Should I negotiate to be a co-founder?


7

My friend, six years more experienced than me, has invented a marvelous device that I consider has a huge potential in the market. He has already filed for a patent. The research is currently funded by university. He wants me to join as a researcher in the project, invent and file a few patents together with him. He plans to start a company in a time-frame of a few months to an year. I would consider an investment into commercializing this device as a lower-than-usual risk; but the execution of commercialization needs to be well performed.

From my perspective: I work in a somewhat different field and joining him will be a non-trivial change of field for me. OTOH by joining him, I get the opportunity to file some patents as a co-author and reap the benefits of commercialization.

I understand that the basic invention was his idea and he has already progressed with it quite far. Therefore he should definitely have the lead position in the company. I have to negotiate my future position: Should I negotiate to be called a "co-founder" of the company? Having such a "title" would give me good visibility outside the company. I fear that if I do not negotiate this, I might be relegated to an "initial/key employee" position, that is, visible mostly inside the firm. This is my current state in my present company but not very acceptable to me for the future. OTOH there is an element of doubt as I do not have much experience in this field.

I understand that negotiating the share in the company is also important, but it might be too early and awkward at this state. There is also an element of trust and "mutual consideration" (he is much like a mentor) that cannot be quantified easily.

Edit: Why is the title important? Some of you have advised me to not go for titles. However my perspective is the following: I want the title of "co-founder" as in the future I want to be a successful entrepreneur. I want to be known as a person of integrity and caliber.

However I won't take your answer simply because you say "that's nice" or "that's the way things are". To slightly digress, to me the common practice of differentiating the "core/management team" from "employees" looks unfair and divisive. It is possible that the management team members are overrated.

Co-Founder

asked Dec 26 '09 at 01:55
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Phaedrus
183 points
  • We were just trying to save you the embarrassment of you "negotiating" for the title of founder. Again, if I suggested to a friend to work together on a venture and the most important topic they could think of discussing with me was the title "founder" then I would probably walk away from that person. It is a clear indication that the person is not serious and is not a good fit (at least for me) – Tim J 10 years ago
  • > It is a clear indication that the person is not serious and is not a good fit (at least for me). -------- Again, this is not an argument. You're just saying what you feel, not why you feel so. How can you know if you can be wrong? – Phaedrus 10 years ago
  • > We were just trying to save you the embarrassment of you "negotiating" for the title of founder. ------ Thanks for your concern. I have decided that probably I won't use so many words, but over the course of time I will try to make it a natural thing to do, as there is still time before we start up. – Phaedrus 10 years ago
  • I thought more related to the common practice of differentiation between the core team and the employees: The core team may try to retain controls over company strategy if it wants, but the economic incentives belong to all the contributing employees. Here is the approach I like: http://www.xconomy.com/san-diego/2009/03/02/sharing-the-wealth-in-a-technology-startup-how-much-stock-is-enough/ and http://rady.ucsd.edu/beyster/newsletter/top10.html Overall, I understand that it makes a moral (and likely economic) sense that I should not do to others what I would not like done to myself. – Phaedrus 10 years ago

7 Answers


8

I would not place the emphasis on titles. Focus on making a big contribution. In startups your visibility is proportional to your contribution. If you make yourself essential to the business you will have more visibility regardless of your title.

I agree that it's not time to negotiate ownership yet as you have not shown your value yet. Get involved and show your friend you can be an indispensable part of the new venture. You will then be in a much better position to negotiate.

answered Dec 26 '09 at 02:18
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Dane
1,866 points
  • On the whole, I agree with your answer. However I don't completely agree with "In startups your visibility is proportional to your contribution." That's the ideal situation. In real life, to exaggerate, what you ask for is what you get. Note also that I am talking about visibility outside the company, not inside. What I hate is the practice followed in almost all startups of separating the "management team" with the executives, though this separation might be essential for comprehension. The managers who can't be executives do not belong to a startup ... – Phaedrus 10 years ago
  • Founders are usually the only young members of the so-called management team. Given that the so-called management team is the visible outside face of the company, the only way for a young to be visible outside is as a co-founder, not as an employee. – Phaedrus 10 years ago
  • @phaedrus I'm not disagreeing with "what you ask for is what you get" just that you're more likely to be able to ask for and get more AFTER you've proved yourself than before. This is often not easy to do but in your case since the startup will not be formed for a few months you have a few months to prove yourself before you start negotiating. Note I've seen several companies where co-founders are not crucial and don't get any external visibility. Don't ever think that just having that title will get your the visibility you want. – Dane 10 years ago
  • Dane, more or less I agree with your comment. Please also see my edit to the question. – Phaedrus 10 years ago

4

When you are part of a startup, you have many titles. From founder, to janitor, to developer to chief head bottle washer. A co-founder or founder is really a classification that transcends what you really do. Now, it's important to have such classifications because it bestows a certain amount of respect to the pioneers that came together to get the idea off the ground.

In your case, as Jeff put it, you are a founder if you were with the company before it officially incorporated. With that settled, what you really need to figure out is, as a founder, what will you contribute to the company. The reason being, titles are worthless unless you build something of value. No one really cares about titles unless the venture is successful. There will be plenty of opportunities for you to gain recognition as your venture become more and more successful.

So, my advice, have your business card say founder and your other title. That's what we did at my gig and it works out fine.

answered Dec 27 '09 at 01:35
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Jarie Bolander
11,421 points

3

IMHO - co-founder is a title you automatically earn by actually help start a company. Looks a little silly on your office door.

answered Dec 26 '09 at 05:56
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Jeff O
6,169 points

3

As others have mentioned, you seem to have the wrong perspective. You are looking for a title just so that it looks good to other people. That is the wrong way to go through life and it would disturb me if I was your future partner or boss.

