4 Qualities of an Excellent Non-Technical Cofounder

Hamster

The search for cofounders is tough. And there’s a notable tension out there in the world between engineers and perceived “idea guys” – go to any Meetup or founder dating event, and you’ll meet people on both sides of the divide about who’s bringing what value to the table. Engineers invariably think pure idea guys are bringing something akin to the hamster-creating-art image above – and admittedly, idea guys often only have a rough sketch of what they want to build. This article helps bad idea guys become legitimate non-technical cofounders.

My cofounder and I often have a conversation that revolves around :

F1: Engineers are constantly approached by people with ideas who want us to work for equity only, many times for a minority stake.  When pressed, it’s clear that most have not put much effort into developing the idea. I have my own ideas and many people approaching me.  If I can’t separate you from the crowd, I’m not going to jump in with you.

F2: Well, for us business types, it’s simply a matter of plowing through enough meet-and-greets to connect with that one technical cofounder who has enough balls and vision to jump on board what I’m selling.

F1: Your time is better spent working on developing your idea, getting any sort of traction to separate yourself from the crowd, and understanding engineers. If you have a good idea with even minimal traction and true respect for your potential technical counterpart, you’ll be surprised how much easier it is to find a strong technical co-founder. Remember the ratio of idea guys to technical cofounders (anecdotally 40 to 1) and find a way to set yourself apart.  Establish an online presence for themselves as a domain expert, get potential customers lined up, pull together marketing collateral, narrow in on some designs…

We have a general hypothesis (and discussions thereon) that the matching process between non-technical and technical cofounders needs to be improved upon. And if you couldn’t tell from the above exchange, my cofounder is the coder and I’m the non-tech.

WHAT ROLE WILL I PLAY?

I met my prospective cofounder during a purposeful search.  I had a Big Product Idea, I had a working prototype that some friends & I had coded together during a hackathon weekend that was well-received and was actually fun to use, I had the start of a promising advisory board, I had lots and lots of political capital and marketplace news stories piling up in my idea’s favor – but I didn’t have a great marketing plan other than “we’re going to steal the thunder of the existing apps that don’t have the features this does,” and I didn’t have a tech team to help me build a polished MVP or take the product through iterations.  And my own attempts at learning Objective C were dismal – I was looking at probably 1-2 years of a solid dedicated learning environment before I would be able to connect my own dots into a meaningful app beyond Hello World.  So while trying to chat up my cofounder about my idea, he shared one of his, and I liked his just as much.  But now I was in a quandary: if I’m not THE idea guy -if I’m not originating the product- and my technical cofounder is, what role would I play?

I figured out that even if he had the original idea, I would still play the role that the Idea Guy needs to play on his own ideas.  I would take early lead on marketing, customer development, branding, design, financials, and operations.  (And I hopefully already passed the beer test.) But sometimes, when strangers are duking out the cofounder process, the conversation gets sideways into a “Me vs Him” workload discussion.  Check out this exchange on Hacker News.  And this thread between Idea Guys and Engineers.  And this bash.  And this guy who apparently argues with himself.

VISION: UNCLEAR vs. CLEAR

In economic terms, the area under the effort curves represents the respective value of each person’s effort.

Here is how BAD-IDEA-GUY Professionals (BIG PRO’s) conceptualize the amount of work involved in building a tech product, where the BIG PRO effort is in Red, and the Engineer’s
effort is in Blue. ->

BIG PROS tend to think that their own effort only starts in earnest as soon as the Engineer has built an early version of the BIG PRO’s product (the red curve starts after 0 on the x-axis). Even though they recognize the Engineer will be doing more at the beginning, BIG PROS inherently believe that they are going to be doing at least 2/3 of the work for the company in the long term, and the Engineer will have it easy once the product is released. (In economic terms, the area under the Effort curves represents the respective value of each person’s effort, so double the area means double the effort and value.) To make matters worse, even though BIG PROS internally recognize that the Engineer deserves at least 33% of the early enterprise value, they then try to cram the Engineer down to take 5-10%, thinking they’re being shrewd dealmakers. As a seasoned dealmaker, trust me – there’s nothing shrewd about screwing your potential partner.

