In addition to the considerations others have mentioned, I would say from a strictly expected monetary value, a successful consultant will make more money than the first technical employee at a seed stage company. So, if you go that route, you should have other motivations than maximizing your expected return.
As a rule, I don't even think it matters what the valuation was because generally the seed stage companies that should rationally expect to make money would have started with a proven team with prior successful exits.
I'm definitely not advising you away from the offer. I've been a consultant, worked at both successful and failed startups, and preferred both types of startups to consulting. But I still think the expected return is higher in consulting or being a top performer at a large (tech) leader. Good luck whatever you decide.
Ugh, you need a new product team if doing that is the norm. It's gonna happen sometimes, but shouldn't all the time. Maybe you can push back on them before getting too far into the builds, force them to think through things a little deeper?
Some things here (meetings, bad managers, etc.) are all too true, but not unique to software development/developers!
The most frustrating is when I am completely convinced a change I make is going to resolve some failed tests, and then I run the tests, and something still doesn't work. Or I fix something and cause another problem. I enjoy the challenge of getting everything right, but just feel betrayed when I'm convinced I do it right and I'm wrong.
Can't outsource that, though. What I would love to outsource is the actual writing of the testware. I like thinking up all the test scenarios, but wish I could do a brain dump and have someone else write the testware.
The other thing I wish I could outsource is any documentation creation or review. Probably because I can think a lot faster than I can write, and then also feel like I have to take extra time to document things precisely because I might not be able to have a dialog with whoever is reading the docs.
It's hard to say if it's a good offer without knowing how well you're currently being paid compared to market for the salary, and what you would bring to the company. That said, 5% for a senior executive is pretty typical, I think. And I would expect a seed stage company to pay less in salary for a CTO/VPE than a more established company would for the same sort of role (regardless of titles).
You already got some good advice about how to consider equity as part of your total compensation, but that's not what you asked. Hopefully, you've already done some thinking about how much (or little) to value equity yourself. In a vacuum, 5% seems OK for a CTO. If the technology is a critical piece to their business and you have unique expertise in it, you should probably expect more.
Those companies decided to build their own solutions rather than use others not due to distrust, but because they saw a business opportunity. They all use 3rd party products somewhere in the organization, but if they make their own product, would you really expect them to use a competing offering?
I agree with the thoughts others have written about fear of losing the best employees. In addition, I think a lot of managers keep things secret because they hope to avoid difficult conversations. Also, if there is one person who you really don't want to share something with for whatever reason, it's tough to let everyone else in. Those things don't excuse a lack of transparency, but I think they contribute.
Regardless, absent of some extenuating factor related to performance, no way should you have been given no notice and no severance. I'm sure they would have taken it poorly had you (when things were going well) have given them no notice.
Assuming you can convince him to join at whatever stock distribution is acceptable to him, you, and your other founder, you might not need to worry about what's left for future investors. That will be a separate negotiation, and everyone will likely get diluted then, whether they own 5% or 50%.
3 founders can work fine. Many would consider it better than 2, all else being equal, since with 3 you can break some decision logjams. But that assumes all 3 are good, and that you have developed a strong working relationship. Reading your post, where you are technical, you are bringing someone on to help, and eventually he may be promoted to CTO, makes me wonder if you view him as more junior, currently. And whether he views himself more junior. That might drive both the equity split, and whether he participates as an equal in routine operational (or even technical) decisions.
Couple things. You identified one thing to work on, which is not to panic.
The other thing is that if that's all the feedback you got, it's pretty subjective. If you have a good relationship with an engineer or architect you admire, you might run some of your questions by them, along with the steps you took to figure them out on your own. I would ask them whether they thought the questions were reasonable ones, and whether the steps you took to resolve them made sense.
If they say yes and yes, then take heart and keep at it. If they say no, you can ask them their advice for speeding up your understanding or better ways to search for answers. Once you open up your thought process to them, they will be able to better help you, if they care to.
To that point, whatever you do, avoid getting defensive or arguing back. Only further questions you should ask are ones where you need more clarification. It may be tough, especially if you don't agree, so be ready for that. Good luck!
From a preference standpoint, I had assumed that founders were in the same boat as employees most of the time (especially first-time founders), just that they have a lot more stock.
If investors put in $10M and the company sells for $9M, doesn't it all go to the investors?
If founders get the same preference as investors, it wouldn't be true. I just didn't think they normally did.
My first reaction was to think that (b*d)/c was a cool way of expressing how to go after the low hanging fruit, or get the biggest bang for the buck. After thinking about it for a bit, it seems like a good starting point and better than nothing to act with some intent.
But it might be better to focus more on b/c OR d/c, or weight b and d, if you're trying to come up with a general framework. In practice, that comes out to generally, we want to go after broad OR deep features we can build easiest as we groom the backlog. Of course, you would want to maximize both b AND d, but often a single feature doesn't do both.
The whole discussion might be too nuanced. Overall, it's valuable to give some quick thought to why you're picking the features you pick, as long as it doesn't make decisions take too long.