If you like the work and opportunity, go for it. If not, skip it, but don't do it for a silly title.

Some people would be happily called the janitor if it let them join a company where they had great work and loved what they did.

You don't "negotiate" to become a founder. Either you are, or you aren't. It isn't something that is in a job offer.

answered Dec 26 '09 at 14:03
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Tim J
8,346 points
  • Your answer is not an argumentation, but "this is nice and this is how it should be". Therefore it is not much helpful. I am looking for a title because I want to be that, and am ready to do what is needed to get it. It is just that I have to decide whether to join him or go on my own i.e. my own startup. – Phaedrus 10 years ago
  • Please also see my edit to the question. – Phaedrus 10 years ago
  • If you want to go on your own and need to be a founder, then go ahead and found your own company and put the title "founder" on your business card. Frankly, it is off-putting and I don't think it has quite the effect on people that you think it has. – Tim J 10 years ago
  • I am a little confused. Adding to Tim's point, if you have the idea and are more than capable of implementing it yourself or organizing its implementation, then by all means, make your own company. – Nbeecroft 10 years ago
  • > Frankly, it is off-putting and I don't think it has quite the effect on people that you think it has. ------ Again, is that written in stone? I don't understand your argument. – Phaedrus 10 years ago
  • @phaedrus - the comment means that if yor focus is on your title rather than on the actual venture then your mind is in the wrong place. When I meet people or read about them, the "title" founder is not really of consequence. Perhaps you live in a culture that is different than mine. – Tim J 10 years ago

2

There is a company in Sarasota FL that I was told about in a business class. There is only one person in the entire company that has a title, and that is the Plant Manager. She is the lady that goes around watering the plants.

The idea being that titles really are meaningless. For many years my title was Computer Research Specialist. But, what does that really mean? I had to define my job and determine what title would apply to it.

If you want to be more visible outside the company then try to get into a role where you do spend time talking at conferences or meeting with potential clients, so that you can be seen.

If you want a title just to make yourself feel important, then others have dealt with that issue very well already.

Your friend did the work so far, what is your expected role to be, just helping with extending the main invention? Then you may end up seeing about being the head of R&D for example, if he is going to be the CEO/COO, but if he wants to maintain being the head of R&D then you may be out of luck, and should you not be able to find fulfillment helping this company get off the ground.

answered Dec 26 '09 at 16:02
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James Black
2,642 points
  • Please see my edit to the question. – Phaedrus 10 years ago

1

I'm 10 months late replying to this... but my perspective is:

If something is important to you, you should be sure that you discuss it before you sign up.

It doesn't matter what it is. Salary, stock, office location, what brand of bottled water will be in the kitchen. This applies to any situation--founding a company, starting a job, or buying a house.

Just beware--The other party may feel that which you hold important to be trite or ridiculous (such as the brand of bottled water... or the co-founder title).

In my mind, a co-founder is someone who shows up before the company exists, goes far beyond the call of duty of a regular employee (months or years without salary, 80+ hour weeks, wears a lot of hats, does whatever needs to be done to push the company forward). The key elements here are going beyond the call of duty to contribute and incurring significant personal financial burden.

In the above described situation, if you'd be joining prior to the company starting, bringing money into the company, and not taking money out while trying to raise funds or close sales... that would be a co-founder.

answered Sep 25 '10 at 11:43
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Mitch
659 points

1

+1 Dane, hit the nail on the head.

Phaedrus: You mention outside visibility several times. I am curious as to why this is of such importance? Yes, sometimes the situation is "what you ask for is what you get". However, no matter what your title is, your outside visibility will always translate from the inside to the outside ; and this is done via significant contribution to the business itself. I know many "key employees" in different businesses that have higher outside visibility than the co-founders of the same businesses.

You also mentioned the separation of management from executives; perhaps I don't understand correctly, but if you are talking about outside management, most of the time it is not necessary this early in the business. What I'm trying to say is, the executive teams should be the managers at this point.

As for earning the title of "co-founder", I think it depends on the following factors:

  • Size of the business
  • How far the business has progressed, or what "stage" it currently is in
  • What and how much you contribute as an individual to the company (work, investment, etc.)
  • What you are hoping to get out of the "co-founder" title (equity, valor, recognition, etc.)

The best you can do is just sit down and talk with your friend. Find out what he expects from you, tell him what you want and expect from him/the business, and go from there.

answered Dec 26 '09 at 06:44
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Nbeecroft
515 points
  • I have already talked a lot with my friend. But it difficult to determine his expectations. I would go with Dane's answer of "prove it to him" but in the eyes of my friend at least that (me being on the title of a co-founder) should be considered a possibility. Also, please see my edit to the question. – Phaedrus 10 years ago
  • As per the Edit to your question: "I want the title of 'co-founder' as in the future I want to be a successful entrepreneur. I want to be known as a person of integrity and caliber." These sentences are concerning in the sense they make it seem like you're trying to "game the system". It's like saying: if I call myself Lance Armstrong, I will win the tour de France, without training for it. Having the title of co-founder will not make you a successful entrepreneur, nor will it make you a person of integrity and caliber. – Nbeecroft 10 years ago
  • > they make it seem like you're trying to "game the system" ----- What is the system and how am I gaming it? Its only that if I have a heart of gold, I am ready to flaunt it. Anyway its better to leave it to the discretion of my friend. – Phaedrus 10 years ago

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