fit, I would hire a sales person using my savings. Possibly raising venture funding if need be.

Do this (and keep your friend)

In the U.S. & around the world sales pro's earn multi-six & 7-figure incomes (Read: more than most physicians, attorneys, engineers, etc.), yet most founders fail to recognize their import. For example, startups regularly task a co-founder or, gulp, initial admin hire to engage a prospect list or subset thereof. It is an enormous mistake that yields suboptimal adherence to best-practice and crucially, a flawed data set that a founder may clumsily use to forecast growth, churn etc.

The sales talent required to build processes, identify most promising inbound/outbound prospect funnels, execute script/price-point analysis & closing ratio's, etc. to bring a v1 to market is immense. Respectfully, your friend is woefully unqualified to serve your startup well. A B2B with pricing model you've suggested requires a 10x pro.

Where are you located? Website?

This x 10000. A salesperson is not a task where mediocrity is acceptable. Without sales nothing else you do matters. A great salesperson and crummy product have a chance at success. A great product and a crummy salesperson are doomed to fail. No product or service can outrun bad sales.

Your friend isn't a salesperson. If his pedigree and smarts can help then fine. But he isn't a salesperson. Candidly, you are the salesperson until you have 7 figures of revenue. I'm serious. No one knows the product like you. Find other people to do the other things and dive into selling.

I completely agree that an excellent sales person is worth their weight in gold. Right now I don't know any. I would love to meet some.

I'm based in London but I was in the US for the last 4 years. Moved back because of with the visa situation it was just easier.

B2B enterprise sales is all about networks and contacts. A late 20s MBA will have none of these. You need someone who can work their existing extensive network as well as cold call, and get you in the door in front of real budget holding decision makers. I've worked on rates & FX trading systems in London for 20 years and know several guys like that who all do commission and equity points comp deals. PM me via contact details if you want to connect.

Thank you for the offer. Do you know anyone in the alternatives space? with domain knowledge of private equity?

For what it's worth, I do weekly consulting and coaching with founders who don't have sales experience. If you're interested, we can talk a bit further.

Never forget Guy Kawasaki's method (paraphrased here) for how to value a startup.

For every engineer, add $1 million.

For every MBA, subtract $250k.

What's -$250k in startup valuation worth in terms of shares?

My offer to cofound your venture is still a far better deal because I pledge I will not lend my name nor contribute any work. That makes my contribution to your startup $250k greater than the other guy, so I should get $250k more worth of equity.

Just my nickel's worth of free advice.

I agree. It sounds like you are asking this because he seems like he's almost the perfect fit, but you know he isn't and you want us to tell you he is not so you can feel better about it.

I've been there, having an almost perfect fit immediately available is the easy path, otherwise you have to hunt and do dirty work and it can take awhile and you want someone you know well and you want it now, that is understandable. It doesn't sound like the guy wants to do what you want him to do, and it doesn't matter if you think he'd be awesome at it if he'll never do it, or only do it half-assed and begrudgingly.

You can't be a cofounder with one foot in the door and one foot out. He's gotta be all in. I've had promising startups that relied on co-founders with expertise, but they wouldn't take the leap and good advisors said the same to me, so I bailed and they never went anywhere. A cushy job is very addictive.

You have a need so the best thing you can do is find someone who will specifically fill that need with a passion. You probably don't have money to pay them, so you are looking for another way to compensate, but that's the rub. Good sales people will want to get paid, unless they are insiders who know they can make it work and just want to suck the equity from you and try to make the startup theirs. You could almost make that work, but good luck with that scenario.

It's hard to bring in a cofounder this late, especially if they won't go all in, you are looking at giving away at most 10-15% if they really are awesome, all-in, and stay for 3-4 years (and probably not getting paid). If they are bringing money with them to invest, then it changes a bit.

>Good sales people will want to get paid, unless they are insiders who know they can make it work and just want to suck the equity from you and try to make the startup theirs.

I mostly agree with you but the above point is very cynical. The skilled salesperson that OP needs may well recognize that they want to take the company from 0-10MM in sales per year, but that they may be unable to help take the company from 10MM-100MM a year in sales. In that case, knowing that you are likely to need to leave a company you helped build, asking for equity makes sense.

> 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.

> You can always bring in your friend later on when you need a "management role".

Also worth keeping in mind that general purpose managers (as opposed to subject matter specialists taking on managerial tasks) is probably at least ~25 hires out. There's simply not enough to manage to sustain a full time position before then.

Agreed - so we are going to start out with him working one day a week plus weekends. That way he can understand the product and start doing some sales calls. We can figure it out from there.

I know potential clients or can get introductions where needed through my network. The real work will be in running the sales process + shoe leather. Then managing the company (i.e. legal contracts etc.). Building the product takes up a lot of my time.

The alternative is that I bring on a technical person and I do more of the sales.

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.

Thank you for your thoughtful response.

I agree with you on MBAs.

I think when it comes to sales, he is not very confident so he talks himself down. I suggested a sales book for him to read and we shall see where he comes out on that.

I feel like he is personable and gets on well with people. He's also a hard worker. So I think it could work but I acknowledge it's a risk.

Also I don't want him just for sales. I have a lot to do between tech, finance, legal, sales etc. If he could come in and lighten the burden that would be great.

He doesn't have domain knowledge so I would have to get him up the curve on the industry and the product. Good point.

If he doesn't see himself as a salesperson because he's not very confident (as opposed to because he thinks he can do other stuff as well) he's unlikely to an answer to your sales problem. Even if he's competent at the business analysis side of stuff, selling in the $15-100k range is going to take a certain amount of persistence and judgement.

