[Silhouette]

So the TL;DR is: because the founders and investors are too cheap to hire a small number of additional very good people instead?

The real question is why. Surely it is obvious that if you expect employee #1 to work for well below market salary and maybe 1% equity, you will never be hiring the kind of 20x individuals described in the piece here. But in the entire software industry, has no-one considered diluting the founders' equity and offering 5% or even 10% to bring on someone else of the same calibre (assuming the founders are both that good and open-minded)?

[jokethrowaway]

You would be approximating a cooperative. You just have a lot of founders.

I'm trying to go in a similar direction with my company. The idea is to consult under the same brand and create small passive revenue streams together (apps, websites, books, streaming). Earning are split based on the people working on it. The brand may help sell the individual consulting. We help and support each other and share costs.

I've seen startups with a lot of founders and generally all the problems started once they had VCs, funding and pressure to grow faster than it's reasonable.

[Silhouette]

You would be approximating a cooperative. You just have a lot of founders.

That is essentially what I was suggesting, yes. This kind of arrangement doesn't seem unusual in many other industries, yet in software it seems very rare, even though the potential for 5 or 10 top class people to outperform 50 or 100 mediocre contributors or basically any number of juniors is higher than many other fields. It has always puzzled me that we don't see it more often.

[dghlsakjg]

There is a very loose correlation between software quality and success. Well written, useful software doesn't guarantee success, nor is it even necessary in many cases. Combine that with highly talented software makers earning some of the highest salaries in the world, and you get your answer. As far as I can tell Quibi had incredible infrastructure and programming, and god knows it had the funding. But a 100% uptime and the ability to stream to millions on launch day didn't mean anything because the product was not wanted by consumers.

In some other industries the competence of the contributors is much more closely tied to the success of the company. Software is not like this. That's why you might see docs, lawyers and stock-brokers entering in partnership; those professions have the quality of work tied directly to outcome.

[Silhouette]

Of course there are other factors. You need to be building something people want and you need those people to find and pay you. I doubt anyone on HN would dispute that.

But other things being equal, a team of 10 excellent developers will annihilate a team of 50 or maybe even 100 mediocre ones in terms of sustained productivity and quality, so if you do have the market and the business strategy, why wouldn't you want the dev team as well?

[s1artibartfast]

I have been in a similar situation and it made for questions of control when we did need funding. Some of the founders ended up giving back equity - not a feel good moment for the team

[Silhouette]

Surely if you're taking substantial funding you would expect the existing shareholders to give up part of their stake in the company though? The investors will want some equity and it has to come from somewhere. I don't quite understand what was different in the situation you described. Can you clarify?

[s1artibartfast]

Started with a split close to 25% per founder. VCs all wanted to see one founder with clear control, so the equity was rearranged closer to 70-10-10-10

[Silhouette]

That just seems strange. I can understand wanting to have one person who is the ultimate decision-maker for company policy and I can understand wanting to avoid a possibility of deadlock if founders disagree, but neither of those requires anything close to the extreme change you described. What founder in any startup that was established enough to be seeking VC funding would ever accept that kind of change?