Employee Founding

Am I a cofounder or an employee?

There is prestige to having been a cofounder of a startup, someone who was there from the beginning taking the lifestyle risk in return for the possibility of striking gold and changing the world. Now with that breathless sentence out of the way, how do you know if you are a founder or an employee? To me there are four key questions to answer:

  • Is the startup funded externally, from an outside entity like a venture or seed fund? This would be someone without huge sunk costs choosing to hand over money, in exchange debt or equity and upside in the startup’s future.
  • Is the startup selling to businesses (“enterprise”), and does the venture have a paying client-or-two outside of the Silicon Valley scene? Consulting for your buddy’s startup does not count.
  • Is the startup selling to consumers, and have consumers written checks or swiped their credit cards for actual money? Tons of freemium traction does not count.
  • Are you working part-time on something else simultaneously? If you spend every Tuesday and Thursday working as a barista to pay the bills, you are not full-time.

If the answer to any of the three is “yes,” then you are probably an employee and not a founder or cofounder, de facto or otherwise.