If he can do the other mostly less critical stuff then the fact he wants to keep his current job is actually a good thing for you: pay him for his time and expertise when you need it and offer him a salaried job with options if/when you have revenue, funding and a proper position for him several months down the line.

I've done inside and outside sales, and have hired employees to do inside sales. I have a number of outside sales / manufacturer reps who I periodically talk too.

- Hiring is not that much different from sales in my opinion. If you are doing recruiting, you have to really sell yourself and your company on why a prospective company should work for you, over other companies. You need to vet many prospective candidates through cold calling, interviews, etc if you don't have enough prospective candidates in mind. In a startup with a lot volatility, a prospective employees first concern should always be bringing food on the table. In addition, you have to sell your company + ideals + yourself even more if you are hiring someone who you've never worked with (e.g. someone on indeed.com posting), and expect to have a probationary period (1-3 months) where you might have to fire them. Ideally, you should know from selling B2C or B2B experience how well that sales person should be performing (how many sales they should be getting per week, etc)

- MBA =/= Sales. MBA is for upper level management on corporate structures, and is not a necessary skill for selling at all. You stated you had advisors for this already

- Looking at your other comments, this sales person is going to be doing hard-sells by phone call, soft sell through website leads. Sales is a hard earned skill. Its really not something you learn in a textbook. The most difficult part of sales in general is dealing with the laborious grunt work task of cold calling people, coping with potentially high amounts of rejection, following up with CRM, etc.

- Your going to have to spend some time educating this employee on the software. Not to profound technical efficiency, but enough to answer all the questions a prospective business might need to know about it (e.g. how much is it [fixed amount, quote by quote basis, how does it help them save money/time/resources in the long run, do you have well known companies / competitors running your product, etc)

- A salesman with potential networks is worth more than someone who does not have a network. A good example of this a bank account manager. When a bank account manager moves banks, they generally take a large % of all their clients with them to the new bank. The same is true for lawyers who move law firms as well. Having someone with an "in" saves a lot of time since you don't have to deal with a decision maker's secretary at a potential business, etc. This "in" is pretty analogous to applying for job at a specific company and not knowing anyone at that company for referral, its a harder road to climb but still doable.

Those are just general things to consider. Have expectations clear in writing moving forward. What responsibilities he will be handling and what compensation he will be getting as a result.

-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.

I know the industry fairly well but I have never done sales before. Mostly out bound calling / research where I've been the investor.

I know potential clients or can get intros through my network. I have three advisers who I brought on in a semi-formal capacity. Two are senior investment managers and one is a serial entrepreneur having started companies in the same area. I speak to them maybe 1-2 a month to get advice and they are listed on my website.

You need to at least get the product working for the potential clients you already know.

They're your network not his.

CEO is sales to employees, investors, customers etc.

your always going to have to sell to big clients and help out your sales people.

Then you’re good to go! (Although you should make them formal advisors with incentives.) If you can’t land clients based on that network, fresh-MBA no-network-or-experience guy is not going to help.

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

Fair point. I think when it comes to sales, he is not very confident so he talks himself down. I suggested a sales book for him to read and we shall see where he comes out on that.

I feel like he is personable and gets on well with people. He's also a hard worker. So I think it could work but I acknowledge it's a risk.

I also think two pedigree guys from XYZ asset management firm launching a SaaS company will find it easier to raise capital from VCs than a solo founder.

Which book did you recommend? Maybe others can make suggestions as well.

The book is: New Sales. Simplified.: The Essential Handbook for Prospecting and New Business Development

https://www.amazon.com/New-Sales-Simplified-Prospecting-Deve...

I read it in January and found it really helpful

> I also think two pedigree guys from XYZ asset management firm launching a SaaS company will find it easier to raise capital from VCs than a solo founder.

If you can sign and retain customers at ~$15k-$100k/yr with any kind of scale on a product you basically built in your spare time, prepare for your pedigree to come up ~0 times in fundraising conversations.

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?

What is your reasoning for top-level employee vs. co-founder?

To my mind, a co-founder is someone who directly contributes to not only developing the solution to the problem you're facing, but choosing the problem as well. You've already decided on the problem domain (investments), how you're going to solve it (SaaS), and have an understanding of the potential growth models you'd look for (bringing someone in to ramp up sales).

Of course, if you're open to someone only working one day a week on it to come in and challenge all of that and potentially pivot into something else, then they might be a co-founder. But from what you've described, they're a very senior hire (and might not be right, with sales you want to hire for passion, rather than academic smarts), rather than your co-dependent.

I was employee number 3, but I certainly wasn't a co-founder.

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-...

I do not feel like you convince somebody to be a cofounder, they convince you they must be one.

If you're talking him into it and it turns out he just doesn't have the capacity or passion for it which you'd like him to have, you're in for a huge disappointment.

Look at it another way—you're trying to seal a larger commitment on paper so you're buying into risk without getting anything tangible back on that investment compared to investing in him as employee #1. Fallout from a bad first employee will never be as bad as fallout from a cofounder you want to remove.

Because co-founders cost you equity and even a few % of the next Facebook is still many millions of dollars. Or so the thinking goes.

PG says to get a co-founder because (I'd assume) from what he's seen sole founders are much less likely to end up with the next hotdog stand, much less the next Facebook.

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.

What would you view as a reasonable compensation structure for a guy like this for his first few sales?

50% cut on the first sale? Higher?

I was advised:

* 20% of first year revenue on a cold call (deeded to be generous) * 7% of first year revenue on warm lead (incoming from website) * 2.5% of year revenue on a renewal

Interesting, thanks.

With or without base salary though?

With a base salary. With the comp above, ~£25k (~$35k) in base salary so fairly low with the expectation that a good sales person can earn well over 6 figures.

This is in the UK so expect the US to be higher.