Archive for December, 2013

Why Move To Malaysia?

posted on December 29, 2013 in Lifestyle

When three years ago I announced to my friends and family that I was leaving Barcelona to travel, and that I was starting in Malaysia, their first question was “Why Malaysia?”. Their second question was “And where the heck is Malaysia?”. It’s in South East Asia, by the way. Next to Thailand, which is way more popular than Malaysia for expats and travellers.

Even though I had never been in Malaysia before (or anywhere in Asia, for that matter), I expected to like it based on my research and what my friend Tom Hayton, who lived in Malaysia for 5 years, told me about the place.

I have to say I didn’t have a good first impression of Malaysia. My cousin (and travel companion) and I arrived in Kuala Lumpur in March and were greeted with a suffocating heat and humidity. Meanwhile, back in Barcelona, they were having the biggest snowstorm ever.

After that, we spent the next few days awake mostly at night due to jetlag, and hanging around a not so nice part of town (where we had booked a hostel for the first week). We realized that wasn’t what we signed up for and booked a ticket to Phuket, Thailand for two days later.

Funnily enough, before we left, we met Hani, an old friend of Tom’s, and we hit it off right away (spiler alert: she’s my wife now). We still moved to Phuket for two months, but kept in touch with Hani and ended up moving to Kuala Lumpur afterwards for three months.

This is my list of things that make Malaysia a great place to relocate to as an expat, which may not seem obvious at first if you come here for just a few days.

PROS:

Language

As opposed to the superpopular Thailand, where the language barrier can be a problem and even reading something is mission impossible due to their hieroglyphic-like alphabet, language in Malaysia isn’t much of an issue.

Malaysia is an old British colony and because of that, English is spoken by a big part of the population. The official language is Malay, the mother tongue of the Malay ethnic group, the biggest one. But there’s also a big Chinese (32%) and Indian (8%) population, so English is often used as the common tongue. Even though some people speak very good English (specially people in their 20s and 30s), be prepared for some heavy accents or situations where the other person simply doesn’t speak English,

Weather

It’s hot (25-35ºC) and very humid (75-95%) in Malaysia, depending on the season and the area of the country where you are. It rains often too. I personally dislike rain, that’s why I’d have a hard time living in London. But rain in Malaysia is different. In Kuala Lumpur, even on the rainy season, it rarely rains more than one or two hours a day. But it rains very heavily. It’s also quite predictable once you get used to it, so it’s relatively easy to avoid being caught by the rain. On the plus side, it cools the day down and because of that, this is probably the only place I’ve ever been where I’m happy that it rains on a daily basis.

Location

Malaysia is very well located in South East Asia. Its borders are shared with Thailand, Indonesia, and Brunei, and maritime borders exist with Singapore, Vietnam, and the Philippines.

AirAsia, Asia’s most popular low cost airline, uses Kuala Lumpur’a airport as its central hub, so there’s lots of cheap flights all across the region. Roundtrip prices for next month according to AirAsia’s website: Singapore $70, Bangkok $79, Bali $107, Ho Chi Minh City $115, Melbourne $123, Phuket $131, Hong Kong $189, Tokyo $247, Shanghai $262, Seoul $368 and the list goes on and on. You can find way better deals if you plan in advance, but as you can see it’s pretty affordable. When people living in Europe or the US consider a holiday in any Asian country, it all comes down to the same problem: local expenses will be low, but the flight cost is ridiculous. If you live in Malaysia both the holiday cost AND the flight can be cheap!

Cost of living

Malaysia offers great value for money if you’re an expat. Rents vary a lot depending on where you stay in the city and the type of housing you want (apartment at a condo with gym, whole house, etc ). 3 years ago I stayed at a decent 2 bedroom apartment at a condo with pool in Bangsar, which is a pretty cool area to live in, for $577 /mo. Now I’m staying with some friends at a way better two bedroom apartment in a nicer condo, in the same area, and they pay $729 /mo. There are way cheaper options if you’re willing to give up some comfort (pool, space, location…), and way more expensive as well.

Most condos have a laundry shop where you can get someone to do wash and fold your laundry for like $0.30 a pound. A maid to come for 4-5 hours to clean your house might cost you $20.

Cabs are cheap here as well, with most rides costing around $2-$3. If you choose to drive, even paid parking spots in malls usually cost no more than $0.5-$1 an hour.

