I’m running a business that’s currently doing around 32k a month at ~85% margin after 2 years in operations, no funds raised to far. I have a friend who is an MBA and only held corporate roles up until now. I’ve been running companies my entire life, and had one exit that was 42.5M US.
We discussed partnering up, and when i mentioned a buy in or 10% equity split (with no buy in) or some combo of the two, he backed off pretty quick.
Turns out he expected something around 40%-50% with no buy in. To me this is just unintelligent? Especially from an MBA.
From what i'm reading, you seem like you need employees or outsourcing, not partners. Why would you even bother with this person, their incentives seem all misaligned.
Not sure if they approached you, or vice versa -- but people often approach with deals like this because they are trying to find suckers who they can dupe. And sadly, they find them.
Totally agree. To be honest, I think a 10% offer here would kind of lead to the worst of all worlds: too high for the person to be considered an employee, but too low for the person to really be considered a partner.
I've seen a case where a company was started by a very small, relatively inexperienced team, and then had 2 much more experienced "business people" join later. These 2 business people were actually given "founder" credit and equal equity stakes, because it was clear these folks would be integral to the success of the business (and, indeed, in retrospect, they were, and the business became quite successful). I point this out because it's an example were the addition of some later stage business people does deserve large equity stakes. But given the original commenters history (e.g a previous large exit), it doesn't appear that's the case here, so it doesn't look like he needs a partner to begin with.
Agree on your case also. Business folks can add tremendous value. But especially late-joiners as, in your case, the better setup is to set some success criteria, hurdles, and reward accordingly. Win-win.
Yeah frankly my expectation on the most realistic outcome was some middle ground: where they buy in and i juice it with a bonus of equity based on outcomes.
Regardless, I’m just trying to work on making progress day over day. It’s fun, and a real business, so good problems to have.
Yeah, i mean, I’ve done this a few times before and had one decent outcome…i feel I’ve seen enough to feel totally at peace with this outcome.
I think getting incentives right is the hardest part of business, once you find any initial traction. It’s less sexy but i agree, finding good employees and contractors is the next step from here.
I would say that MBA means nothing by itself. It's 100% about their social network. MBAs were a great way to network as a lot of elite kids got MBAs. An MBA is just a proxy for something else which isn't necessarily there...
When we hire MBAs it means nothing except a minimum standard of work ethic and communication skills and usually (but not always) ability to grasp and breakdown problems. What they usually lack is expertise/applicable experience, we know this when we hire them, but any non-MBA candidate with relevant experience is preferred to an MBA. Like I said we don't expect fresh MBAs to know deeply about software but you do get pompous types who don't have the humility to realise they are out of their depth
An MBA is exactly what it sounds like. It teaches you how to administer a business. Not how to found one (it’s often counterproductive for that), not how to have good ideas, not how to spot product cycles, but to take an existing business and make economically rational, not entirely stupid decisions for it.
Curriculum usually includes things like pricing; applied microeconomics; power & politics (ie how to get the org to do what you want), business ethics, some intro to corporate law, oftentimes electives that are deeper dives on how specific industries are structured.
My wife got an MBA at the same time I was working on founding a startup and they are basically completely disjoint skillsets. If you treat the MBA as training for how to be the hired Director/VP in an established organization and not the person who wills it into existence in the first place, it can be a pretty interesting curriculum.
I have no idea what they teach in MBA programs these days - I'm many years removed from the age that most people get theirs.
My dad got his MBA in 1959. When I was younger and considering one (I moved out of day to day tech work a long time ago because I wanted to "fix" the business problems I kept encountering because of their negative impact on the tech work), we reviewed curricula for several programs.
My dad was pretty astounded that in the wake of globalism and technology, they were still teaching the same tired-ass theories that he was taught in the 50's. Note that this conversation wasn't all that long ago in the grand scheme of things.
I get that this is a vulture capital site but all one has to do is look at what is happening in the world (Bain capital et al) and you see that all they are really teaching/practicing is wealth extraction, not wealth building.
Edit: sorry, my dad got his BS in 1959, his MBA in 1962.
He discussed partnering up on your current business or were you talking about a new and different startup? I think you mean the first one, but that seems shocking to me.
