Ask HN: Should I sign partnership agreement if I have doubts about co-founder?

2 points by RichardDL 2 years ago | 9 comments

I'm being asked to sign a co-founder agreement, but I'm not feeling very comfortable because, for the last 5 months, we had a product that was way beyond an MVP and so far we have only 1 client that found us and 1 partnership that he found. We had about 6 pilots and 2 of them were successful, but we didn't get any of them to pay us. We are a B2B Saas in the HR AI industry. And I'm worried that if nothing happens I'll be tying myself to a co-founder that is not able to bring clients and partnerships and later investments.

I'm the CTO and I'm the only one that can build the product, so I'm not worried about the product, but I'm worried about the business side of things. I'm not sure if I should sign the agreement or not. I'm not sure if I should ask for a clause that would void the agreement if we don't get any clients in the next 3 months.

I have been bringing this issue up for a while now, but he always says that he is working on it and that we have to be patient. Frankly, my confidence is not very high at this point. He is working hard, he is smart and a good person, he is dedicated and really wants to make this work. But when someone send out 200 emails in a month and gets only 1 reply and gives up on emails and starts to focus on things that are not related to getting clients, I start to worry.

I know reaching out to people is hard work and can be tedios and I know that it's not easy to get clients, but I'm not sure if I should be worried or not at this point. Also it's not the lack of clients that really worries me, but the lack of learnings about our product market fit.

He would be a CEO and we are onboarding another co-founder who would be focusing on sales because he isn't able to sell. But I'm not sure if that would be enough. And having a CEO who is not able to bring clients seems like a problem. I mean, you wouldn't make someone a striker that hasn't scored any goals.

It's a sensitive situation and I don't want my lack of confidence right now to destroy our relationship. But I also don't want to be tied to someone that may not be good enough.

Any advice would be appreciated

jacquesm 2 years ago |

That all depends on what is in the agreement!

And this is a two way street so you have a say in what gets put in the agreement as well. I would strongly advise you to sign unless you are 100% on board with everything that is in it, and to go through some possible future scenarios (failure, moderate success, success, home-run) to see how the agreement will work for each of those situations as well as situations where regardless of the success fact you guys decide to stop working together and what happens to the shares etc.

I've seen more than one start-up crash to a grinding halt because the shareholder agreement wasn't well thought out and did not foresee the typical crisis that a start-up can go through in its lifetime.

Best of luck!

RichardDL 2 years ago | |

Pretty "standard things" like non-compete clauses which would not allow me to do anything in the HR AI industry for the next year and the product would belong to the Company so I would not be able to just leave and find someone else.

I like the idea of failure, moderate success, success and home run.

Thank you

jacquesm 2 years ago | | |

YW, pay special attention to things like bad leaver clauses and make sure that the CEO realizes that all of the articles apply to them as much as they do to you.

ssss11 2 years ago |

I would start by speaking to a lawyer familiar with startup founders agreements. Tell him what you want in it.. you could totally ask about things like termination clauses for not carrying out his side of the deal.

RichardDL 2 years ago | |

Termination clauses - we haven't considered those yet. Sounds like a sensitive topic. Any advice on how to approach it? How do put targets in a partnership contract? And is it fair to add something like that, putting expectations like that can also create a lot of pressure?

siegel 2 years ago |

What type of co-founder agreement is this? I'm at a bit of loss as to what he, as CEO, is really contributing here. But that aside, it's completely unclear what the terms are.

If you have an draft, I'm happy to take a quick look. Lots of experience with these things.

gus_massa 2 years ago |

* Is he signing the same agreement?

* Remember "4 Years with a 1-Year Cliff"

* Who gets the 51%?

* Is the new cofounder his friend? Your friend?

* What is "business development and project management"?

jjackson5324 2 years ago |

Does he have any experience with sales?

RichardDL 2 years ago | |

On paper, he does, from multinational corporations. I don't think it's his happy place. he seems better at business development and project management side.