Going to the movies can cost from $3 for basic seats and movies all the way to $9 for the comfy seat, 3D movie, etc.

Eating out can be extremely cheap, or just as expensive as in Europe or the US. You can eat a delicious local meal for $1-$2, $5 or so for more expensive options (shrimps, etc) or maybe spend $10-$15 at a fancier restaurant at a mall (still sticking to Asian food). There are some great Sushi places as well for $15-$20 per person. If you want Italian, American, steak, etc. then you’ll probably looking at $20 or higher. Overall, cooking at home is only recommended if you’re going to be eating things like meat, salads, etc. If you’re into Asian food, you’ll be eating like a king for very cheap.

Drinking is expensive, though. Between importing costs and the very high tax on alcohol (it’s a muslim country after all), the cost of drinking is very high compared to everything else. The same wine that in Spain costs €4, here you’ll find it for €20 on the supermarket. A bottle of rum that would cost €13 in Spain, here costs €40-50. Drinks might be slightly cheaper or same price than other places in the US or Europe. A cocktail usually goes for $5, and a beer for $3. It doesn’t get much cheaper if you buy beer at the supermarket either.

What some friends do, considering that flying is cheap and they take regular weekend escapades, is buy their alcohol at the airport, where there is no tax and a bottle can cost half as much as in the city. It’s a good idea, but still doesn’t help with the cost of drinking at a bar.

Food

Other than the cost, which can be really cheap, food here is delicious. Before I came here I had tasted sushi, chinese, thai and indian food back home. After being in Asia I can say the only authentic Asian food I had tasted was sushi.

First of all, pretty much everything is spicy here. Our most spicy food in Spain is probably the lowest here. If you’re not into spicy food (I wasn’t at first), you’ll be sweating and drinking juice or milk tea after every bite. But after a few weeks you’ll be hooked and will love it. Don’t get me wrong, I still don’t go for the “real spicy” stuff here, but the basic spicy tastes great.

You’ll find delicious Malay, Chinese and Indian food everywhere. Some good Thai, Vietnamese, Korean and Japanese too, although pricier. And for more money, I’ve also tasted decent burgers, pasta, pizza and even tapas. Basically, if you love food, you’ll be right at home.

On the grocery front, you’ll find almost everything you want if you shop at the right places, but expect to pay a premium for imported or not very locally consumed goods, and the quality won’t be as good as back home sometimes: bread, cheese, pork cured meats, etc. Overall, you’ll find eating in more expensive than eating out.

Being an expat here

White people are usually pretty well regarded here. You could say there’s positive racism towards white folks. Salaries in Kuala Lumpur are OK for locals, but usually expats command higher salaries, even in local companies. Still, the ones who do really well are expats who come here relocated from their country’s office (say, the UK or the US). They usually make the same salary as back home, sometimes with a relocation bonus, and here that means big bucks.

The community of expats, at least those who I’ve met, seems pretty great as well. They mostly have good jobs and are cool and interesting people. It also helps that they make good money when it comes to planning things to do. In Barcelona there’s a lot of expats that have local salaries (not great) or living on savings who are always scrapping by, and the difference shows.

Comfort

With an expat salary, life can be just as comfortable as back home, if not more. Eating out all the time, good apartments, pool and gym right in the condo, frequent weekend escapades, AC on all the time, a fast and reliable Internet connection… The only thing I find more unconvenient than back home is that Barcelona is small, walkable and the public transportation is great, while in Kuala Lumpur you pretty much need a car to move around.

Diversity

The mix of Malay, Chinese and Indian cultures along with a lot of Western influence and expats living in town make Kuala Lumpur a very diverse and interesting place to live. As a comparison, I found Bogotá (Colombia) to be more homogenous. People share a similar look and personality traits, while here that doesn’t happen.

Entertainment

Kuala Lumpur is huge (the metro area is home to roughly 7.5 million people), and there is a big variety of entertainment offers. Clubs, bars, movie theaters, concerts…

If you get into the expat circle you’ll see there seems to be a pool party pretty much every weekend, too.

There are also awesome places to visit without leaving Malaysia during a long weekend: Langkawi, Cameron Highlands, Penang, Batu Caves, Sarawak in East Malaysia…

If you like diving, Perhentian Islands have some of the best spots in South East Asia, although you should only go March to October due to monsoon season. And if you’re into surfing, Bali is great for that and just around the corner.