He’s could be taking a significant pay cut and only assigns a moderate future value to the stock, eg, 1% of 50M exit and 10% of 5M exit with 50% ownership is only $500k expected value. Amortized across several years of pay cut (eg, 5 years to exit) you’re looking at $100k/yr “bonus” on $160k for effective $260k/yr. (And that’s assuming no dilution events!)
I agree expectations were misaligned so a bad partnership — but the ask doesn’t seem particularly crazy.
If your assumptions here are correct, he's just not a good candidate for being a founder. If you see earning 163k/year a hardship and don't value 10% equity in a high margin business doing > 30k MMR, then you should try to become an employee at a big company.
Well no, I don't know how startups work, having never been a founder or an investor, but my understanding is that startups are valued at a few multiples of ARR, 10x if there's major growth, for which in almost all cases you'll need VC money (which they don't have).
I'm going to assume that either A) there is no growth without this partnership, so the startup is maybe worth up to 1M, in which case getting up to 40% over 4 years with work and targets makes sense, or B) the original founder is expecting significant growth even without the partnership, in which case he needs an employee and not a partner (and he should pay him as such).
It’s all good to me - let these folks stay in the simple times while you and i arbitrage our efforts against theirs? I agree, there’s massive value in using these tools and it’s hilarious to me when others don’t see it. My reaction isn’t going to be convince them they’re wrong, it’s just to find ways to use it to get ahead while leaving them behind.
“ Editing videos: invideo enables millions of users to transform their ideas into videos using AI. With the integration of gpt-image-1, the platform now offers improved text generation, fine-grain editing controls, and advanced style guidance.”
Does this mean this also does video in some manner?
This was my experience, until the latest update. Suddenly cursor is useless. The agent option? Terrible. What’s manual, what’s ask? Just give me what i had before…such a step backwards.
The UI changed in the latest update but it’s not that hard.
Ask: previously was chat, and just tries to answer questions. Does not have the capability of editing your code directly (although if it provides a snippet, you can always click to apply it to the code).
Manual: previously was composer in standard mode. Can edit code across multiple files, but only works one prompt at a time. So if you ask it to edit tests, it will do that and then wait for your next input.
Agent: previously composer with agent mode enabled. Same as manual, but can figure out next steps and automatically execute them. For example, it can edit the tests, then run the CLI command to run the tests, then edit the code again if there are test failures, and repeat.
I find agent to be most helpful when you know the end goal but you need to be clear about what you want. Tell it things like “run the tests to make sure they’re working” and “search the codebase for where this class is used”.
I find manual best for when you know what small steps to do. Like, “create a helper class for managing permissions”, followed by “write tests for the profile view that checks permissions”, followed by “refactor the profile view to use the helper class”.
Which one of those options was the default for command+L? I also find it’s always auto applying changes despite those options being off…just seems a lot less smart suddenly.
My 100% favourite part of this write up is the mention of "piano piano".
In 2018 i was renovating my house in Little Italy Toronto (Canada). There was this 91 year old Italian woman, Assunta, living alone in the house next to mine. She was always curious (or nosey?), but only spoke Italian, so we struggled to communicate. She would always say in broken English encouraging statements like "You make it nice", "lot of work, you do so good" to which I would say "thanks" and often talk about the amount of work ahead of me. She would always follow up with "eh, piano piano...".
I had no idea what she meant until one day I Googled this term and i learnt it essentially means "slowly slowly" or "take it slowly".
Assunta is gone now, but she was a lovable character. I think my dog misses her treats, and I miss the snacks she would bring me when I was working on the house.
"Piano piano" does mean "slowly slowly" in a literal way, but I guess she meant it as a reference of the full saying "piano piano si va lontano", meaning "slowly slowly you get far". You were commenting on the amount of work ahead, and she was telling you "it's a marathon, not a sprint".
Something i like doing from time to time is picking a foreign movie, ie Russian (you know, the standard bad guys) and just pretend it’s a US based movie. Or the reverse, watch something based in the US and turn on Russian dubbing.
It’s funny how quickly you realize the bad guys are both sides.
I say this because often when trying to interpret media i feel the language and accent of the presenter influences me. “They sound like me” therefore i start with an assumption they think like me. Rarely anyone in fox thinks like me.
Odd media literacy take? Yes of course the propaganda is supposed to influence you, and of course if you're actually trying to analyse media you shouldn't let it.