Reading through your responses, I'm not sure I can give you great advice because the two large software companies I've worked at welcomed moves out of what you call sustaining engineering. It was a pretty natural and repeatable process of fixing small bugs to fixing larger bugs to fixing bugs that impacted multiple areas of code. People would get assigned other people's regressions to fix. At that point, even if a sustaining dev manager doesn't want to let you go, the new dev team will damn sure want to have you.
If you really are terrible at programming, or maybe you just don't enjoy it very much, then explore something else. But if you do enjoy it, you have to figure out what's going wrong before you can make a plan or get good advice to fix it. You say people were dissatisfied with you as an engineer. Why? If you ask a more senior engineer or a manager what you can do to improve, you'll get a better answer than HN will be able to give you. But you have to be willing to hear some things that might not make you feel good. In the long run, though, it will be worth it.
Great idea, hope that you are successful with this! If you're able to get good, verified reviews, the site will be tremendously valuable.
The other area I'd personally like, which might be hard to get reliable information for, is mentor accessibility and expertise. Both during and after the program.
For US (not sure if it's the same in UK), you might go with a provisional patent filing only. It's a lot easier and less expensive to file. You then have a year (I believe) to file for the actual patent.
My firsthand experience is with software, as opposed to biotech, and there the answer would usually be to focus on customers first. But I know that patents are more important to biotech investors, and companies. Hopefully the accelerator funding you has enough mentor presence in your space to get a more definitive take on the tradeoffs and timing.
Congrats on the progress you've made so far. Personally, it doesn't sound like a co-founder. It's not clear whether you think he wants that title specifically or just a lot of equity. The former would be a red flag to me without some context.
As far as the amount of equity to give, 50/50 after a couple years, when you've gotten the company profitable, seems high. But that depends on why you started the company in the first place, and more importantly, where you want to take it from here and how he can help with that. If he's uniquely capable to accomplish things that you really want for the company, but can't or don't want to do yourself, you'll compensate him highly. If you can't afford the salary, you'll give him more equity. And that's certainly a valid decision, even if it's not typical. That said, the fact that you don't think it makes sense leads me to believe that it doesn't. I personally would have to have no doubt before giving up that much of the company that I"d made profitable.
You clarified for me the misgivings I've had with Invision. I've used it a few times on projects (as more of a stakeholder than core team member), and it just never seemed to live up to its promise. I think it was because there were some people who were not "all in" with it, and some of the key feedback was coming outside the app.
Rather than the sense of dread you mentioned, I just let other things take higher priority than the emails with Invision links. I thought it did work well when a designer led a small group through a prototype live.
First off, if the stress is truly constant, I would advise you to do at least a consultation with a mental health professional. Can't hurt, and no one here has a whole lot of context (we couldn't). My advice for a first step is to uncover why you're stressed feel rage with co-workers. Everyone has different ways of figuring that out, but it sounds like you've given it some thought, and are not sure. Hence, my suggestion.
If you have any relationship issues or anxiety about your upcoming kid (congrats by the way!), that could spill over. When my first was on her way, marriage was all good (still is), and I was excited to be a parent. But I was still nervous as hell, and I'm sure some of that nervousness spilled over to other areas.
However, it seems as if this might be a pattern for you, and so I come back to figuring out why. If you don't figure it out, any change you make is likely to result in the same feelings shortly after you make a change. I put myself through some self directed exercises in a book called What Color Is Your Parachute. It's geared to job seekers, but the first steps in the process are about self discovery. There are probably better tools, but that book was the one I grabbed for whatever reason one day in the bookstore. But anything that gets you thinking about what matters to you will help.
Well, a flat response of "Nope, don't have any questions," or something similar would possibly make you appear more uninterested than lame. Depends on how engaging the conversation was beforehand.
In general, you should have a few top things that you are trying to uncover during your interview. The interview process is 2-way. If you've gotten answers or impressions to your top few items and you truly have no additional questions, you could respond by saying, "I was most interested to find out about A, B, and C. This is what I heard... I don't have any pressing questions beyond those right now. But could I follow up with you if something else comes up?"
For me, the negotiation has been different with each job, and has depended on whether I sought them out or they sought me out. You don't say your situation. Let's assume I'm satisfied in my current role, and a recruiter is cold-contacting me.
If their initial pitch goes well, and they ask about my comp requirements, I know that I'm supposed to have them make the first offer, but I will usually offer a salary and equity number. Granted, that's considered by many a negotiation mistake. So, I will say that I will not consider less than x$ and y-equity, but that it will likely take more. Depends on how the interview process goes and what I learn. But they're numbers that, if we end up there, will be better than my current situation.
So, then things go well, and they make an offer, usually at or very close to what I told them. I've always countered some bump in salary or equity from that, but a package that if they accept, I will accept.
For me personally, money is no longer the top factor, I don't particularly enjoy negotiation, and I'm usually also talking by this point with my potential new boss. So, I willingly make the process pretty streamlined at the expense of possibly squeezing out a little more. That approach is not right for everyone.
That said, I think companies fully expect some negotiation. So whatever negotiation tactic you take, as long as it's respectful, will not hurt your chances of ultimately getting the new gig. In other words, they won't withdraw an offer or anything if you negotiate.
Edit: they just updated their status page for this.