Do business co-founders have a place in tech startups?
The role of MBAs in tech startups has been greatly criticized as non-value-adding, but that doesn't mean all business founders are bad
It’s a favourite past time in the startup world to quietly poke fun of clueless MBAs who write “Rockstar” and “Ninja” in every job listings and who can craft a great pitch but completely fail in product execution.
Ben Yoskovitz wrote a post today announcing that the business founder is dead.
My problem with taking this position is that it feeds into the common strawman: the non-value-adding business person.
The issue is that it’s used as a blanket statement to apply to all startups when in fact having a business person can be very beneficial for many startups.
Business vs Technical Founders
The best argument against business founders is that technical founders can do business but business founders can very rarely become technical.
I completely agree.
But the reality of building a startup involves mountains of day-to-day activities that consume your attention and a significant chunk of these activities are non-technical. For example:
- Fundraising and pitching
- Calling/meeting customers (customer development)
- Writing content and managing social communications (twitter,blogs,forums)
- Getting press
- Answering customer service calls and emails
- Handling legal issues, registering the business and all other details
- Managing finance and accounting (understanding margins is super important)
- Creating partnerships and doing B2B deals
- Constantly monitoring your analytics and operating dashboard
There’s enough of this stuff to consume all of your attention.
Having an introverted technical founder handling these activities can slow everything down. Just because a technical person can learn the business side, doesn’t mean he’ll instantly be good at it.
On top of that, great UX and software development requires you to be focused and “in the zone”. You can’t be distracted one minute by a customer call, then jump right back into coding. It doesn’t work like that.
Having someone who can champion all of the above so your technical founders can focus on building a great product is incredibility valuable.
The Lead Founder Should be Technical
Paul Graham said that among all the startups he’s met, that there’s always one founder who stands out as the leader.
For example, Bill Gates took the lead while Paul Allen and Steve Ballmer played a supporting role; same with Mark Zuckerberg with Dustin Moskovitz and Shawn Parker.
I’d argue that in the early stages of a software startup, there should always be a technical person leading the company.
But it’s still beneficial to have a business founder in a supporting role (in most cases).
When to Have a Business Founder and When Not To
The importance of a business founder depends heavily on your market and industry.
When not to have a business founder:
- product is targeted to a technical audience
- when your solving big data issues (unless its marketed at enterprise)
- when your product is one that will be in development for a long time (ex a year)
When you must have a business founder:
- any B2B company
- companies with marketing strategies involving trade shows and spending tons of time on the phone selling
- when you have to heavily manage VC/angel investor relationships (large capital)
What Makes an Ideal Business Founder?
There are some traits that are essential in a modern business founder:
- strong connections with potential customers, partners or investors ($$ is a plus)
- loves talking to customers
- understands customer development / lean startups
- is data driven
- understands what makes a great product and what makes people want that product
- is an expert in pitching ideas and understands the ins and outs of fundraising
- great at getting press
- *Reads books* – this one is important, they may spend all their time on a phone but in a startup they still need to be a knowledge worker
While I don’t agree with Ben that the business founder should be capable of “designing the UI, product flows, hacking the MVP” – I do agree that they should be dedicated to understanding whats involved in all of those.
As Chris Dixon said at the NYC TechStars event last weekend “Business founders don’t need to know how to code – but they should have a basic understanding of html/http/scaling”.
Everyone Should be Involved in the Macro
One of the biggest fallacies in the anti-business founder argument is believing that the macro-level decisions all fit into the business person role. For example, identifying the problem to solve, pricing etc is often lumped into the “business” category.
So it’s assumed that the technical person won’t be involved because the business guy would be taking care of it.
But this stuff is the core of every startup and effects everything from the marketing, design, product development and even outward communications. So every person is inherently responsible for being part of these decisions.
If some founders are only interested in their own worlds and don’t take part in shaping the direction of the company, it is indicative that there is a bigger problem with the founders themselves and not because that person was technical or business.
80% Comfort Zone / 20% Learning
It’s important for both sides to be comfortable in both the technical and business sides of the company – at least to some extent.
Each founder should spend around 80% focusing on their strengths, and 20% learning the other role.
For example, technical founder should spend their 20% talking to customers, replying to customer service emails, etc. And the business founder should spend time coming up with a/b tests and getting up to date with the latest software development.
At the end of the day, what makes a great founder has little to do with whether they know python or whether they are an extroverted people person. Great founders are the ones who just fucking do it.