I've lived recently through a experience in which I failed to convince the founders into making me a co-founder. Two very successful entrepreneurs (with many successful exits, one of which worth hundreds of millions of dollars) invited me a couple months ago to join them to work in their idea. I started working part-time at first, getting to know them, and from day one, I stated I wanted to be their co-founder, not employee. I tried to stay part-time until I was more sure of how working with them would be like.
We assembled a team, refined the vision and were then negotiating how everyone would join it, so we could build the MVP. I was ready to work full-time, but suddenly, they were trying to reason with me that % of equity doesn't matter, what matters is the number of shares you own, and tried to offer me a regular salary + options (not even a decent salary). I tried to convince them about why % matters, and why it was fair for me to get equity, but then they told me that this model doesn't work when they are the investors who are going to put millions of dollars into the company, having effectively the control of dilution over me.
I proposed ideas that would take care of the dilution problem, but it was no good, they weren't really listening to me, using the same arguments over and over. This was the first red flag that raised in my head, and later, we started disagreeing on how to build the company (I was showing them how the Customer Development Model works, showed them the canvas from business model generation and all). I noticed they had very strong beliefs on how to do it, and weren't willing to discuss it with me. That's when the illusion popped and I noticed, I wasn't a co-founder, and ended up getting a call a week ago with them saying that "maybe I wasn't ready to face the risks of starting up" and that I shouldn't participate in the meeting later that day... It's a shame, I liked the team, and the idea was quite interesting, but no way I would put 4-6 years of my life into this without being a co-founder.
In retrospect, I think that what caused our issues was mostly the fact that they never had another co-founder and all of their previous startups were bootstrapped. So when I asked equity, they likely saw it as too risky, even though we worked together and they saw my determination and skills.
One of the biggest differences between cofounder and employee is the direction of money flow. If you're putting money in and working, you're a cofounder. If you're taking money out as a salary you're an employee.
One of the biggest differences between cofounder and employee is the direction of money flow. If you're putting money in and working, you're a cofounder.
Yes, this is certainly true, and I was putting money in as well, but the amount I could afford to. Remember that these founders are worth hundreds of millions of dollars, while I just graduated last December. The best way I could contribute to them was with dedication, effort and work. I wasn't asking for a salary (I got enough to sustain myself for a couple years), just equity, which is another way of putting money in. I was putting in all the money I could afford to, if it went bust, I would need a job after a couple years.
We assembled a team, refined the vision and were then negotiating how everyone would join it, so we could build the MVP. I was ready to work full-time, but suddenly, they were trying to reason with me that % of equity doesn't matter, what matters is the number of shares you own, and tried to offer me a regular salary + options (not even a decent salary). I tried to convince them about why % matters, and why it was fair for me to get equity, but then they told me that this model doesn't work when they are the investors who are going to put millions of dollars into the company, having effectively the control of dilution over me.
I proposed ideas that would take care of the dilution problem, but it was no good, they weren't really listening to me, using the same arguments over and over. This was the first red flag that raised in my head, and later, we started disagreeing on how to build the company (I was showing them how the Customer Development Model works, showed them the canvas from business model generation and all). I noticed they had very strong beliefs on how to do it, and weren't willing to discuss it with me. That's when the illusion popped and I noticed, I wasn't a co-founder, and ended up getting a call a week ago with them saying that "maybe I wasn't ready to face the risks of starting up" and that I shouldn't participate in the meeting later that day... It's a shame, I liked the team, and the idea was quite interesting, but no way I would put 4-6 years of my life into this without being a co-founder.
In retrospect, I think that what caused our issues was mostly the fact that they never had another co-founder and all of their previous startups were bootstrapped. So when I asked equity, they likely saw it as too risky, even though we worked together and they saw my determination and skills.