founderLets say B,C,D want to part ways with A in a pre-launch phase startup. The product is almost finished but it seems the team is not working out as well as planned. The startup has no official company and was on planning phase for a month and development for another month.
Founder A: Had the idea (actually stole from another startup), brought together the team, found logo, picked name, had the initial vision (which was proven to be wrong and pivoted away from), some other misc tasks. Has no technical or creative skills. Has people skills. Runs another successful startup which is in growth phase. Spends about 10- hours a week on this startup. Has 30%
Founder B,C: Left their old startup to work on this fulltime. One is a good designer & ok programmer, the other is a good programmer. Duo has a better vision for the product. Spent about 90+ hours a week for this startup. Both have 30%
Founder D: Is an addition to the team, his first startup experience. Is a good programmer. Is working half time cause still in school. Spends about 20+ hours a week for this startup. Has 10%
B,C,D want to keep A as an advisor and give him 1%. Or pay the cost of his time and move on.
A claims he is the original founder and did most of the work in this startup and deserves at least 10%-15%. This does not seem logical cause in the long run and investor will take a look at the company and ask “WTF is this, are you guys retarded?”. And most likely not fund the company because of that red flag.
What is a good solution for this problem without damaging the friendship of these founders?
My advice isn’t going to please any of you, but it may open the doors for kinder voices to offer in. I would say that you are all suspect in the eyes of any invester, no matter how you work out your current power struggle. Two months of intense work on an idea with no formal written agreement between you and no corporate wrapper to shield the idea from internal theft… this doesn’t speak highly of any of you in terms of discretion.
At this point, I would seriously recommend disbanding your group, so that each member can go join a properly run startup as a junior member. My advice to each of you would be this… once you have joined a well organized and governed team, keep your eyes open and learn everything you can about the business side of this game.
A great idea is nothing. A great idea plus skilled effort is a product demonstration. A great idea plus skilled effort, plus business knowledge, marketing connections, market analysis, funding for advertising and operating costs, etc., now you have a startup. Add passion, leadership, commitment and loyalty, and maybe, just maybe, now you have a chance to succeed.
Team is the number one variable for any seasoned investor. If you cannot assemble and maintain a good team, and founders are already skirmishing with each other, that is a huge red flag.
An unseasoned investor will put too much emphasis on the idea, and accept a sub-prime team. That is not the case with the more experienced ones. I heard a VC say once: it takes US$ 5 million to create a VC. In errors.
Bottom line: if you are able to assemble a great team, that’s the real asset. You can always find the idea after the team is great and working together like the gears in a clock.
And, for the answer of the bottom question: I would just abandon the idea altogether and keep the friendship.
It sounds to me like each party owns the IP they created. Period. But if you want real advice talk to an attorney.
Just reproduce the pieces that A created or negotiate an agreement.
2 months of work should not be hard to replace.
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