CONS:

Traffic

Huge city plus crappy public transportation equals traffic jams. It doesn’t matter if you’re in Los Angeles or Mexico City, the formula is never wrong, and it isn’t here. If you skip rush hour you’ll be mostly in the clear, though.

Religion

Malaysia isn’t Afghanistan, Iran or Saudi Arabia, but you can still feel it’s a muslim country in many ways. It’s not too bad, though. As an expat, here are the things I’ve noticed that are quite annoying (some more than others):

  • The ridiculous “sin tax” on alcohol.
  • The annoying traffic jams around mosques on Friday afternoons, during praying time.
  • If you want to buy alcohol or pork at the supermarket, you have to pay that first at a different line and then line up for the regular line for the rest of the products.
  • Less freedom of speech in the arts. It’s quite common to ban or censor movies, shows, videogames, etc. depending on their content.

I hope that by now you’ll be curious enough about Malaysia that you’ll consider visiting if you’re in the region. I’ll be here for another week and then spend a month in Bali (being so close and all), to be back later in Kuala Lumpur for another week or two before moving on with my travels. If you happen to be in town while I’m here or just want to ask anything about Malaysia, get in touch.

To Everyone Who Works Online: Never Forget This

posted on December 21, 2013 in Entrepreneurship, Lifestyle


Like everyone, I have problems. And like a lot of people, I worry or stress about them more than I should. Yes, there are big problems or situations in life that  will (and should) stress or worry you, like critical health issues. But 99% of what most people worry, stress or get upset about is just bullshit. I’m of course talking about people with their basic needs covered, which I’m sure includes everyone reading this post.

A few years ago a friend was explaining to me how he realized his life was pretty sweet: he found himself being quite upset about running out of ice while having drinks at home with some good friends. He was right. When your biggest problem in life is running out of ice for drinks, you’re doing well.

Sometimes I’m so occupied worrying about stuff that shouldn’t matter that I don’t have time to be grateful and happy about how extremely lucky I am, and have been most of my life.

I’m from Spain, where the situation for a lot of people is pretty bad right now (youth unemployment is over 50%), and I’m sure a lot of them won’t be having an easy time this holiday season. Still, if you’re as fortunate as I am to work online (and every year more and more people are), we live in exciting times. If you’re a developer, designer, marketer, writer or a multitude of other “professions”, I’m sure you could use a little reminder for when you’re feeling down.

We have found our passion

Sometimes I get sad when I realize that actually, most people don’t really enjoy what they do at work. They might be OK with it (as in, they don’t hate it), but it’s definitely not something they’d do on their free time or that they are passionate enough to discuss with their friends. We are fortunate to have found something we love to do in life. Most people aren’t that lucky and don’t even have a hobby outside of work, and just spend time watching movies, meeting friends, etc. Not that here’s anything wrong with that, but if you have a hobby or passion you’ll agree with me that life would feel emptier without it.

We work on something we love

That doesn’t mean work is always easy or that we always have a smile on our face. Sometimes we work with people we don’t like. But I’d much rather be doing this than anything else in the world. Heck, this is how I spend much of my free time too, and it’s a topic I never get tired of talking about.

We are paid well

Of course, there are exceptions. But right now, everything online is in high demand. Sure, there are better paid professions, but they’re usually just something that is more critical or difficult (say, a surgeon) or that are in higher demand (say, a movie star that can make a movie highly profitable).

I agree there are things that could be better (overtime in certain companies or industries, crappy managers, etc) but the important thing to remember is that we have one of the better paid jobs out there. Enjoy it while it lasts.

We can find work easily

Again, we’re in high demand. There are online businesses everywhere in the world. And if you speak English, you can actually move anywhere you want in the world and, if you’re good, will probably have an easy time finding a job.

We can work from anywhere

The majority of companies still require their employees to work on site. And I’m willing to bet most people are actually OK with that. But if you’re one of those who prefer to work remotely. Either from home, from a different region in your country or from the other side of the world altogether, there are companies out there who could be a good fit for you. You can find some of those jobs here.

There are not many professions that let you relocate to a different country while still being able to keep your job. We should be grateful we have one that allows us to do it.

We’re mostly valued on our performance

Again, there are exceptions and companies that value more the time you spend there (if you work for one, find another job). Still, you’ll agree that in most companies, as long as you perform well and do your job to the standard that is required (or higher), they won’t have a problem with you leaving a bit early, taking some off here and there or playing the company foosball a bit too much. Very few companies (again, the wrong ones) will fire a great performer because he doesn’t “look like one”.

