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Ask HN: How to divide shares in a startup company that was born in a hackathon?

13 points by alexleclair ↗ HN
Hey HN,

I was participating in a hackathon last weekend (Startup Weekend @ Sherbrooke) and we won second place.

We are invited to pitch to FounderFuel, which is kind of like YC (A startup accelerator/incubator in Montreal, Canada).

There are two problems:

1) We're a team of 8 people, and some of them won't be really useful until the product is launched.

2) Some of them would like to work part-time on the project until they finish uni or decide it's a good enough move to quit their job.

That leaves 3-4 of us, mostly developers, working full-time on it if we get into FounderFuel.

We don't want to lose the talented team we have, even though some of the team members will be doing part-time work or will come into play once we launch.

How should we handle the shares within the team and the money coming from FounderFuel? I was thinking we could give a smaller part of the company to those working part-time, paying them for their work with the money we're getting to get started and giving shares on a promise-to-work basis to those who will come into play once we launch.

What do you think?

12 comments

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27182818284
8 is way too many. If you can amicably reduce that number, I'd highly encourage it. I'm kinda surprised that FounderFuel even wants to hear from a team of 8. Not to mention there are other subtle problems. For example, in my state, people with less than 25% equity have to have workman's comp insurance and other things done.
alexleclair
That's a very good point. We could reduce it down to 4, at least in the very beginning and hire the others back in once we're ready, pitch in some equity in there and everyone's happy.

How does that sound?

picc4211
We've got the same problem. Won a Startup Weekend and have a big team (6). We've debated a number of options here but everyone seems very committed so far, so right now we're working away on it and giving it a few months of breathing room to see if people naturally fall off or lose interest. I'd suspect after a little time you'll start to see who's really dedicated to the project and who isn't. Otherwise, it'll be time for an awkward team conversation about how to proceed.

I would argue that some people whose roles might seem more relevant post-launch may actually be really helpful during the development stage too. If you're looking to customer validate throughout the development process then a talented non-technical person could be super helpful in pounding the pavement, getting feedback, setting up meetings and building relationships for you. So I think it's more about having a small team of the RIGHT people rather than a small team based solely on their presumed job titles.

alexleclair
Well thought through. Right now, everyone's talking one on one with each other, asking the same questions: Do you want to stay? What's in it for me? Will it be fun? Am I willing to relocate? (Some are from Sherbrooke, a 2h drive from Montreal).

We'll see what comes out of it.

Thanks!

sieva
Definitely give it some breathing room. Goodluck trying to different levels of equity right now, could be very sticky. - Put people's feet to the fire with a money, and time commitment. (60, 80, 100hrs/week) - Then just work on it for a few months and see who's keeping up the commitment

It's easy to float on your recent win, and pretend like everyone is equally committed. People will start dropping off in levels soon enough. Or maybe not, and you have 8 amazing founders :)

alexleclair
You're making a very valid point. Thanks for the insight! :)
evolve2k
I've heard of teams requiring everyone that's continuing to front up some funds, couple grand maybe. This helps sort who's serious and who's not and provides you with a bit more cash in the bag which is good too.
dhchait
PLEASE PLEASE PLEASE do everyone a favor and have a founder's vesting schedule. Typical is a 4-year vest with 1 year cliff. Solves many issues.
alexleclair
Did not know what that was, just googled it. Interesting, thanks!
argonaut
8 is too many. I've heard many say that 5 is too many (co-founders). 4 is still pushing it.

Also, in my opinion, anyone who isn't working on it full-time becomes at that point an employee, not a co-founder.

I honestly think you should have an upfront conversation ASAP instead of trying to be nice and keep everyone on the team.

Also, is every single one of those 8 equally talented? I'm pretty sure there are some people who you already know are better than the rest.

alexleclair
I think all 8 of us are talented, maybe not equally, but still.

Will have said conversation. Thanks!