So, yeah. I’ve tried and I am using Car2Go. I’ve tried to resist the tentation of dropping my expensive month-to-month car rental at entreprise but I’ve failed. I got approved by Car2Go with some extra steps as I am a foreigner and I’ve got started. The first thing I’ve done is send a text to my strong eco-activist friend to piss him off. Disclaimer: I am strongly for the destruction of the environment, so it’s kind of ironical, that I am the one who get a Car2Go.
Obviously, a service like Car2Go which is really green oriented cannot come without some green bullshit nonsense. This time, the bullshit nonsense has a name, EcoScore. Basically, EcoScore monitor you driving style to give you an environment rating. You loose points when you are accelerating or breaking too strongly. You gain points when you do this softly. You have 3 beautiful trees (accelerating, cruising and braking) who get sad when you are driving normally (unless you are shadowing a snail). You are noting the eco-mentality non-sense, a tree should be happier when you are producing more CO2. But, Okay, that’s allright, we don’t ask them for any scientific accuracy.
I first encounter Car2Go EcoScore when I was driving very poorly. Yeah, I confess, I wasn’t really considering neither the environment nor the Car2Go golf carts. And I got this:
I was scared. Shit, I screw up so much that the aliens spot me? I documented myself online and learn about the EcoScore system. No one (Yeah…!) has ever posted this red warning stating that their Car2Go membership may be cancelled because of the Car2Go EcoScore. The more close warning I’ve found is a yellow vegan pussy one:
So I’ve learned what’s the EcoScore is and what are the 3 tree real-time scores. After this event, I was caught into the game. Trying to reach the best score possible ever. I am a game addict and trying to score 100 for cruise, break and accelerating was kind of fun. Since then, each time I take a Car2Go, I display it in full screen the score board and watch the changes while I was driving.
Here what I found out. This system is bullshit. I’ve made an almost perfect score and to archive this, I had to drive really, but really poorly. Burning lights to not have to break. Accelerate very slowly. I think several people on their bikes were able to pass me, they seem not to care about their own EcoScore. It was not perfect drive because I slow down to fast when I’ve spotted a child walking on the side walk. Damn me, I should have know better that the environment cause is far more important than a life of child. With the butterfly effect maybe this single brake will trigger the new ice age. I am deeply sorry if this is the case.
Technically, the system is more than inaccurate Braking when you go up a hill will gave you a perfect score in only one single break. But breaking while you are going down a hill will destroy your score. Basically, saving the whales consist on accelerating when you are going down an hill and breaking when you are going up. Progress. Moreover, and I think it’s the biggest flaw, it doesn’t take account of the importance of the trip. I think we need another parameter with this, maybe by prompting the user for the reason of the trip. We can rank then with something like: Going to the Hospital > Going to see your Mum > Going for Groceries > Going to Work > Going to Party > Driving around purposeless… A perfect trip will be then to go the hospital while driving very slowly, avoiding lights and with a hill built near the arrival to slow down. I guess I will submit this idea to Car2Go. Seriously (They might be serious with this idea though!) and eventually, whereas spending money, engineering and marketing tricks to find better ways to spy on their customers, they should spend a little of this money to improve their mobile app. Seriously, it’s shitty.
Here a trip where I’ve saved 3 trees, 5 birds and 2 squirrels. I am good person.
Ironically, I am okay with a private company spying my driving and making business decisions based on that. Ie. if they decide to cancel my membership because they think I am driving poorly whatever metrics they want to use, it’s their call. What piss me off is that they try to make you believe that this system is for saving the environment or something, They are not saying we are spying on your driving style but they are saying “We try to give you advices to adjust your eco-driving style.” Thanks mama. It will be also okay if it was a real private company, but it’s not. In Austin, Car2Go has private parking spots, free street parking and subsidiaries from the city. They got all of that because of the hypocrite eco-friendly attitude they display.
Now, like Cartman would sang: “I don’t give a crap ‘about ****** Whales, So Go and Hug a Tree.”