We have incredible perks

Since demand is high, and having the right talent is critical to the success of your company (unlike many positions in other industries), companies resort to not just paying us well, but also offer other great perks. From great offices, foosball and pingpong tables to delicious catered lunches and free massages, I’ve seen it all.

We are treated like human beings

People who’ve only had this kind of jobs (like me) sometimes forget how badly treated employees are in general in certain industries. Horrible bosses, lack of job security, change from day to night shifts every few weeks, safety or health issues, etc. Most Internet companies are run by decent (yet sometimes flawed) human beings and we are generally treated fairly. And some of the policies these companies have are just plain inspiring. Have you ever seen a mining company offering deceased employees’ spouses 50% of their salary for 10 years, or a bank having an open salary policy?

Starting our own business has never been easier

This is probably our biggest advantage over other professions. Very few industries allow you to start a business on the side while having a day job, and grow it successfully until it allows you to make a great living out of it.

I’ve never seen a waiter or chef start a restaurant while having a full time job. Everytime I hear how much it costs to start a small restaurant, bar or shop, I get a shock. It’s ridiculous, to me, as someone who works online. And then I remember, that’s the capital you used to need for starting any kind of business: a lot. And most types of businesses still do. But online, we can start a business dedicating mostly our time.

Every writer can start their own blog and make a living out of it (I did). Every marketer can get into affiliate marketing and make money. Every developer can make an app or website and do the same. Yes, not everyone has the determination to do it. And not everyone who does will pull it off. That’s just how the market works. But we have it easier than anyone to give it a try.

So don’t forget. We’re extremely luck to live in such a short and exciting period in humanity’s history. Let’s be grateful and enjoy it while it lasts.

The Ultimate To-Do List: Your Inbox

posted on December 14, 2013 in Productivity

I’ve tried a lot of task management systems and to-do list apps over the years. Simple and complex, web-based and native, mobile and desktop. Despite some of them being quite slick, I always ended up ignoring them over time. It seems stupid, but just the fact that my tasks are on some separate app that I have to consciously open and keep updated, makes me drop them eventually. It is “too much work”. Eventually I found a workflow that’s so integrated into my daily routine that it works perfectly for me. Everyone’s different, but I’m sure some people will find it works wonderfully for them too.

Before I go any further let me clarify something. Besides the system I’ll describe in this post, I also use Basecamp, where I have all my projects and their respective backlog of tasks (plus documents, etc). Some of those lists are huge, some are small. It depends on the project. I usually have a vague roadmap of big projects and features (launch X on Q2 2014, etc), but other than that I just have a week or two worth of tasks planned (with deadlines). And I mostly use the calendar to have a visual view of my next weeks’ worth of work.

So I do use some classic project management software. The system I’m about to describe works on top of that. I use it for emails I need to reply, personal tasks (do laundry, call someone, do taxes, etc), work related tasks that don’t necesarily fit into a Basecamp project (or I just feel like it’s important enough to deserve extra visibility), or maybe it’s something I thought about and haven’t had the time to put into Basecamp yet.

Keeping Your Tasks Visible

Something everyone has problems with is finding a way to be aware of their to-do items. Some people try sticking post-it notes on the bathroom mirror or the computer monitor, since they think they’ll look at them every day. I don’t think that’s a useful method, since there’s limited real state available and is harder to maintain than an digital solution.

At some point I realized there is something that I look at multiple times during the day, every day. Even in my off days. My inbox. I always have a Gmail tab open. Or if I’m on the go, check it on my phone quite often.

Using Your Inbox As A To-Do List

There are some people who may receive hundreds of emails a day they need to reply to, and they’ll think they can’t make this work because of the volume. I personally receive maybe around 100 emails a day, sometimes more, although a lot of them are things that I need to know about, but not necessarily need to reply to. My opinion is that this system works whatever your email volume is.

