Differences between Co-Founter, Investor, First Coder:
Co-Founder:
- Starts the compamy, has the idea/initial impl
- Takes risk, may work for a while with zero salary, investing personal time for nothing.
- May wind up getting ZERO (total) for the investment.
- Company does not get paid, co-found does not get paid.
- Big potential payout
- Health benefits? Post funding, or from other job while building startup.
Investor:
- Puts money into company.
- May lose everything, that money is just going to the founders for some food and servers or something of that nature.
- Payout depends on investment size. However lets say compared to co-founder, small payout.
- Minimal invested personal effort compared to co-founder.
- Invested time assisting the company and connecting the company to personal contacts to help it grow.
- Provides advice when needed (hopefully)
First Coder:
- Gets paid less than average coder
- Gets potential payout less than investor
- Gets paid or laid off. There is no in-between. May agree to not get paid this month and instead get paid later in hopes of assisting the business during a tough month.
- Has to be pretty close to the business since it's so volatile, so will see the lay-off coming.
- Probably coming in with benefits provided to employee.
As you can see risks/benefits are quite different for everyone. So its not just "you are getting screwed".
I think that getting a very small % is actually practical depending on how far along the company is. The question is about how much risk is being taken, and how much is being contributed.
A smart co-founder will see the contribution of a very valuable employee and offer more % to that employee especially if they are so critical to the company. Its not about employee #1 its about the fact that during the early phases, each individual person has the ability to make big things for the company, and they should be rewarded for those big things. Keeping life static is quite boring and no incentive. Yet having incentives for employees transforming the business early on is quite good.
The term "coder" is a demeaning one that is solely used to denigrate the contributions of product developers.
If you are the only product developer at a company, you are not a "coder". The correct title would be Director of Product Development, or VP of Software Engineering.
Assuming we're talking a typical Silicon Valley startup, then you're incorrect.
VCs rarely fund a business person without a technical person as part of the package. That person is CTO or VP Eng. They, having committed and worked before money, will be a co-founder and receive a fair bit of equity.
A first employee is somebody who comes after funding. They are hired to help build. They may have a variety of skills that will come in handy later. But early on, they, like the technical cofounder, are their to code, code, code.
Co-Founder: - Starts the compamy, has the idea/initial impl - Takes risk, may work for a while with zero salary, investing personal time for nothing. - May wind up getting ZERO (total) for the investment. - Company does not get paid, co-found does not get paid. - Big potential payout - Health benefits? Post funding, or from other job while building startup.
Investor: - Puts money into company. - May lose everything, that money is just going to the founders for some food and servers or something of that nature. - Payout depends on investment size. However lets say compared to co-founder, small payout. - Minimal invested personal effort compared to co-founder. - Invested time assisting the company and connecting the company to personal contacts to help it grow. - Provides advice when needed (hopefully)
First Coder: - Gets paid less than average coder - Gets potential payout less than investor - Gets paid or laid off. There is no in-between. May agree to not get paid this month and instead get paid later in hopes of assisting the business during a tough month. - Has to be pretty close to the business since it's so volatile, so will see the lay-off coming. - Probably coming in with benefits provided to employee.
As you can see risks/benefits are quite different for everyone. So its not just "you are getting screwed".
I think that getting a very small % is actually practical depending on how far along the company is. The question is about how much risk is being taken, and how much is being contributed. A smart co-founder will see the contribution of a very valuable employee and offer more % to that employee especially if they are so critical to the company. Its not about employee #1 its about the fact that during the early phases, each individual person has the ability to make big things for the company, and they should be rewarded for those big things. Keeping life static is quite boring and no incentive. Yet having incentives for employees transforming the business early on is quite good.