Business type founders are too greedy with their equity and thinks idea is king

Funny to see most of those ideas type are ex-consultants from Bain, Accenture, etc and MBAs. Is there are trend going on here ?

I've seen how a techie got screwed by the founders(financial types) after he created the initial website for them for free in KL. Techies need to be more street smart and don't end up getting short changed. 

Equity, this is an important component. Don't always think tech is 80% of product while in fact it is just 20%~30%, the rest are either designer, finance, operations, users managers.

There are also reasons why equity is not given in big block. Do you want to buy back your equity when your startup is having a deadlock problem? Think wisely.

To start an accountancy business, you need accountants. You either pay them or you give them substantial equity, you can't tell the accountant that there are other roles in the company like designer, finance, operations, user managers and so they should be happy with 20% equity and no salary.. and expect them to join you?

The same applies to an Internet start-up. To start an Internet startup, you need programmers. You can't offer 20% equity and no salary either. Esp. in a market when there isn't that many great programmers around. 

I do agree that there are start-ups that do not need as much tech. In those cases, perhaps the business founder can pay the programmer instead. 

It depend on what stage your startup is. If just in idea stage, I think all co-founders (no matter what role you are playing) should put some money into the company to show the commitment, equity can be discussed as what value-added you bring into this company (programming skill, market access connection etc). If the startup is already running a while, then you just pay the salary or give a small equity from your option pool with vesting.

I guess everybody is free to negotiate a deal that seems fair to all parties involved (or what we can get away with). My theory is if it is an internet start-up business, the programmer could also start a business and give the business person 50% equity then only put together a fund. Instead of the programmer joining someone's idea, getting 20% equity and even have to put in funds.. all that before being directed around because 20% has no decision power. In fact I've seen 50/50 work many times, esp. early stages. Just putting my opinion out here (for a more balanced view from a techie/business person perspective), anyone is free to try anything that works for them. I only hope that more start-ups be successful rather than die because of unnecessary power/equity struggle.

Ya, each party come out 10k and both get 50% seem fair to everyone.

Good. 50/50 works yeah? How about this, there is one more founder, very talented, wish to join in, and you guys agreed to make it 33% each. This founder is smart, bringing in another smart guy, want equity too. In the end, there is 5 founders, each with 20% equity. Happy ending, right? Except that you soon find there is no captain in the boat ever dares to direct anything.

Tell me, how do you know you only have 2 founders in your whole boat? Not 3? Not 4? Not 5?

How about your early employee? You left them nothing? Having at least one co-founder is great, how do you justify others?

Back to your programmer thing. It doesn't applies only to programmers. It also applies to designer, finance, operations, users managers. How do you justify them, obviously you will need to pursue others for their dilution too, justify it in different stages of your company. Suddenly the business develop is important, and you need to find a co-founder, how to give out the equity? Still sticking to 50/50?

Yeah, put 10k for everyone is good. Buying them out 100k is even better. Tell me, how are you going to avoid that with your current thinking?

Most of all, if I am a talent, justify to me how that work. Instead of telling to YOURSELF how it works, tell others how that work.

Care to share what worked for you?

Let me be straight. You told us that 50/50 is good. Now I tell you the poison is. You have to counter what the good or bad in it. If you want us to share something, kindly leave something too.

I can counter in many ways actually. There are many answers to your questions on Quora. I've been through the co-founder thing through an accelerator programme. Everything is just a Google away. There are plenty of successful 50/50 two-persons start-ups in the valley and locally. I'm not saying it should be 50/50, I'm saying it should be more equal than 20/80 for the programmer to join you for free. But besides complaining you haven't shared your side of the story and how much success you've had with your own setup. When you say 'us', did you mean 'me'?

Us, is you and me. I don't believe in just me typing alone with all the content. Especially in this early hour and with things to finish.

You might see it as complain, take it as a real world stimulation. Every founder has to face with the same question, some neglected to look it seriously. Behind every company, there is a shareholding structure. This shareholding structure will determine our future, either succeed or fail.