After reading a lot about equity, profit-sharing and other various related subjects, I was profoundly dissatisfied and I decide to come up with my own method, humbly called Hartator Cash Method, in order to split out equity in a fair way between co-fonders. First and above all, I don’t believe that equity should be divide evenly, like 50/50 or 33/33/33. It’s morally profoundly wrong and economically inefficient. Indeed, it sates in an agressive and coward way, that either you believe that everyone in the early company are equal, and that’s never the case, or, and that’s maybe worse, that too poltron to do something about it. There is other methods, that guide you to list and rank elements like level of responsibilities, commitments, experience, industry knowledge or the importance of the idea or the business plan. You try to give a rate, seriously a rate how retarded is that?, to each founder for each elements in the scale of 10, 0 meaning your are a sh*t in this area/skill and 10 you are an expert. Unfortunately, this process is profoundly subjective in every single steps and lead to more incomprehension and confusion than an evenly distributed equity.
I believe in cash. I believe business is about money. Everyone that told you that business is not about money is damn hypocrite who lie to himself or lie to you. Everything, and I emphasize everything, that makes a company, a product and service can be quantified in cash. Equity shares is consequently just the amount of cash brought on the table by each co-founders. The hard part is to work on the valuation of each component that makes a company. And your arguments, you must have at least one!, must be focused on theses valuations.
You have to work on evaluate each co-founder contributions against the components list here:
- Capital and Investissements
We are starting with the easiest, startup capital and investissement contributions are strictly egual to the amount of cash a co-founder invest. This investissement is at risk, so I advise you to not take account of interest rate or currency depreciation. If a co-founder invest $100,000 just had $100,000 as his contribution.
- Potential Salary
We move forward directly to the hardest part, but I’ll make it easier for you! Estimate each co-founder potential salaries based on the best they can expect if they were working for a competitor that will pay them the most they can expect to be paid if your competitor recognizes fully their expertise/skills. Don’t be shy and write down more than decent salaries! Indeed, if you are starting a company, it is because you believe that your work can be valued much more than the price you can have by selling it in the regular job market, so make your best shot! For example, you can value your CEO at $250,000 by year, your CTO, $150,000 and your CMO, $120,000. Don’t add up right now each potential salaries as contribution, keep it down somewhere and we will use it latter.
- Work already done
Even if you are starting a brand new company, the odds that one of you or some of you have already done some work are not negligible. Make your best estimation of the time spend by each co-founder, be precise specially if you are dealing with some people working part-time and some full-time. Then, calculate the contribution of each founders based on worked time and the potential salary, the one we calculate before, they can have claim for this time. For example, if the CMO who can claim a potential salary of $120,000 yearly had worked 2 months full-time for free, it should have $20,000 more as contributions. If a co-founder has been paid by another co-founder, he can’t claim any contribution as he wasn’t working for free. The money paid by the other co-founder must be accounted as a regular fee for this co-founder.
- Future Work
Any work that is going to be done without being paid must be counted as a contribution of the co-founder. As soon as the revenue of the startup is enough to give a co-founder a decent salary, his work shouldn’t be counted anymore toward cash contribution. Estimate this date and add as a contribution to each co-founder the time they will work for free evaluated again the potential salary they can have claim. If you expect the company to not be able to make enough money until 6 months, give at each co-founder half of the potential salary you have calculated previously. Obviously, if the company will make tremendous amount of money since day one, nobody deserve any contribution based on the work that are going to be directly paid.
- Social Connections
A startup team is rarely balanced, they is often one who is more socially active than the other, who get more connections, more business-related friends and can use his network for the benefits of the company. The question is: How we value that? The simplest answer will be whatever you will be ready to pay in the regular marketplace. The commission rates for a sale are in every industry are pretty transparent, from 5% for real estate to 50% for tech services. For example, if one co-founder bring to the company a client that is worth $100,000 and the commission rate in your industry is usually 20%, give to his co-founder $20,000 as a contribution. Exactly the same thing work with contacts with potential hires and capital venture: How much an external agent will be willing to take to give you his contact?
- Miscellaneous Fees
Fees include anything that have been paid by a co-founder and must be counted as a contribution. It can be domain registration fees, legal fees, contractor payments, subscriptions, rents… I strongly recommend to include all fees even small ones to add the more fairness possible to your math.
- Idea Conceptualisation
The idea and the idea conceptualisation, alias business plan, has also a price. Idea worth almost nothing, all the value of a company is based on the aptitude to execute the idea, to make it real. Idea conceptualisation takes time, energy and experience and have a higher price. A tip will be to evaluate the contribution of the co-founder who have done this work as if he was working for an external marketing agency.
