Jon: All right. Welcome to the Venture Capital podcast. VentureCapital.fm your co-founder, Peter Harris. We call you co-founder. You're on the air co-founder. But if you ever look at yourself as a co-founder.
Peter: Well, like co-host.
Jon: Co-host, that founder, co-host, by the way. Well, what are your thoughts on the term founder?
Jon: When should it be used or not used? I feel like it's one of the hottest debated topics.
Peter: Why is it so hotly debated?
Peter: Who cares? I mean.
Jon: That's how how I look at what would you how do you define what a founder is? Then we'll get into the show.
Peter: I think a founder is somebody that takes risk and that moves the company from 0 to 1.
Jon: From 0 to 1. What are you saying the firm's not a success to?
Peter: No, no, no. Not from like, from. Hey, this is like an idea.
Peter: That we have and helps them move from that to like, Hey, this is an actual product or something, right? This is actual company.
Jon: It's let's look at Tesla as an example. Who was the founder of Tesla or who are the founders of Tesla?
Peter: Not Marc or not Elon Musk, but you.
Jon: Must call themselves a founder. And for those of you that aren't aware, Elon's thought or premise is that the company that that exists today was not the company the founder started.
Peter: So I think there are a lot of.
Peter: Like definitions that are that could be used right. And to a certain extent.
Peter: Under the definition I just laid out, he.
Peter: Would be a founder.
Jon: Right now because he was further on on the down the road.
Peter: I don't know. But but he took the company from being like this, like interesting like science fair project to like a real company, right?
Peter: Make that the defense or the argument that like he is a founder because he took a tremendous amount of risk and he took the company from that like 0 to 1.
Peter: I mean, this is like Josh Coates.
Peter: At and structure, right? He didn't start the company.
Jon: But is he a founder?
Peter: You know, is the two students from BYU the satellite.
Peter: Yeah. So I don't know is Josh Coates, a founder. He was like the first money in and the company kind of floundered until he he came in and took the reins.
Jon: I kind of feel like the first few employees can choose to designate if someone's a founder or not a founder.
Peter: So that's a good, interesting question. Where do you delineate between like I'm employee number one versus I was a founder and that's where I say it's the risk is you take risk and if you're getting paid a salary, then you're not really taking risk.
Jon: Okay. So typically I would look at a founder is usually one of the first five people there who took a significant pay cut or or took no salary. And then the other aspect I would look at is, was there a major pivot? And then I guess the third definition of a founder is do the who do the original two or three people call a founder.
Peter: So you would you would call Elon a founder because of the pivot.
Jon: I'm fine with that piece of it. I don't think if Elon had not stepped in, Tesla would not exist in anyone's mind today or maybe a few hundred people.
Peter: Yeah, I think that's fair.
Jon: Was fair. I think a lot of startups need an ambassador, but.
Peter: Like a company is just kind of out there floundering. It's been around there for a long time and then they hire a professional CEO to come in and run it and all of that takes off. Is that CEO considered a founder?
Jon: I guess from your definition, is there significant risk? I would just say at that.
Peter: Point, I don't think that there is significant risk in that case.
Jon: I look, the founders think it would be if a professional CEO came in. I mean, even if they're getting a salary, their opportunity costs could have been high. Okay. You know, sort of their, you know, their next best option. So I don't know. I just usually say a lot the founders.
Peter: Opportunity risk is not the same as like true risk or opportunity cost is not the same as risk.
Jon: Okay, So here's an example of a buddy who took who was who left corporate America to join a startup. He's getting my 10%. He took only like a 25% pay cut. Yeah, but as part of a stipulation was he wanted the founder title. The CEO gave it to him. So I'm fine with it. But in my mind I'd look at him as being like a CEO.
Peter: But this is like, Why do you even care?
Jon: I usually don't, but I just think a lot of people do care.
Peter: But a lot of people do care. And that's what I'm asking. Like, why do people care?
Peter: So like, there's this like old.
Peter: Story, like, Mark Zuckerberg. Okay, Right. And Ron Conway shows up at the house where they're all coding and building Facebook. And, you know, he's like meeting everybody and.