When you people says founders are too greedy and should given more than 20% out. There is a golden thumb we should remember: The first people that you find will always get half of the preceding one (That's you). If you read this carefully, it means founder will get 66%, while the second co-founder will get 33%. Then another co-founder will get 1/3 of the 33%, 16.7%. And the equity goes on.

You started to complaining you got 10~20% from founders (business or whatever), might be it is a little less. Think this, eventually, the above law will certainly ensure the founder control as the founder retain 50....% of the equity. You will eventually ended up with 10% after dilution. Plus, there is need to be a captain to made all those hard decisions. Look back at Facebook, none founder remained there.

Now, does 20% non diluted equity sounds nice to you?

If you never cared about the vision, the company, the dilution, the future, go ahead with 50/50 rule. Alas, you can't even commit something that is worth commit, you should automatically be filtered out by your founder.

And don't think you are builder (designer, techie, business, everyone else) and you are the only one committing. You are one of the only many to commit into idea till a grown up product. It's everyone's baby. Justly, everyone should get a share, but there isn't a 150% equity for everyone.

I think I'm long overdue working on my start-up tonight. Anyway, seriously if you look up Quora you'll find plenty of explanation of splits. It comes down to what deal you can strike without applying any formula. The real world is that not too many programmers will jump for joy at 20/80 and no salary. And I still haven't heard your success story yet having shared that I'm in a 50/50 two-cofounder arrangement via an accelerator.

Finally, I will say all your concerns is the reason why many start-ups don't start well or start at all, just waiting for the right conditions (e.g. an expert programmer who would take 20% or less who somehow loves your idea rather than his/her own and want to volunteer for a minimum 1-3 months, even putting his/her money in excitedly). IMO, what is more important is the chemistry of the two co-founders. They both should try working together first since there is vesting with 1 year cliff.  I'd say most start-ups don't last 1 year. When both co-founders are full-time, they discover/expose things and have to talk it out or split. 1 year is when the 2 persons can gauge the value each brings. Using an analogy, dating first before signing a pre-nuptial agreement seems reasonable. But if discussing the pre-nuptial agreement before dating and then saying that the other half should just get 20%, I think that was the last date.

Wei Loon, in the case you mention, it is not co-founder but employee. Then you don't even need to give equity but you need to pay them according to market rate. If you say startup don't have much more money. One of the main responsibility of the leader (CEO or founder whatever) is to source funding to keep the company can sustain and grow no matter you get it from investor, family, friend or fool. Else you can only offer a big portion equity to convince the one you really need and join as co-founder at no salary.

It is an issue of shareholding structure. It is a real world issue. Your concern is already out of topic, and that is not my concern. My concern is that you don't get it, seems always seeking to repeat mistakes. And I am not sufficiently impressed with your "accelerator" too although you mentioned twice, pardon me. And what is beyond my ability, not my concern.

Heard of SP Setia, Phileo Bank, Twitter, MySpace?  You need to study deep about shareholding structure before we really goes deep into it.

After all, I got no interest in your venture or whatsoever. One advice: From your reply and others, I can tell straight into your face you are just novice. You need to improve it, a lot.

Maybe there is no chance we meet, but if there is, just chat about this and you will find out more. Anyway, do your homework first.

Benson, WHAT? You expect the leader to take care everything? Share burden with your team. They are there and they have the right to know and listen and do. Things goes two way. There are many responsibility of leader, the main one is to decide priority and to set course.

This is a good time to promote the other roadblock. Malaysian entrepreneurs are their worst enemy sometimes. 
Quality of the entrepreneurs itself

Yes Wei Loon, I always consider myself a novice and continue to listen, learn and evolve.

Hi Wei Loon, not everything of course. If you look into my previous reply carefully you will realize I only point out one of the responsibly of the leader is seeking fund to keep the company alive and grow.