What the Hell Does a “Business Guy” Do?


Photo by Dan Taylor

I try to hang around with entrepreneurs as much as possible. I dig people with an insatiable desire to create things, and I’m not anywhere close to being cool enough to hang out with painters and musicians.

One term I hear thrown around now and again among technical founders is “business guy” (or gal…except it’s always “guy” when I hear it). This is the mythical person who’s going to swoop in once your app is built and handle all of that business-y stuff.

You know…the stuff we technical founders scoff at as tertiary to our product’s success:

“I don’t need no stinking MBA. I got code to write!”

Code that will be magically catapulted into the hands of millions once the business guy steps in.

I think having a “business founder” is a good idea for some developers. If you don’t have the desire to learn some critical aspect of your business, then finding a partner with the requisite experience is heartily recommended. The key is to determine which aspects of your business are critical and hard to learn.

For example, here are four areas I’ve heard mentioned by developers when discussing finding a partner with business experience:

  • Business filings and structure
  • Taxes
  • Banking
  • Payment gateway / merchant account

Aside from “to kick me in the head twice a day” these may be the worst reasons ever for finding a business partner.

Each of the above “business-y” things can be handled either with a few hours of research, or by hiring an experiences professional (lawyer, accountant, etc…). Giving up equity to someone to handle what amounts to administrative duties is a huge mistake.

So if you’re a self-funded technical founder looking for a business partner, what is a good reason to give up a portion of your hard-earned equity?

Only one that I know of: successful marketing experience.

This is an area where a few hours of online research will not provide you with a passing grade, and where experience holds enormous value.

As an aside, securing funding might be another reason to bring someone on the team. Since I’ve never raised funding and don’t talk much about it on this blog I’m going to leave it to someone with more expertise in this area to comment here and let us know if it’s an equity-worthy contribution (or if hiring a lawyer or winging it with the information available in blogs and books would be a sufficient hack).

The Most Important Question to Ask a Potential Non-Technical Founder
I need to be clear: if you have any interest  in learning marketing, I heartily encourage you to keep your equity and learn this stuff yourself. A developer who can market is an amazing combination.

But some people really don’t want to stray away from the role of technician, and if that’s the case I think finding a non-technical co-founder is a decent option.

In A Fool’s Bargain: Building Software for Free (or, An Idea Ain’t Worth Squat) I ask the “money” question of someone who pitched my on building a product for them in exchange for equity:

Do you have experience marketing and selling software on the internet, and if so could you pass along links to previous successes?

You should make this the first question you ask of a potential non-technical founder. Most conversations will end here.

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19 comments ↓

#1 travis sheridan on 04.19.11 at 11:34 am

Rob,
I agree. I completely agree. When I look at good teams they are generally comprised of three key skill sets: coding, design, and marketing. I rarely find a person who possesses all three. If a person does, push through solo.

I work in a world where “business guy” overvalues his/her contribution. Things like legal matters and accounting SHOULD be outsourced most of the time.

Your initial question will keep a lot of developers from entering into a bad relationship with a fast talker.

#2 Maxxxx on 04.19.11 at 11:39 am

Number 1 qualification for a business guy is sales IMO. Doing stuff like banking or company registration are not hard to do.

#3 Pep Dekker on 04.19.11 at 11:59 am

I’ll give you my opinion as a business-y guy. I feel there are two positions in a startup; coder or salesman. If you can’t do either then what the heck are you doing in a startup.

#4 William D. on 04.19.11 at 1:21 pm

Good point about not giving up equity for what amounts to clerical work with taxes, business structures, etc. However, marketing is more and more attainable these days thanks to sites like PopularFans that give you a nice boost on social media sites, so even just giving up equity for marketing experience isn’t strictly necessary. Personally, having gone through this before, I view technical founders as much more valuable than non-technical founders. Unless you’re dealing with some business guy that has access to lots of money and legitimate connections, you’re better off working with a smart technical guy in most cases.

#5 Ilya on 04.19.11 at 2:25 pm

I agree completely. The main thing a business guy needs to do is drive traffic. Everything else is just noise.

#6 Doug on 04.19.11 at 2:50 pm

So…
What do you think about giving up the small slice for an incubator, like Tech Stars, Y Combinator or others?

Rob Reply:

I think it’s worth it in the cases where the incubator provides invaluable guidance, advice, introductions, and help obtaining funding. I know they also provide help with incorporation, but that’s a minimal advantage IMO.