Peter: They're like, yeah, I'm a founder, I'm a founder, I'm a founders. Like the whole.
Peter: How everybody in the house was like a founder and like it was.
Peter: Fine because markers is like, yeah, like they're all founders. Like everybody can have I have the founder title.
Peter: Inflation, you know, But like, it doesn't matter, but it makes everybody feel like they have skin in the game and that they're part of the community, part of the company, blah, blah, blah.
Jon: And don't know. Yeah, so I don't know. So this probably should have been its own episode.
Peter: Well, it pretty much is. It's on it.
Jon: But we did make it its own episode and then and then postpone it to next week. Let's do that. So what what have you a founder is ultimately I don't care that much, although I think if I had built lucid chart or lucid, you know, lucid software, if you know that that company locally and other people would start claiming it, then I would be kind of I'd be very aggressive, probably like, what are you doing?
Jon: Come into my office.
Peter: You'd be aggressive, you be kind of pissed. So what if you're no longer at the company anymore so you don't really have a say?
Jon: If you still have equity, you have to say.
Jon: I also. So I don't know. I don't know. And it's been interesting. I watch people who claim the founder title of very successful companies and I'm like, your number like 12.
Peter: Yeah, Well and there you know, I know. Yeah. Same thing now people that claim that they are founders, but they never took the risk. They were totally an employee. They were just too early. But that doesn't make you a founder in mind.
Jon: But now they're now they're claiming and honestly, I think a lot of people who've gotten to a certain level of success have taken the claim of others to get there, and that's partly how they do that, do it.
Peter: And that's partly what pisses people off.
Jon: Like I did this, I don't know. So sorry guys, this wasn't a chatty episode, but let us know in the comments. How do you define what a founder is or isn't? I would typically say it's one of those like three things. One of the first five took significant pay cut or helped the company that was floundering go through a major pivot that made it super successful.
Jon: And then maybe the fifth one is if the original three, you're fine with it, then doesn't really.
Peter: Matter. Yeah, I think for me it's really just those two and it has to be both. Can be one or the other. Okay, so you take the company from 0 to 1, not just, I mean.
Peter: Maybe through a major pivot, maybe not. But like.
Peter: You know, it's having some more massive, massive like impact on the business. Right? It's not from 1 to 2, it's from 0 to 1. Right. And then it's you took significant risk, you know, pay cut like massive pay cut with not like equity. That was compensating you for that, at least at the time. Right. Like if I take a 50% pay cut, but then they give me half the company, you know, or whatever.
Peter: Right. Like that's a bit of extreme because if you own half the company, really you just on it. But but you know what I mean? Like if I'm being, like, generously compensated in other ways than I am, I really taking that big of a risk. I don't know. But you do have people that are like, I'm going to leave my job, my, like well-paying job.
Peter: I'm going to live off my salary, right?
Peter: Sorry. Yes, I'm going to live off my savings. I'm going to.
Peter: Sell my first one. K Right. Like the founder of Peloton, he sold his like.
Peter $>:,
for </strongone K after taxes and penalties and everything else only netted like 40 grand or something and use that to start peloton like he is no question a founder right in my book so yeah did you take did you take that substantial risk.200
Jon: Okay but yeah I agree 100% 100%.
Jon: All right. So as we wrap this up, one of the things we've done is we've launched a new venture capital, AUTOHOME site. We've introduced a Slack community. So if you want direct access to me or Peter, go to venture capital law firm and click on the Slack icon and you can harass us with as many questions as you want, and we'll do our best to answer those.
Peter: Most of those answers will be from John.
Jon: And his buddies Mob Rule.
Jon: If you want to be a VC feature on the because we're we're starting to get some pretty good traction if you want to be a VC featured on the podcast we need to see you contributing in our slacker world.
Jon: All right. Well, make sure you do venture capital on it. You can subscribe to us on Spotify, Apple, YouTube or all those other weird podcast players that you may want, may want to look out, look at. So all right, thanks. As.