But legitimate non-technical cofounders, know that the workload looks more like
this second chart ->

where the x-axis has been shifted to the left to reflect that the non-technical cofounder’s work actually starts well before the Engineer gets involved. This early work is made up of customer discovery and audience building (the early product-market fit exercises and the early efforts at establishing a marketing channel for the eventual product). Note: If you look at the efforts of each contributor on the second chart, they’re somewhat counter-cyclical, meaning that when one guy is cranking hard, the other guy has a little less to do. One guy is more heads-down on his work than the other. When they raise their heads in a pause, they think they see that their counterpart “isn’t working as hard as me,” when in fact their timing is just mismatched on their workload. The workload is much, much closer to 50/5. And if the non-technical cofounder is doing his job right, he’s de-risking the product vision ahead of time, and acknowledging that they will need to go through future technical iterations to get the product right, requiring more and more Engineer commitment over time, not less.

EARN “NON-TECHNICAL CO-FOUNDER” STATUS, DON’T BE JUST AN IDEA GUY

So what kind of cofounders do engineers want to work with?  If you’re going to recruit a rockstar engineer, how can you be a rockstar non-tech in return?  First and foremost, you must transcend the pure “Idea Guy CEO” mentality into becoming a full-on executive, as in: “one who executes” not as in “white collar, with a title.”

Here are the 4 basic building blocks of execution as a Non-Technical Cofounder:

1) Customer Development & Marketing

As mentioned above, Engineers want you to own the customer experience.  You should know your potential customers inside and out.  What software do they currently use?  What’s their pain point you’re trying to solve?  Are they Mac or PC guys?  Where do they eat lunch?  This is obviously just a representative list of what you need to know about your potential customers.  You need to know what makes them tick, how much money they’re going to spend on your solution, and most importantly, how to reach them effectively.  Build an Ideal Customer Persona, complete with name, age, etc., as well as the likely online resources they typically use (i.e. LinkedIn, Gawker, Aha!, US Weekly, etc.), what their goals and concerns are – both that your product might address, and the ones that are just outliers.  Find a stock photo of a person you think typifies the persona.  Do research to verify all of the above.

2) Product & Prototyping

You need to be responsible for at least half of the product vision.  I say “at least half” because don’t forget that your technical cofounder is going to have good ideas about what should be there, how to implement it, and how to position it in the market.  Definitely don’t discount his/her input simply because you sold them on your idea.  So in owning this much of the product vision, you also need to play lead on defining how the product will work from a UX perspective.  Don’t know what that means?  Look it up and figure it out because that’s your job.  You should study UX as much as you study your product domain because it is via UX that you lead your customers through your domain solution.  Two years ago, Harvard Business Review listed UX as a corporate asset that needs to be managed like a brand would be managed.  Get on this.

3) Branding & Design

This is probably the hardest part for pure Idea Guys to play.  But if you’re truly handling #2 above, you’ll need to start ballparking design elements and branding (name, logo treatment, color scheme, etc.), if not handling them outright yourself.  Learn some photoshop skills and study the latest branding efforts in your product’s sector.  At least get on Dribbble or Behance to get ideas, then hit Fiverr or Elance and get a cheap first version up on the board, against which you can iterate in the future.  Better yet, get a real designer to commit even before your Engineer.  You need to have some vision about how this product is going to sit in the marketplace, and good designs will help explain the idea but also inspire others in your solution.  Pure Engineers often struggle with their own design skills, and want to know that you can help deliver on this crucial piece.  FYI to all you natural-born marketers: a good domain name or tagline is NOT a replacement for good UI and branding.

4) Personality & Hustle

Lastly, you have to be easy to work with and know how to just get shit done. You have to pass the beer test. And you have to be willing to get out and sell the product. You. Not AdWords. Not a VP of Sales. You. You have to deliver the customers, the strategic partnerships, the financing, without being a PITA to your Engineer. Startups are an all-hands-on-deck exercise – sometimes the team will need you to play a role that you’re ill-suited to play. And sometimes your technical team will have to help with sales. So buck up, get it done with a smile rather than an attitude, and make your business happen. Be a leader.

You want the status of cofounder and a technical cofounder deserving of the CTO title? Take responsibility for the full half of the business that you actually have to deliver on, and recognize that a good chunk of that needs to happen on your idea before you build anything. And for you Engineers out there dismissive of the business guys – in this day and age of >1 million apps on the market, breakneck evolution of consumer trends, globalization of products and markets, and enough noise in the market to drown a DJ, remember that your technical chops need the support of people who can market effectively, close customers, and operate the minutiae of a fledgling business. These things can’t be solved with a plugin. And the following admonishment applies to both sides of the Biz/Dev (no relation) divide: don’t be stingy on the equity – if you’re not staying up til 3 in the morning coding your own product while also conning rich kids out of their lunch money to fund your project, then you’re no Zuckerberg, so don’t even think of offering the other guy 5% or 10%. The work on both sides is equal, and equally important to the success of the company.