Given that they only take a few percentage points of your company I think it’s a good trade as long as you get something beyond the simple admin items I mentioned in the post.

#7 Francisco Sáez on 04.19.11 at 2:53 pm

Thanks for the advice, Rob. You just keep me from making a mistake.

#8 Enoch Sears on 04.20.11 at 8:44 am

Rob,

Thanks for the thought provoking post. A very practical approach. Definitely too many fast talkers who want work (or a piece of equity) for free. The theme ties in well to the conversation at last week’s SMC regarding the marketing/design/technical aspects of developing. What is your opinion on the question posed last week? Is it more difficult to come by a good coder/developer or a good salesperson/marketer?

Rob Reply:

>> Is it more difficult to come by a good coder/developer or a good salesperson/marketer?

I actually have this queued up as a topic for a blog post. The short answer is that I think it’s more difficult to find a good marketer. I’ll go into the long answer in one of my next few blog posts.

Enoch Sears Reply:

Not the answer I expected. I’m looking forward to your post – and thanks for responding.

#9 David O. on 04.21.11 at 5:10 pm

Yes, business guy handles marketing and sales. Unfortunately people in general don’t understand
that marketing is more than ads or driving traffic to a site. Marketing should help you refine your product/service and have sales early. Not this – let’s reach critical mass than turn on the magic switch of profitability.

#10 Troy Allen on 04.23.11 at 10:31 am

When I am asked to do coding for pure “sweat equity”, it usually starts with the “Idea Guy” saying something like this:

“Hey Troy, I have this GREAT idea that I KNOW I can sell the heck out of if you will build it for me for free. I will give you equity, and I am sure you will make far more than your hourly rate.”

I reply…”Great! You should be able to find some funding to pay me then if it is such a sure-thing.”

That usually ends the conversation, or we work out a discounted rate in exchange for some equity. It took three grueling experiences of me building the great product, better than the idea guy had even envisioned, and it not selling at all to learn this hard lesson.

#11 Alex Schiff on 04.23.11 at 6:14 pm

I don’t think there’s much value in someone who says they are a “business cofounder” and wants to just do marketing, sales, etc. That sounds like an employee more than a founder. But there is a lot of value for a non-technical cofounder in:

Customer development – talking with customers and figuring out what they want

Product development and management – not everything about a product is the actual technical side, a lot of it is conceptualizing features, interface, experience, etc.

Management and organization – spearheading recruiting, managing other employees, working to create an awesome company culture

Getting shit done – make sure that your technical cofounder can focus on the technical side of things and not have to worry about filing paperwork, following up with people, etc. It’s a non-glorious but very important part of a startup since there’s just so much to do.

Sure, a non-technical cofounder should be doing a lot of the marketing, sales, etc. work too (or at least working with the people that do), but those are things that a technical cofounder can figure out how to do on their own in the initial stages.

Disclosure: I’m a non-technical cofounder so I may be a bit biased!

David O. Reply:

@Alex Schiff

You comment exemplify my argument. Customer development is crucial to sales and marketing. Product development, management and organization is crucial to marketing. Practically everything a company does plays a role in it’s marketing.

#12 Dan Terrill on 04.23.11 at 9:17 pm

My brother is the VP of sales for a company that handles outsourcing (to the US, mind you) of administrative, HR, payroll, Accounting, and Finance functionality for small to mid-sized companies.Most startups are pretty small, so the day-to-day costs of outsourcing such functionality is on the order of <$30/month. Why would someone give up equity in exchange for something so inexpensive

#13 Artie Gold on 04.27.11 at 1:11 pm

A “business guy” to me is one who brings the “business mindset” to things. If you’re already an entrepreneur whether by training or nature, I think the above comments are correct: What you need to do is hire some body or somebodies, either contracting with professionals for well defined tasks or hiring and employee with the requisite skills.
If, on the other hand, you need help with the monetization of solution to a problem — well, that makes a lot more sense. But only if the monetization thing is a mystery. (It is for me, I admit.) Sometimes it’s about getting answers to questions. Sometimes it’s about finding the right questions to ask.

#14 DanNegrea on 04.27.11 at 2:53 pm

What can you tell us about advisors role and how to remunerate them?

Rob Walling Reply:

Not much, I’m afraid. I’ve been asked to advise a few local startups and I’m in the process if figuring out what that looks like myself.