The way the system works is very simple, really: each email you receive is something you need to act upon, and you use email for everything. For every email you receive, these are your choices:

  • You can do nothing (that’s also a choice) if you don’t have to do anything about it. Maybe you were just CC’d on something but your whole purpose on that thread is to know about it. This means you just read it (or mark it as read).
  • You can delete or archive it, if it’s completely useless or you don’t particularly want it wasting space in your inbox. Keep in mind that I don’t strive for inbox zero in the traditional sense. For me, an unread item is an item that requires my attention. A read item is one I already dealt with. So for me, zero unread items is the equivalent of inbox zero.
  • You can reply to it.
  • You can delegate it to someone (forward it or CC someone into the conversation).
  • You can postpone it (maybe it’s something you need to deal with but only in, say, a week from now, and you don’t want it bothering you now).
  • You can create a task into your formal task management software (if you use any). This includes Basecamp, Jira, FogBugz, Flow, Asana, etc.
  • You can take some other action (maybe call someone, run an errand, etc).

How It All Actually Works

The technical implementation of this system is pretty straightforward:

  • Use Gmail in your desktop, configured to show “Unread Messages First”. This effectively separates your inbox in two: first all your unread emails, which are all the items on your to-do list that you haven’t dealt with, and then all your read messages, which could be thousands or more, it doesn’t matter, and you shouldn’t really look at them unless you need to dig up some old data (a flight’s details, an old conversation, etc). In essence, you should only be focusing on the unread items in your inbox.
  • If you for example read an email and you need to do something with it (like reply) but can’t do it right away, just mark is as unread and you’ll keep seeing it at the top of your inbox, and you’ll never forget to reply.
  • Adding a task to your list is as simple as sending yourself an email. From any device in the world, really. In the desktop, I just send myself an email from Gmail since with autocomplete it takes 2 seconds. On my phone, which I use several times per day when I need to remind myself of anything, I use Captio. A 1.99$ app which I use several times per day. Easily best two bucks I ever spent. Just fire it up, write whatever you want to send yourself, and then click Send. You can even attach images and files. Way faster than using the Email app.
  • I wish there was a way I could easily reorganize my unread emails in Gmail and they stayed that way, to reprioritize tasks (keep most important tasks on top instead of latest). But what I do works most of the times: I just reply to it (assuming I sent it to myself), or just forward it to myself. That way it goes to the top of the list. I don’t necesarily take action on items from top to bottom, but I find that sometimes an item I’ve been procrastinating about for a while and has been sitting at the bottom of the list gets more attention from me if I bump it to the top.
  • I use the Gmail iPhone app since it has a “Show unread emails first” and the official iPhone Mail app does not. It’s a pity because other than that, I prefer the official app.
  • To postpone a task, or be reminded some time in the future, I use FollowUp.cc. It’s a great service, and quite cheap (I actually used the free version for months until I needed more monthly emails). You basically send an email to an address like [time]@followup.cc, and you’ll get a reminder after that time. For example: 1w@followup.cc will send you that email back to you after 1 week. 3d@followup.cc will send it to you after 3 days. And so on. The paid version even has a calendar you can look at and it’ll show all your scheduled reminders. It’d be awesome if you could reschedule them by drag and dropping them, again like tasks on Basecamp.
  • For exact time and date reminders (like you have a Skype call next Monday at 2pm, or a doctor’s appointment), I personally prefer to use my phone’s calendar system (although you could always use Google Calendar and have it synced to your phone), and I always include two alerts. One quite some time in advance, the other with very little margin. It depends on the situation, for example:
    • For a Skype call, I’ll probably have one an hour before, and then 5 minutes before.
    • For a doctor’s appointment at 9am, I might have one the day before and the other an hour before, since I’ll need to physically go somewhere for it.
  • I also use labels in Gmail to quickly differentiate tasks at a glance. For example, any emails I receive from myself are labeled as TO-DO. If they’ve been sent to one of my businesses’ address, I label them as from that business. I use strong colors with white text (like bright red or blue) for work or more important projects, and lighter colors with dark text for personal stuff.

How Does My Inbox Usually Look Like?

Usually, when I look at my inbox in the morning it has anywhere from 50 to 100 unread messages. After I’ve deleted all the notifications, dealt with the easy stuff and replied to the quick emails, I’m down to less than 20.

Those 20 are usually a variety of things, which can include:

  • An email that will take some concentration and time to reply to.
  • An email that will require that I perform some other task before I can reply to.
  • A reminder that I need to run some errand (do laundry, buy groceries, etc) or task (change copy, fix bug, etc).
  • Some ideas for features or projects that I need to either do (maybe it’s a possible solution for a bug I’m trying to fix) or just dump into Basecamp (if it’s more of a complex task that will require breaking it into smaller tasks).
  • A link to a blog post, article, ebook, video or any other type of resource I found while browsing the net (probably on my phone) and I want to take the time to look into at some point. Usually these end up either being read/watched in a week’s time or I deem them not that important after all, and just mark them as read.

