Ask HN: Startup Co-founder working on a lot of other things. Advice? | Hacker News Reader

Ask HN: Startup Co-founder working on a lot of other things. Advice?

13 pointsstressedfounder13 comments

Some background: I am currently working on a startup, and there are 3 of us. We're in the UK. We've been at this for about 3 months now.

I'm technical (coding etc), the other two are more business focused. They are planning the product out, I'm building it for them (it's a dashboard basically, showing charts and graphs, fairly standard stuff from my perspective).

Division of shares is 20% (me), 40% for each of the other founders (Mr X, and Mr Y).

The startup is Mr X's idea. He convinced myself and Mr Y to leave our very nice jobs and work on this full time. Mr X told us he would be doing this as well, but he has not. He is heavily involved with a number of other startups (I think 4 others).

Myself and Mr Y are banging our heads against the wall. We get Mr X on a call for an hour each day, which he is often late for as his other calls run over. Sometimes he is late to other calls as our call runs over.

Things that need to be done by Mr X just aren't getting done, it's me and Mr Y doing most of the work at the moment.

From my perspective, I think the idea is good, the industry is interesting to learn about, and I'm happy to sit and build out a dashboard, but it won't work without Mr X's full input. He's a very smart guy, and very knowledgable about this industry, but he's just not pulling his weight.

We are pre funding. Myself and Mr Y are currently relying on our savings, Mr X I think gets income from his other projects. I think we will be able to raise money, Mr X has a good track record in regard to funding.

We have tried:

* Asking Mr X to give up equity until he is on board full time. He would look into it...

* Straight up saying on calls, "we need you to stop working on your other projects and focus on this. we quit our jobs for this". Lot's of "yes that's the plan" etc

* Threatening to walk away if things don't change. Mr X gets very upset, promises to fix things...

So, what the hell do we do? All advice is welcome! Thanks

Mr. X is living the dream. He has two guys trying to build his idea, does not pay anything for it, and still has 40% equity.

I have a couple of interesting ideas which could lead to a successful startup, hit me up, I'm always looking for good developers working for free.

You and mr.Y forms majority in current company. I think if the regulations permit in UK, dilute Mr.X's share down to whatever percentage you think is appropriate or incorporate new company if nothing works.

This above thing works unless Mr. X has lot of leverage in other aspects like domain knowledge or clients.

If you are invested in the idea, I suggest you work on gaining the leverage before attempting anything.

As a 4x founder myself (serial, not asynchronous), I don't think the concept of a "portfolio" entrepreneur is necessarily bad. However, if Mr. X is directly blocking progress then that is a problem. If you aren't being paid, that is also a bit worrisome. If he has a good track record, I am surprised he doesn't have seed money already to fund him at the idea stage. Another red flag would be if you and Mr. Y didn't really know or interact with Mr. X previously. Usually, successful entrepreneurs have fairly good network of resources and often times work with people they might have worked with before. Just saying they red flags and you may want to be cautious about how successful he may appear vs reality.

Is it possible you can bring someone else on that can do his role?

Does he have a vesting cliff for his own equity? How is the company formed regarding voting rights? Does the company own the IP? If you and Mr. Y effectively have 60% voting to his 40%, and he is vesting, you should be able to remove him and use his un-vested equity to bring in someone else.

If you don't have a company formed with proper stock/voting/vesting/ip assignments in place, then I would immediately stop until this is done. You have very little legal recourse. This is were co-founders get into huge legal problems later on. This should be a non-starter. You should immediately make claims on any IP you have committed if there is no agreement in place.

The biggest misconception is that ideas are worth something. They really are worthless. Execution is everything. Good ideas fail all the time. When two companies with the same idea compete, the one that executes better, mostly will win.

It is a huge risk to quit your day job to work on a project like this full-time. My last recommendation is to search internally for why you joined this team? Maybe it was exciting to be doing your own startup, or maybe you felt it would be easy with Mr. X to get funding. But startups are incredibly hard and 9/10 fail. So you should make sure that you honestly believe that the product/service is valuable and that this team can iterate it to market.

Your 20% of shares + Y's 40% of shares is a controlling interest. That's enough to fire X. Good luck.

If you're in a position where you have to constantly twist a cofounder's arm to work hard you probably don't want to work with that person. Did you sign any paperwork with Mr X. yet; if so try to buy out his share? Probably talk to a lawyer about an IP release form in any case. I have dealt with this a few times before and a lawyer once told me "Money changes people" -- and that might be true once you start making money. Also, are you early on that you can just quit and rebuild with your friend who actually does work? Also 40% equity for 0% risk--imagine how far that equity can go in raising money rather than lining someone's pocket who does no work.

"Myself and Mr Y are currently relying on our savings, Mr X I think gets income from his other projects."

" it's me and Mr Y doing most of the work at the moment."

It is just a matter of time before things crash. Extreme Red Flags here. Mr X seems like the type of person who knows what he is doing so it is unlikely he will change and only focus on this specific project. You need to either get more equity or get out fast before burning more savings.

If you are working for nothing, all the work product (code) is yours. (There is no transfer of copyright document, right?) Quit, and bring your code and the one other guy and start your own company. Probably need to sue the leech for breach of contract, too, to dissolve the old thing cleanly.

An idea and $5 will get you a Starbucks.

(This is not legal advice. Do get a lawyer. They might have smarter ideas.)

I run a legaltech in the UK. Other than dealing with a similar case with my own co-founder (I ended up splitting ways very early which in hindsight I'm glad I did), we've dealt with a case on the platform where one co-founder wanted to oust the other for similar reasons. Not even thinking of this with a legal lens, if trust is already an issue, you need to have a 'hard conversation' with him. Trust is everything at an early stage, more than the problem.

I think outside the worrying mechanics of the situation here with you and Y working for free and etc.

It's pretty clear communication just isn't working out either. It doesn't seem like you trust X to do what he says / he isn't doing it ... if there isn't trust and communication, I think this venture may be doomed to conflict and the usual bad things that come of it.

I'm in a very similar situation. My partners have other business besides the startup and I believe this is one of the main problems that's blocking our growth.

I suggest you: (1) to define tasks for your partners on a board (like trello), then just follow the tasks if they are being executed. (2) to have a limit date for the startup to profit and grow, and if the date is not met think about leave the startup.

Time is the most valuable asset. Use it wisely :)

An ultimatum is useless if you don't actually carry it out when the push comes to shove.

You are working for free, please don't do that; Mr. X is taking advantage of you.

Never, ever, form a company without having a provision to earn the equity over time.

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