(I retrospectively put the high point of recent West-China relations some time around the release of https://en.wikipedia.org/wiki/The_Battle_at_Lake_Changjin , which is an obvious propaganda war film with Americans on the "enemy" side .. that was shown in Western cinemas. Certainly in the UK, I think in America as well. Very odd. BTW, MOSFILM is on Youtube if you need some classic Russian cinema)
It’s an interesting point, but are they even allowed to communicate on these devices with this app? I feel that has to be a question with an answer and i would assume it’s no?
Yes they are, but explicitly not for non-public DoD information. It's for stuff like "hey get to a SCIF so we can talk" and otherwise replacing what you'd normally use SMS for.
Hmm every day i notice that the button to open photos and send them via iMessage doesn’t load the photos half the time. I close the widget, open it again, boom it works. This bug was introduced 5 or more years ago and no one has fixed it. It drives me crazy.
I’m so sorry for your loss. Something did change, and i think it’s good you feel that. Someone I used to work with, their wife was a professor at Rochester university and her research was around happiness. She would tell me that our baseline happiness in life is virtually constant (on large timescales, we all have good/bad days etc), there’s not much we can do to alter it in adulthood to shift it. There were a few exceptions, loss of a child, partner or critical illness.
I’m not sure what comes next but really hope that energy and happiness finds its way back to you with time.
>Someone I used to work with, their wife was a professor at Rochester university and her research was around happiness. She would tell me that our baseline happiness in life is virtually constant (on large timescales, we all have good/bad days etc), there’s not much we can do to alter it in adulthood to shift it.
If you're someone who struggles with chronic depression this statement is extremely demoralizing. But it's also hearsay -- you're a stranger on the internet, so you want me to believe based on a stranger's colleague's wife's alleged research, that depression cannot be effectively treated?
If you want to share that researcher's work, provide a link. Keep your rumors, suppositions, and lay-person's doomer psychology to yourself, unless you are planning to make a post with direct citations that is in effect nothing like the comment you did leave.
People's lives depend on this. You can't just post "if you have depression you'll never be able to change it" cavalierly as though you are an expert and your post has no consequences.
Someone is going to read your supposition, your rumor, believe it, and despair.
This is a well known concept called the "Hedonic Treadmill", which exists since the 70ies, not "doomer psychology". It also does not say treating depression is not possible. Depression is a disease.
Fully agree. And even if there was a legitimate study, it wouldn't be dispositive. I had horrible anxiety and depression for most of my adult life. I believed I would never be a happy person, and that I would always be tormented by my mental illness.
I finally found treatment that worked for me in the pandemic (Ketamine assisted psychotherapy), and it was life changing. It has been 2.5 years since I stopped treatment and I'm 10x happier. I wake up every day happy and curious about what the day will bring.
My wife has had anxiety and depression her whole life. I have been carefree and happy all of mine. I've been bullied at school, broke to the point of hunger after college in the 90s, and lost my sister to ovarian cancer 5 years ago. And aside from dealing with "in the moment" problems, my brain is always in freewheeling happy mode. Whereas my wife, no matter how "right" her day went, tens to be negative and beat herself up. It's how we're wired. She did therapy and she thinks that 90% of it is bullshit.
However, in the last few years she said that her "negative voices" (not actually schizophrenia, but her own nagging, disrespectful, negative narration) have gotten under control through CBT. She says it's something she needs to work at daily, though, because her brain seems to be wired that way. And she's controlling it and staying healthy without any meds.
So while I think there's something in that anecdote I don't think it means that you can't have a good life.
The entire point of clinical depression is that it's not environmental, it's intrinsic. Yes, this means it won't change - that's why antidepressants exist. It's why you should see a therapist for it, and should stop listening to people implying you can just eat different or whatever. This knowledge sucks, but you trying to keep that a secret and shaming someone into silence isn't helping.
> The entire point of clinical depression is that it's not environmental, it's intrinsic. Yes, this means it won't change
Wrong. I lost at least a decade of really great years to this belief. It's bullshit. I've made huge strides in my "clinical" depression despite my environment not markedly improving. I did, however, improve myself enough to recognize and stop maladaptive behaviors.
It's hard as hell to change yourself, but you're not immutable.
We discussed partnering up, and when i mentioned a buy in or 10% equity split (with no buy in) or some combo of the two, he backed off pretty quick.
Turns out he expected something around 40%-50% with no buy in. To me this is just unintelligent? Especially from an MBA.