By Robert Snowberger, Wharton MBA 2014
(Robert originally wrote this responding to an email from Wharton VIP advisor, Jeffrey Babin, who commented: “You don’t find a technical Co-founder, you earn one.”)
While my company exists in the Nanotech space, it certainly speaks to the very unique and challenging relationship between the “business” and tech relationship within startups.
To start, we began our company with an unusual problem…. The original founder of our technology was the engineer, and he needed money and connections/“business sense.” That’s where the other two business co-founders came in, one being me. From that point, we were a three-man shop that started going to meetings with potential B2B clients. “Cool idea, but too risky for us” was pretty much what every facial expression told us during those meetings. This is where everything changed.
We began to shift our focus toward developing the technology internally, which is an incredible task for a physical invention in the Nano realm. We would not be able to find a “strategic development partner” until we made some major steps forward in our product development and research design models. Ultimately, our new task was to find engineers that were capable of understanding our technology and willing to work “on a hope and a prayer.” This is where our problem became: “Where do we find engineering talent and how do we evaluate engineers?” Later, we would find that these were the wrong questions to ask up front.
We started by reaching out to colleges, smaller tech companies and old friends, but we were unwilling to give up equity and we could not afford to pay the high price for qualified Nano Engineers and Theoretical Physicists. So, after wasting months, we decided that our only chance was to move our engineering effort to San Francisco (a place where we thought engineers might work on a startup, without receiving equity – think Napster guy in the first part of the Facebook movie). This meant our company would be operating from two different coasts.
Now, we “business” guys were physically isolated from the daily grind of the tech side. A situation I would consider synonymous with a startup that has a “business” founder who knows nothing about what the “tech” founder is doing (the movie startup.com demonstrates the pitfalls of this dire situation). Back east we had two “business” co-founders, our accountants, our IP attorney, our general counsel, and all of our B2B contacts with Lockheed, Boeing, and Northrup, etc. But out west, where the “tech” was, we actually had a company.
Our CTO quickly began to find eager engineers who were ready to work on our technology for what seemed like curiosity. We got these people to believe in our idea, and their “talent” began to evaluate itself. We were making significant progress on our technology for 6 months without writing a single payroll check (besides living expenses for our CTO, and a few free iPads and travel expense reimbursements for the “team”). This was the “ah-ha” moment where I began to realize that we were “earning” our engineers. We didn’t need to put anyone through a comprehensive, formal evaluation process. What our CTO was doing to gain their trust was nothing short of a miraculous, herculean effort, but what were we “business” co-founders doing? Making sure that we were building a company where engineers could get paid at some point. We were also trying to learn about Nanotechnology and material science, and their markets/sales cycles/competitors/grants/etc.
At the end of the day, engineers dictate most everything in a tech startup (as I am still learning). They are putting in all of the actual work on the product that you are trying to sell. They are the ones that will choose to meet / not meet deadlines. They are the ones that could easily walk away and get paid large sums for their skills in the established sector.
My advice to non-technical founders is to focus on being a salesman. You need to sell your idea to a “special” engineer who one, believes in what you are doing, two, trusts that you will try your hardest to learn the “tech” side of the business and what he/she is actually doing and, three, has confidence that your business skills and work ethic are nothing short of heroic. After you find this then you can get them started and see if THEY match YOUR work ethic and enthusiasm. As I said before, engineers dictate most everything, even the initial “feeling out / talent evaluation” process. An engineer or CTO who is worth being partners with and/or trusting with your idea or company will evaluate you before they commit to the TONS of work and risk you are proposing.
I have certainly learned that engineers and the technical guys are not just some piece of the puzzle; they basically are the puzzle maker. As the business leader, you get out there and sell that put-together puzzle to someone at a huge margin (so I hope). Today, we have been able to retain many of our engineers, found ways to pay them a decent salary, and moved them into our new offices at NASA Ames where they get to work with top industry engineers to develop a cool technology. Luck is a factor.
If you have money, pay engineers what they are worth and get rid of them if they under perform. But if you are giving equity or asking them to become a true partner in your company, they better believe in it, and you, so that they are honest about their own limitations. But first, you have to sell your idea through hard work, lots of searching, and tons of creativity to keep engineers happy and involved.
Bio: Robert Snowberger is a first-year MBA student at Wharton, majoring in Finance and Entrepreneurial Management. Robert is a co-founder of a nanotechnology startup that is currently a member of the Wharton VIP community. Before coming to Wharton, Robert spent five years as an officer in the US Navy SEAL teams and completed two deployments to Iraq. He earned his undergraduate degree from The George Washington University, and he grew up in Wilmington, Delaware.