At this point, and depending on how motivated I am, I start by the easiest or hardest/most important, and use the momentum to plow through as many as I can before I call it a day (or move on to my tasks for the day on Basecamp).

I’d love to hear your feedback on my system as well as any recommendations to improve it or make it even simpler to use.

Everything You Need To Discuss Before Starting A Business With Someone

posted on December 5, 2013 in Entrepreneurship

When most people decide to partner up for a business, they pick someone they already know. Friends, coworkers & family members. Usually they’ve known them for years, and think they know them well. That, I think, plus just a general lack of understanding of everything that can go wrong (and usually does) in a business relationship, leads people to believe they don’t need to talk much to each other about things like expectations, “what happens if”, etc. before they start working on the business. They probably also don’t think they need to put everything in writing either. “We trust each other”, they say.

This is probably the first advice I give to anyone asking me for it. Look, having a thorough and (sometimes) hard conversation with your soon-to-be partner(s) is absolutely critical. And putting everything you agree on in writing too. And the reason for it isn’t that you can’t trust them or anything, it’s to preserve the business and the friendship. If you just talk and one year down the line you each think the equity split of the business is different, who is right? The answer is you can’t tell for sure, but you’re in deep trouble (trust me, I’ve been there).

Because of some past bad experience with this topic (which I’m still paying for), I decided to build an app that’d guide people over that tough conversation they must have in the beginning, and help them also download and sign a proper agreement with everything they talk about so that there’s no doubt in the future of what was agreed to. Here’s a link to the prototype, if you’re interested. You’ll see it doesn’t really “work”, it’s just a proof of concept, and I’d appreciate some feedback on it.

Here’s a list of everything you should talk about (and agree on) before you move on to work on a business with someone. If you can’t agree on any of these topics before you’ve even created anything or invested any time and money, shake hands and DO NOT move forward with the venture. Because you will have problems down the line.

Who is getting in business together?

It sounds stupid, but it’s still worth mentioning. Maybe one of you thinks that someone else (a friend, a girlfriend, etc) will be joining in too, maybe later. Make sure who is on the founding team, and who is out (everyone else).

Define the business

Again, sounds stupid, but it isn’t. Define properly and in detail what you want to build. Because if you just talked briefly, maybe you have different ideas of what you’re doing and that will lead to disappointments, confusion and arguments later.

What will each of you do?

Define each of your roles in the company. Who’s gonna do, say, sales? Or development? And if both of you are going to work on one area, how will you split the work? It’s always good to have complementary skills (say a technical partner who develops the product and a business partner who sells and markets it). Otherwise, you’ll have to bring in someone else on board to do those things you can’t do. Or do them yourselves, which may not be the best approach if you don’t have any experience with it.

As part of this, and this is one of the many uncomfortable decisions you must make, you should choose a CEO. Yes, there are companies with two co-CEOs, but it’s not the norm, for a reason. Eventually you’ll disagree on something important, and the CEO must have final call on almost everything. Again, if you can’t trust your new partner to be CEO, and he or she can’t trust you, then you have a problem that you better address before you even start.

How much will each of you work?

You should have an honest hard look at your life and your current work load, and decide (realistically) how much time you can invest in the business. If one of you is unemployed and can work 80h a week and the other has a day job and a family and can only work ten, that’s something you need to discuss soon, so everyone knows what to expect. Again, this avoids disappointment and arguments later on.

As part of this you should also talk about whether any of you will be working on other side projects or businesses at the same time. It’s always better to focus on one thing at a time, specially if you can’t work on it full time.

How much money will you each invest and under what terms?

Is any of you putting any money? If so, how much? And how will it be spent? How about other assets like a patent, existing source code, equipment, raw materials, etc. All these are again critical to discuss upfront.

You should also talk about whether someone else is putting in money and how much. And what happens if they end up falling through or you can’t convince them to. Does the business die right there and then? Do you try working on it without that seed capital?

Last but not least, you need to discuss how those investments (assuming there are any) are treated. And this can be very simple or very complicated, technically speaking. What you shouldn’t do under any circumstances is to just put money for free (unless you all put in an equal amount). At the very least, the investment should be returned to whoever put it, plus interest, when the company turns a profit. Other options (which I personally recommend) are that that cash investment buys extra shares in the company. You’ll need to discuss how many. Again, that’s a tough conversation.

