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Comment by hwestiii | Hacker News Reader

I will be that guy and say that all the discussion around who is allowed to self-designate as a ”founder” is fatuous and fetishistic. It’s an obvious attempt to amplify one’s importance beyond sense in order to provide some level of resume inflation and just dilutes the meaning of the word.

In my opinion “founder” is not a word someone should be unilaterally conferring upon themselves, but is more meaningfully applied only by others. Until you are making actual money, you are someone trying to start a business. When you actually make money, that is at least break even, perhaps you can consider yourself an “entrepreneur”. Leave the identification of “founders” to people like the Wall Street Journal if you wish for the word to retain any meaning at all.

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I agree with you with the caveat that I think it is important for two things: equity, and expected work.

If I'm a co-founder I am going to work day and night on our problem space, the tech, whatever my role is. I'm going to be thinking about it during dinner. I'm going to wake up early and stay up late and work on it during lunch breaks if I'm still an employee somewhere. I'm willing and expecting to work for $0 cash comp for months or years, or until we get investment. I'm also going to expect an equal share of equity to my other co-founders, and expect them to work more-or-less a "fair" amount when you compare our different equity stakes. I also expect to know what their equity stake is. Ballpark I would look for a floor of 25% equity before pulling out a pool for early employees.

If I'm an early employee, I will probably work more than 40 but I'm certainly not working 80-90. When I'm not working, I'm not working. You're probably not getting my cell phone number. You're going to have to pay me something, and the first time a check bounces or a direct deposit is missed I'm gone. But I'm also going to be happy with a lot less equity than 25%.

I'm willing and expecting to work for $0 cash comp

That's illegal in a C-corp, the common form of startups (in the Silicon Valley sense of "startup"). Everyone is an employee and is required to be paid the minimum wage established by law. And somewhat ironically, the liabilities created by working for zero compensation are a reason for investors to forgo investing particularly since it correlates with lack of profitability.

A 20% or greater ownership position with an active role in management of the business will exempt you from that requirement:

http://www.ecfr.gov/cgi-bin/text-idx?SID=e026726958b72eec799...

https://www.shrm.org/resourcesandtools/tools-and-samples/hr-...

You're typically not going to become a C-Corp until you take investment, at which point you'd draw a minimal salary.

Without being a C-corp there’s nothing in which to have equity or rather “equity” doesn’t mean anything much.

This is just not true. You can absolutely own part of a business that isn't a C-Corp. I've purchased various percentages of LLCs and S-Corps (and LLCs taxed as S-Corps) and not once have any of my attorneys, accountants, or the IRS come to the conclusion that the equity "doesn't mean anything much."

C-corps form the context of my comment because they are discussed up thread. Sorry for assuming that you didn’t need clarification.

> Without being a C-corp there’s nothing in which to have equity or rather “equity” doesn’t mean anything much.

Completely unwarranted rudeness notwithstanding, this comment is still 100% false.

You brought up C-corps, and legal/accounting structure isn't mentioned in any of the parent comments. Which is fair, but like I said nobody first starts a business by filing paperwork to incorporate a C-corp. They work as an LLC or sole proprietorship, and if/when they reach a point where it makes sense, they restructure. I even alluded to that in my sentence you took issue with, "or until we get investment." Yes, you'll absolutely restructure as a (Delaware) C-corp if you take venture investment, and this minimum wage law would apply - but not to the co-founders, as @adventured noted.

Obviously, clarification would not have made any difference.

Where does this obssesion with starting businesses in non-healthy way come from?

Indeed. I was the first non-founder employee of a company many years ago, joining the two founders in a tiny office. There was never any confusion about this: they were the ones that had put in the work and formed the company, and I was the one hired in a normal process.

Are you a director? Were you included in the initial distribution of company equity? You're a founder.

Have an employment contract which does not specify "founder" as your job title? Not a founder.

Working for the company without clarification of role or contract? You're ... very optimistic and have great trust in humans.

I will counter that with saying that it makes a huge difference to (1) investors, (2) the press, (3) your bank (try getting a mortgage as a founder), (4) family and friends, (5) your lawyer when talking about your class of shares and (6) the rest of the world.

I'd agree with you if we are talking about C-suite titles in small businesses or early stage start-ups.

There's a vast gulf between people A and B starting a company with person C as a cofounder vs starting the company with C as their first employee.

This is about more than just names. An employee will probably be paid better, will get far less equity and will probably end up with a different class of shares.

Making someone a cofounder is a far bigger bet and being a cofounder requires a lot more risk tolerance.

Musk became Tesla co-founder retroactively.

> In my opinion “founder” is not a word someone should be unilaterally conferring upon themselves, but is more meaningfully applied only by others.

Simply not true. It is a legal definition with someone leeway at the edge cases.

> Leave the identification of “founders” to people like the Wall Street Journal if you wish for the word to retain any meaning at all.

What? Since when did Wall Street Journal decide who are the founders? The founders tell the WSJ who the founders are, not the other way around.

Pretty much founders are those who weren't hired. Early employees are those hired by the "founders".

> Simply not true. It is a legal definition with someone leeway at the edge cases.

Can you provide a citation? I've spent five minutes on Google and all results indicate the opposite, that the title "founder" holds no legal meaning or standing. It does look like you need an agreement with the board and through shareholders to hold the title (and the title would be helpful in some situations), but that the title itself is meaningless from a legal definition.

> Can you provide a citation? I've spent five minutes on Google and all results indicate the opposite, that the title "founder" holds no legal meaning or standing.

It's called registering your company? It varies from state to state and country to country.

> It does look like you need an agreement with the board and through shareholders to hold the title (and the title would be helpful in some situations), but that the title itself is meaningless from a legal definition.

Yes. I guess the founder is not a "legal definition". But when you ( and your cofounders ) legally register the company, you are the founder.

Certainly it's not simply what others say it is. If you say I'm the founder of microsoft, it doesn't make it so. We can see who legally founded ( aka registered ) the company.

Do you count taking investment as “making actual money”?

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