If you think of other things that can have a value and are not listed above, take time to evaluate it based on its market price. Then, give the co-founder concerned the value of his contribution. For example, if a co-founder has a working prototype, try to evaluate the value of the prototype if you have to pay an external company to make it.
When you are done, sum up all the contributions of each founder and you will have the value in cash bring on the table by each co-founder. Sum up all the total values of each co-founder and you get the virtual valuation of your company, basically all the money, real and virtual, needed to start the company. Then you just have to make a ratio, co-founder’s contributions/total company valuation, to estimate each co-founder fair shares.
Here is an example, assuming the CEO’s potential salary is $300,000, the CTO’s $150,000 and the CMO’s $120,000, and the company will take 1 year and half to make enough money to pay the founders:
Capital = $150,000
Work already done = $100,000 (4 months full-time)
Future Work = $450,000
Social Connection = $50,000 (1 customer worth $500,000 with 10% commission)
Legal Fees Paid = $20,000
Total Contributions = $770,000
Work already done = $50,000 (4 months full-time)
Future Work = $275,000
Prototype Build = $70,000
Total Contributions = $395,000
Capital = $100,000
Work already done = $20,000 (10 months part-time at 20%)
Future Work = $180,000
Social Connection = $200,000 (5 customers worth $2,000,000 with 10% commission)
Marketing Fees Paid = $30,000
Total Contributions = $530,000
In this company, the total valuation will be $1,695,000. The CEO will receive 45%, the CTO 24% and the CMO 31%.
Congratulation, you are all set. Feel free to use this method and adapte it to your own business, company or startup. Remember, the main discussions with your business partner must be focused on the valuation of each components and not the resulting shares of each person. Thank you for reading, I am hoping it will help you to make better and fairer co-founder deals and, above all, good luck with your business!
I’ve just finished Atlas Shrugged from Ayn Rand, great book by the way. This reading leds me to think a lot about needs. From Ayn Rand works, she despises the link made between needs and the obligation of the state to try to give satisfaction to them. She despises the fact that you will bring productions of other men at an end of a gun, the looters behind the gun defining who is the state. I think we can go further into her thoughts and challenging the mere use of the word “needs” to analyze human behavior.
We use the word need plenty of times when we try to have an insight about how human works, thinks, acts, lives and loves. Of course, we can think about communism, which try and fail to address everyone’s needs in an attempt to guess what every people want. But, we use the word “need” also in more capitalism ends, notably in marketing services. The customer needs whether it’s a company or a person is then the basis of how marketing staff thinks. The last but not the least, we use needs in sociology to analyze how one man or woman interact with other men and women. Thus, it have been identified that each one of us has a fair amount of physiological needs, safety needs, stability needs but also fun needs, spiritual needs, social needs, emotional needs, and even love needs.
I think this way to analyze human behavior simply doesn’t work and doesn’t make sense. When you go out to eat a burger, you don’t say: “hum.. I feel hungry, maybe it means that I have to fulfill my food needs. I ought to buy a sandwich and eat it.” No, you directly go eat it without even thinking it is one of your say-so physiological needs. When you feel unsafe, you buy a gun. You are not fulfilling a safety need, you are just trying to do your best to stay alive! When you fall in love, you don’t even think about that it can be a need, you just feel it, Moreover, the absence of it doesn’t mean you now want to seek it. The human analysis by his needs is a way that makes companies loose their money and politicians keep their jobs. As a matter of fact, it may be obvious that something that is good for politicians cannot be profitable!
Men act towards what is the most useful for their own survival and for their self-happiness. When we feel hungry, we don’t buy a burger to own it, we buy it because we know how we can make it useful for us, how we can eat it and how this help to not suffer for starvation and death. We don’t want things because of our needs. We want things because of their usefulness. Our mind tell us that this hammer must be bought giving that it can be useful to make this nails right, not giving that it will fill a part of our do-it-yourself needs. When you buy a gun, you know well that by itself, it will not raise your level of safety, but you know also well in case of someone trying to break into your house, it can be very useful to make him runaway.
