Founder Agreement · Founder equity

My co-founders have genuine reasons why they can't contribute as much as I want them to, but I'm getting impatient. What should I do?

Anonymous

April 2nd, 2017

I'd really appreciate any contributions that can help. I am a design engineering (mech.) university student. Last year, a friend came to me with an idea to build a web application, being a freelance visual designer from a young age, I've had some experience working on the user experience aspect of web applications and people within the university usually approach me for advice on this at times.


I decided to be involved this time, however, after the discussion, we discovered we both lacked the necessary back-end technical skills. We decided to invite a third friend to our discussion who I naively thought had the skills to build it or would have a less steep learning curve (as he was a computer science student). We discussed the idea some more, but after some brainstorming, the idea changed a lot and wasn't like the original idea (which we agreed wasn't viable).


At this point, we shared a joint responsibility for the idea since we all contributed through discussion. However, since then I have been responsible for almost everything else. The third friend we believed would have the technical knowledge later on said he couldn't create the application so he just left us to it for some time to focus on his studies. And the first friend that approached me said he can't do much since he doesn't have the technical knowledge and can't do much on the business side unless he has a finished product to market, he drafted a few documents though on competition research which I asked him to do. Coupled with the design knowledge I have, I decided to start learning all I can about the industry and also picked up coding classes despite it not being my expertise.


Fast forward a few months, I have now created a functional MVP which users are signing up for and work mostly on improving the user experience but I am still searching for a technical co-founder. I have created all brand assets including company name and logo, redesigned the company strategy and how we can bootstrap our way to investment (doing things ourselves and not outsourcing to save cost and also to become more valuable to investors), attending events (conferences, trade shows etc) within the industry and paid out of my pocket to travel overseas to them, and naturally, over those few months, I have learnt so much that the idea has changed over time and I almost have a full grasp of what our strategy and milestones are for the next few years.


They seem to be out of the loop and I always have to report back to them on what's next or give them tasks to do before they can do anything as they don't know what to do next. I just started my third year in university and I was given a chance to do a year in the industry, and offered a decent paying internship in the UK. However, I opted to go to San-Francisco to broaden my network and worked for another company in our industry as an unpaid intern, which means I'm funding myself. Since then, I've met business advisors, potential investors and other people within the industry who tell me I need to move quicker with the business and get other co-founders.


I tried talking to my current co-founders about this (the technical one who disappeared came back after the MVP was done), and I'm currently trying to motivate them but one is in his final year of university and the other is doing his masters. So the new excuse (although true) is that they can't do much because their studies is too demanding so I'd have to wait till the academic year is finished. They contribute once in a while when it's convenient as I send a task like 'email this potential client' which I can do myself but I feel like I am looking for tasks to give them in order to justify them being a part of the project, but I'm still trying to find their value to the project.


But the opportunity cost is getting too high for me, I have to balance working at a company that's not paying me in order to meet more people in the industry for our startup and also work freelance in order to keep up with my living costs while still balancing university work at foreign country.


I'm also worried as we're friends and I agree that we started the idea together, but we haven't executed together. I can't fault their excuses, but I've never given any excuses. If I don't know something, I learn, I find time, I schedule, I work overnight, as long as it's done. But I can't force them to have that same personality or neglect their studies. I want to be fair though and not just take an irrational step due to how I feel about it, which is why I need a third opinion.


Is it time for me to move on or am I being too impatient and should just wait till they finish university or what exactly should I do?

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Steve Procter Tech entrepreneur seeks cybersecurity startup team

April 2nd, 2017

Oh heck! Welcome to the world of startups and entrepreneurship!


No two people will ever have the same desires and drive and it is guaranteed they will never put the same input into something. You are not the first person and won't be the last to be in this situation. This is why the Slicing Pie book and associated concepts are worth their weight in gold - you must read and digest those concepts. They will enable you to split the pie according to input.


But rather than reading the Slicing Pie book with a view to starting a new idea, I guess right now you need to know how best to ease yourself from the existing situation into a new one where things are resolved and more fairly structured with you and your friends. Oh and talking of "we are all friends", well sad to say, you may need to put the friendships aside for the moment, sorry if that is harsh but balancing friendship and business is never easy.


So for people to help guide you, tell us what your position currently is regarding forming a company and giving out shares or future options? Or is it all just informal and based on promises and trust at the moment? Once you've outlined that I am sure you'll get some good practical advice, but also some views from the lawyers on here about the actual legal position (i.e. you may want to take shares back from the others but legally you can't, etc).

Daniel Curran

April 2nd, 2017

I'm dealing with this exact issue as a Founder and SuperAngel. You need to either take the role of sole founder with independent contractor staff paid only with deferred options/cash or find new local non-student founders at meetups. Use cash flow from any sales to hire and only convert contractors to full time employees on merit. svexec at hotmail dot com

Shel Horowitz I help organizations thrive by building social transformation into your products, your services, and your marketing

April 2nd, 2017

Now, while you are small and not producing revenue, is the time to cut your losses—but do so intelligently. If they do this little when you have no offering yet, there's not much chance they will perform for you in the future when they can count on you to pick up all the pieces they drop. Tell them informally that you'd like to buy out their interests and find out what they want in return. **Spend some money with a competent IP (intellectual property) lawyer** with international experience who can draw up a severance agreement that feels friendly and approachable to them yet protects you in any country if they come back later when you're successful; write up a draft first to save money. Don't short-change yourself on this. You want it to be absolutely air-tight. The document must have them relinquish any control of or financial interest in the original idea, the modified idea you're working with now, and the execution of that idea—the products/services you will be selling and the systems you create.


I do wonder if you've spent too much time on things like the brand and logo before you're really clear enough about what you'll focus on. Also if you've properly protected yourself against trademark claims (your IP lawyer could help with that, too). And if you've had anyone with marketing expertise look them over before you go out into the world.


Note: I'm a marketing guy, not a lawyer, and this is not legal advice.

Niels Koizumi

April 3rd, 2017

YOU are an entrepreneur and they sound like millennials!


If what you say is accurate then you have been more than patient because it doesn't sound like either of your "partners" has created any real value or sacrifice. People love to talk and dream of glory but rarely want to put in the work and, even more, assume the ownership of thinking & creating something with an obsession. People like you are founders and people like them should be employees for someone else. My initial reaction to your situation was "who owns it?". If you have an agreement that gives them undue ownership of what you've built, i would suggest a full freeze and come to jesus with them before you grow even more value in the platform and they will become an even bigger obstacle. If you don't have contractual agreements but you have trademarked the brand and have records of the work you've done, communications with them, receipts of expenses, etc, then start documenting their inaction in email and keep going.


In general, you sound like an ambitious spirit. As a fellow-founder myself, i can tell you that very few (none for me, so far) understand what "ownership" means and will do as little as possible especially when someone is taking the lead and doing more.


I am curious to hear about your platform if you care to share

Steve Owens

April 2nd, 2017

Don't hire people until you are ready to scale - meaning you have a proven, repeatable processes for developing profits.


Outsource until you're ready to scale. Raising money is better use of your time than educating yourself on every skill you will need - plus, your focus should be outside (talking to customers, vendors, partners, etc) not inside.


Fire (they have already quite) the other partners - get a lawyer to help you make sure any equity split is fair.



Kevin Zhu a founder, from China , Fintech project

April 4th, 2017

We the same. I also started a project with my best friend. And then, I'm busy. Do you guess the final result? That is to disband. However, I suggest that you can do this, 1 to give them a sense of mission and spirit. 2 you do this thing with all one's strength.