 

This post also appeared on LinkedIn here.

 

(Title Image courtesy of Christophere Campbell)

Iteration Brings Success Too

A little more on Innovation versus Invention from Martin Zwilling at Entrepreneur.com:

starting a new business that builds on an existing technology or business model is usually less risky than introducing that ultimate new disruptive technology… The advantage of imitation, with innovation, is that it gives you a solid base for building experience. There is always time later for your next startup, using that disruptive technology of your dreams. Or you may decide that your dream was not really the great idea that you thought it was.

Zwilling goes on to list 5 reasons why Innovation/Iteration/Imitation is better for first-time projects and for lower-risk projects.  I’ll add 3 additional reasons to his list:

  1. Less grandiose projects are easier to build when the founder/startup is outside of the typical technology hubs (Silicon Valley, NYC, LA, Boston, Boulder, Seattle).  Innovation is an “outsider’s” best friend.
  2. Investors are investing in fewer Series A rounds (we are in the tail end of the Series Crunch mentioned elsewhere) so if going after seed or angel money, keep this in mind when choosing which idea to actually commit to – because the seed and angel investors will be looking at the potential for future rounds when deciding where to put their initial investment. If you can anticipate these concerns, you can still effectively position yourself for investors that are looking for more of a cash-flow return than a unicorn, albeit it at smaller raise amounts.
  3. Lifetime entrepreneurs (“Lifers”) are not investing their time and effort in the potential “walking dead” startups that can’t get through the A round crunch.  This includes startups and products that just don’t produce enough revenue to attract new investors.  If your sincere numbers produce an estimate that your idea is a $10-20 million product, then it’s not the typical “swing big” idea that Lifers and Series A VC’s typically look for.  Rather than a home run, these ideas are at best a double, and might have trouble attracting bigger rounds at higher valuations. So you probably will have less competition in this market size. Less competition means you can focus on just building a good product, without the distractions of strategic interference.

You Don’t Need Disruptive Technology to Be a Success, Iteration Works Too | Entrepreneur.com.

Ideas: NDA or No NDA?

As a former attorney to entrepreneurs (tech & entertainment), I was asked about NDA’s and sharing ideas probably more than any other topic.  If you’re trying to start a business, should you share your idea with other people, or should you try to get an NDA to protect it?

INVENTION VS. INNOVATION

If your idea is patentable, then get NDA’s up until the time you finish your patent application.  Patentability means you have 17 years to monetize your market for your idea so time is somewhat on your side.

However, if you’re innovating on an idea and it’s not actually patentable (which is 1000% more likely the case in a business setting) – then STOP WORRYING ABOUT NDA’s because time IS NOT on your side, and asking for an NDA means:

  • by default, you’re moving too slow, and
  • you’re not ready to actually share your idea with anyone.

A valuable business idea is one that you put into practice now – not later – and start carving out value for yourself.  Start building your audience or customer base.  Start determining your pricing strategy.  Start finalizing an attractive design for your solution.  If you can’t share an idea without fear of someone stealing it – then you haven’t done enough with the idea to actually move it into “build” phase with the help of other people.

So, if you’re Innovating and not Inventing:

  • move quickly
  • share wisely, but openly
  • validate the idea with potential customers
  • build a team around the product, and
  • get it to market before the market shifts away from your solution or people find a better workaround.

You can get better details of this analysis on this blog post.

Header Image 1

Ideas: When To Share & When Not To

As a former attorney to entrepreneurs (tech & entertainment), I get asked about NDA’s and sharing ideas probably more than any other topic. When it comes to story ideas, it’s better not to share with “just anybody” because stories can be told very easily in more than one way. A story about a meteor crashing into Earth? Has been told numerous times in various ways to various degrees of success. But when it comes to business ideas, the same doesn’t hold true.  Business ideas can’t be simply retold – there’s true function to a business that needs to be built, to be coaxed out of a market.