And what happens if you run out of money and you need more? Will any of you be able to? Friends and family? Angel investors? VCs? Under what terms (assuming you can dictate them)? Will you bootstrap?

How much will you each be making?

Most companies won’t pay the founders until the business turns a profit or you raise some external capital, but everyone’s situation is different. Maybe one of you has money to invest and the other absolutely needs to take a salary to be able to spend time working on the business. You need to talk about this, and how you’ll treat it. Of course, someone who gets a salary (however small) is already taking a lot less risk than someone who doesn’t (because your business will most likely fail, by the way).

And what happens when you turn a profit? Do you split them among all of you based on your equity? Do you set yourself a salary and reinvest the rest into the company? Do you reinvest it all and take nothing for yourself? Until what point? And who gets to change any of that? The CEO? An unanimous vote? Money is a touchy issue, so much to talk about in this department. Trust me, waiting until you make money to make these decisions is a bad idea. You should agree on something now, and later on if you agree on something else, then you change it. But agree on something before there’s too much at stake and a failure to decide puts the company in jeopardy.

How will shares vest over time?

To most people who aren’t on the “tech startup” circuit, vesting is usually a foreign term. Vesting means, in layman terms, that you don’t own all your shares in the business from day one, but rather, you earn them over time. Standard terms for technology companies (which I recommend you stick to, even for other industries) is 4 years with a 1 year cliff. That means that if you’re two people and each of you has 50% of the business, you need to work on the business for four years in order to fully earn (or vest) your whole 50% of the business. If you leave after 2 years, you’d only own 25% of it. I hope it’s clear. The one year cliff part means that, if you leave before you work on the business for one year, you own nothing. Not even the proportional part of those few first months.

I understand that a lot of people might be skeptic of such term. I was at first. Why would I need to earn my own shares? What if I want to leave? What if I get somehow fired, or we have a fight? That’s exactly why it’s there for. Imagine it the other way around:

Without vesting, if you and a friend split a business 50/50 and make it official, he can literally quit a week later and still own 50% of the business, even if you end up working for years on it and ends up generating millions of dollars. Your friend, who did absolutely nothing, will own as much as you. I’m sure you agree that isn’t fair. And if you do the same? Then it’s also not fair that you own any part of the business. It’s as simple as that.

Now, of course, it can get a lot trickier. Say you’re three cofounders and two of you want to fire the third one after a few months. He’s clearly done some work but there’s clearly a culture problem, or something like that. What do you do? You leave him with nothing? Well at this point is a negotiation, although you can also add terms to it into the agreement. Something you could do if he worked for 9 months and did solid work is for example vest him a full year and let him own 25% of his shares. If the company’s making money there’s also the option of a cash severance. The options can be many, depending on the individual’s and the company’s preference.

One other thing you should consider. What happens if you sell the company after 2 years when everyone’s only vested 50% of their shares? Do they still need to be work at that company for two more years? And what happens if they are fired immediately after the acquisition? That may not be fair. For such scenarios there’s something called acceleration. A standard term is 50% acceleration on single trigger and 100% acceleration on double trigger. This means that in our example above, 50% of your unvested shares would vest if the company is acquired (so it’d be like you worked for 3 years at the company when it was acquired instead of 2), and 100% of your unvested shares would vest if the company is acquired and you are fired (basically, you’ll get all of your shares).

Sometimes companies screw people with these terms. For example let’s say you’re an employee and are on year 2 of your 4-year vesting. The company is going to be acquired and they want to fire you afterwards because, who knows, they may only want the product. In order to give you less money, your company may fire you immediately before the acquisition. That way it counts as a regular termination and you only get your 2 years vested so far. Of course this is a very unethical and fortunately rare practice.

Still, let me end this section clearly saying again: you need to add vesting to your agreement, and I recommend 4 years with a 1 year cliff. Even for founders.

In what situation can a founder be fired?

Yes, even founders can be fired. Happens often. You need to understand that being a shareholder in a company (owning shares) and working on it are two separate things. Some people do just one (investors only own shares, some employees only work on it) and other people do both, like founders in the beginning. But this situation can change over time. Maybe an employee is given equity, or sells their shares. Or maybe a founder is fired.