We value things according to the usefulness we find on them, either for our very own survival or for our seek of happiness. The reason why something material can be worthless for someone and invaluable for another one is that our mind differs in what we have learnt and so what we think will be useful. Oil was more than worthless a few centuries ago because it was simply useless. Human minds managed to build useful machinery to take advantage of the oil nature and now oil is valued more than gold. It is valued more than gold because it has become a lot more useful thanks to a series of complex inventions. We feel love as a good thing because it is pure happiness. No needs for our mind to make an extra step to judge its usefulness for our self-happiness, indeed, It’s already it.
Companies also must not think about what clients need or want but what’s the most useful for them. To get it straight, when clients express theirs desires, it must be taken of course in account because the odds are high that this IS what is useful. But, as a company, we must challenge ourselves to find for them new ways that no one has dreamt of. It’s not by studying market needs, that Steve Jobs invented the Mac and the whole personal IT market, but by guessing, what will be useful for other people and, by convincing them that it will be. The study of needs is useless and drive us to collectivism, bad ideas and a lost of money, therefore, we must avoid it and focus on what really matters, determining what will be the most useful thing we can create and how we can efficiently bring it to the customer.
As human beings, we have to seek what’s, material or not, the most useful things we can find to leverage our existence by, first of all, keeping it and after that, by driving towards happiness. And, we have to remember, that every man and woman, consciously or not, has the same behavior, they follow what’s they think is the most useful for their own survival and for their self-happiness.
Yeah, that’s another debate about the pros and the cons of python and ruby. Many thinks it’s a false debate, you have just to give a try to both and see. I strongly disagree.
You cannot judge a whole language in a couple of hours, in a couple of days or even in a couple of weeks. Languages are complex, you have to learn the syntax and moreover and that’s maybe the most important part, the inhereted library which come with it.
For example, Ruby comes with great web/network related libraries (RoR, watir, webrat, anemone…) Hence, tools in the linux distribution BackTrace use Ruby as the lang of choice. In another side, Python has great libraries in stuff which use realtime environment, we can think about blender, games development, OpenGL, graphics interfaces…
Python has a huge support from Google, so it means a lot about the quality of the language. Nevertheless, the creator himself of Python now works for Google, so we can legitimetely question Google for its impartility about this subject. Ruby has direct or indirect support also from a lot of companies, but any of this campanies can compare to the size and the influence of Google.
Python and Ruby was created nearly at the same time and I think that the version number of the two languages reflected the underlined philosophy. Ruby’s current versions is 1.8.7 and 1.9.2. Python’s are 2.7 and 3.2. We can fully accept that’s for ruby, 1.X are major version whereas for python X.1 are the major version. So, for the same amount of time, Ruby have 9 “majors” versions whereas Python only 3. Yeah, I know it’s mean nothing about the quality of the language but it reflects a lot about the two language philosophies. Ruby move forward quickly and so does its community. Python works slowly but with far more strong support for each its version.
We can fell that in the language libraries. Python’s one tend to be more stable, less subject of changes, more robust and on another side Ruby’s one are more in the edge, with features been added, deleted and changed every time, and finally with better and simpler approach particularly with the ruby DSL which can make things pretty clear with a reading like natural english (: Rspec is a good example).
The downside of ruby is the inconsistency of the behavior between versions. This works for the core but also for its libraries. For example, core regex behaves in a different way in Ruby 1.8 and Ruby 1.8 with unicode strings. It can be very frustrating. Another thing frustrating is to make a extensive use of DSL, Ruby allows libraries and modules to pollute the global namespaces very easily and to monkey patch the core classes. It can be useful to have a to_json methods associated with every arrays but it can be painful when two libraries try to add to_json twice and their to_json do not behave in the same way. Python modules are simpler, prettier and they do not pollute the namespace. Unfortunately, Python miss tools like rubygems and bundler to make the management of modules very easy and consistent.
Back to the beginning of the post, it’s not easy to choose between this two great languages. On the other hand, you cannot waste your time rewriting your application in both to see what fits best. My opinion is simple. Python is a language to talk to the computer. Ruby make the computer able to talk to you. Python takes a academic approach trying to do the right things at the right point. Ruby try to fill the hole between humans and computer. Good or Bad ? Who can tell ? If you want a stable approach learn Python. If you like to gamble, bet Ruby.