In my law practice (and to my wife’s chagrin), I have never advised a client about a certain legal strategy just because it made more paid work for my firm. So if a client asked about the necessity for an NDA, I could have said “Sure, that’s a really smart move, and I can draft one for you in a little less than an hour at the standard hourly rate.” But that was rarely the case because clients rarely actually needed an NDA for legal reasons – really all it served was to make themselves feel better about a conversation with someone they didn’t know. (If a client asked about an NDA for a discussion with someone they knew, then I’d tell them they were being a jerk and charge them for the phone time.)

So when is an NDA appropriate and when is it unnecessary? A connection of mine on LinkedIn posted a helpful image of “Invention vs. Innovation” (see insert below) that I think sums up the distinction very well. All you Interweb readers out there must understand that Invention is different than Innovation. If you have an Invention, then get an NDA from anyone you share it with in the period before you get a patent (emphasis on Getting a Patent).  If your idea is not patentable, then you’re actually Innovating and don’t worry about an NDA.  I’ll explain below.

WHEN TO NDA – INVENTION

Ideas that are patentable are granted a controlled monopoly over the idea for 17 years.  That’s what a “patent” is at its essence – a government sanctioned monopoly.  If you’re developing a new drug, or a new kind of power generation, or a new kind of radio, then you need a serious amount of time to get it right and bring it to market.  Get an NDA in this kind of circumstance until you get your patent because 1) public disclosure of your invention starts the clock on your patent – you have 12 months from public disclosure to finish your patent application or lose it forever! and 2) you have 17 years if granted a patent, so take your time and build it right – an NDA (theoretically) gives you more time.  Inventions take time.

Conversely, if you’re an established business with significant value at stake in a negotiation, you’re not inventing, but you ARE innovating.  Get an NDA from the other party so that you can complete your deal in the best possible manner without worrying about conflicts of intention or interest.  But this only applies to existing businesses with revenue to protect – this does not apply to startups.

WHEN NOT TO NDA – INNOVATION

If your idea is not patentable (you don’t have an invention) and you’re actually innovating in a field, by necessity you must move quickly because the market tends to move faster than you do.  People are creative – if there’s a problem with an existing application, often they’ll find alternatives or iterations that get them around the roadblock.  So to capitalize on your innovation, you need to move faster than the market in order to capture that value.  If you have a business idea and think to yourself “I need an NDA to protect my secret sauce” then BY DEFAULT YOU’RE NOT MOVING FAST ENOUGH AND YOU’RE NOT READY TO SHARE THE IDEA.  Move quickly, share wisely (not indiscriminately – i.e. don’t share it with an incubator team looking for a pivot), make sure people want the idea, build a team, build the solution, & get it to market quickly.  You have a limited time frame in which to monetize your solution.  There are a couple reasons why NDA’s don’t actually help you here:

  1. There’s a difference between Legal Risks and Business Risks
    Lawyers -under professional obligation to clients- must err on the side of caution. Therefore, to lawyers, no risk is a good risk because their bar license and income are potentially on the line if a client takes a bad turn from the lawyer’s advice. However, in business, there is no such thing as “zero risk” so at some point, as a leader, you must make a business decision that certain risks are acceptable risks. Sometimes even against your lawyer’s advice. This is the nature of the business world. If you can’t stomach even a small amount of risk, get out of the tech or entertainment business and go into the insurance business – trust me, you’ll be happier overall (but a more miserable person to be around).
  2. The complexity of the recipe for a business means no one will execute an idea the way you would.
    Presumably, you have some insights that extend beyond simply the idea at stake. You know the audience or the customer better. You know the strategic partnerships better. You know ways to connect the dots technologically that would take others months or years to discover. You know what the look and feel should be. You know the right pricing strategy. These are all moving targets that even you – the idea expert – will have to adjust as you go along. How likely is it that someone you mention the idea to will a) drop their own ideas in favor of yours, and then b) execute the idea the same as you or better? Get real. If they can do it better, then guess what – that was the wrong idea for you to bet your career on. Go back to the drawing board. No NDA will protect you from your own inability to execute the idea.
  3. Industry norms are for No NDA’s.
    Don’t be that guy that thinks their idea is more important than the person’s integrity you’re sitting across from. Again, if you’re at the “can’t share because it’s too fragile” stage, then you’re not ready to start building it.

Being a good entrepreneur means taking risks as a leader, innovating faster than the market can move away from your ideas, rallying support for your idea – from an internal team and from an external customer base, and executing well.  Don’t let paperwork stand in your way of a winning business.