Either way, you need to decide under what circumstances can a founder be fired. And I’m not talking about the reasons, but about the procedure. Who can make the decision? The CEO? Does a majority of the shareholders need to agree (whoever they may be)? Does the majority of the founders (this of course isn’t possible if there are only two and nobody wants to get fired). My suggestion is that, if there’s no investors and the company’s just the founders (assuming there are more than two), it should be majority of founders who agree. In any other scenario (just two founders, bigger company with investors, etc), it should be the CEO’s call.

If you’re scared that your founders will just fire you for no other reason but to get a bigger share of the pie (not that you’d want to start a business with these people if you’re genuinely concerned), keep in mind that you could always sue for wrongful termination.

How and when will the company be incorporated?

In some countries, incorporating a company isn’t trivial or cheap, so you may not want to do it right from the start. So when will you do it? Depends on your situation or preference. Some people choose to do it when they start generating revenue. Or maybe after a specific amount of time has passed. Maybe you want to wait until you raise venture capital or get accepted into an accelerator. Either was is fine, but talk about it and put it in writing.

What are your goals for the business?

This is important and not many people pay attention to this. One of you may want to raise VC and join the startup circuit, while the other prefers to bootstrap the business while retaining ownership and control. Either view is fine but you should agree on what each of you considers desirable, acceptable or unacceptable.

Do you want to always run it as a side business or at some point will you quit your job to work full time on this? When would this happen? Do you want to try and join and accelerator? Would you be interested in approaching advisors to join the company? How about selling the company, is that on the table? Or maybe, if you’re one in a million, taking the company public? Is either one of you interested in working only for a couple of years and then moving on to the next thing?

Extra terms

There are a bunch of extra terms you should talk about and add to your agreement. Some of the ones I recommend are:

  • Non compete: you should agree that, whatever happens (one of you quits, is fired, etc), you won’t create or work for a competing business for at least 2 years after your relationship with the company ends.
  • Confidentiality: none of you is allowed to share confidential information about the company with any third party without the consent of the CEO or the rest of the founders.
  • Intellectual Property Forfeit: this means you all forfeit all IP rights to the work you do to the company. This includes whatever you contribute from the start, maybe some source code that predates the creation of the company, or a patent.

How are you going to split the business?

Last but not least, probably the most important thing to talk about and usually the one that causes the most arguments. I like to discuss this at the end because I think it’s important to talk about everything else first.

Before you decide how much of the business each of you belongs, you need to know how time you will all work on it, how much money you’ll invest, how big a salary you’ll take, etc.

As a rule of thumb , you will rarely end up with an equal split. If you do, may be putting yourself up for resentment later on. You don’t want to be thinking “Why do we own the same percentage of the company if I do twice as much work as him?”. It really is a hard place to be at, but at the very least, if you go through all the items on this list and end up knowingly accepting an equal equity split and an unequal time dedication split, then it’s on you. Also keep in mind that if there are two of you and you have an equal 50/50 split, you may end up not being able to make certain decisions. And lack of action often kills companies.

So how should you split the business? There isn’t a specific way of doing it, and eventually it’s up to you, but here are all the factors that should absolutely be part of your decision making:

  • How much time is each of you going to dedicate to the business? Working full time is worth a lot more than working “nights and weekends”.
  • How much money is each of you investing?
  • How much experience do you each have at your role? If for example a very experienced and a very inexperienced are forming a business together, all things being equal, the former will have a bigger share of the company.
  • How much market knowledge do you each have? Maybe you’re not a very experienced coder but you have years of inside knowledge at the industry your new company will be part of (say, real estate). This also counts.
  • How much time and money have they invested so far? Maybe one of the founders have been working on it for a year and the other is just joining now.
  • Who is CEO? Usually they have extra equity for the sole fact of being in charge of the company.
  • Who came up with the idea? Usually they have extra equity too.
  • Do any of you have other companies under your belt? An entrepreneur with a proven track record is a lot more valuable (and should have extra shares) than a first time entrepreneur, if they join forces.
  • Other things each of you may bring to the table: good connections in the industry or VCs, a patent, certain technology…

Now some things that shouldn’t have any importance when considering your equity split:

  • How good friends are you?
  • Will they get hurt or feel unappreciated if they, for a good reason, have less than an equal share of the business?

Closing notes

Well at this point if you’ve talked about and agreed on all those terms, you’re more than ready to actually start a business together, knowing that your foundations are solid. Good luck!