As a writer, I often have conversations about whether ChatGPT is going to put me out of business. So far, I think the answer is no, mostly because I can do things that AI cannot.
The truth is that many AIs are pretty mediocre at most things, which makes a lot of sense: If you train a model on a huge dataset, you end up with the average of that dataset. You can pour Tolstoy into the top of the machine, but if you balance it out with the most-watched videos on YouTube, you’ll be in for a wild ride in a landscape where the depth of content is often as shallow as a kiddie pool filled with baby sharks.
The thing is, that’s not what AI is helpful for. It is, in fact, particularly well built for dragging everyone who is below mediocre up to the average. And that’s a hell of a feature.
The heady, futuristic world of artificial intelligence brings us a new promise: The ability to be perfectly average. Yes, with the power of AI, you, too, can ascend to mediocrity.
Don’t get me wrong, that’s not a bad thing. Imagine if you could be reliably average at everything you try to do for the first time — that’s the revolution we’re seeing play out right now.
I’m a below-average illustrator, but Midjourney has helped me make an enormous library of graphics for a project. Would a great illustrator do better? Absolutely. But the truth is, most of us don’t have access to great illustrators.
I’d like to think that I’m an above-average writer, which is why I’m perennially frustrated by the quality of writing generative AI puts out. But that’s okay, because AI isn’t built for that yet.
But now, everyone can be an average writer in almost every profession where the written word is important. You can get an AI to write a contract, summarize a report, or provide some mediocre startup advice — instantly, for free.
To wit: When I’m not cooking up a tasty word soup for you lovely lot, I work as a pitch coach. This week, one of my clients told me he’d found someone who could be a co-founder for his company. We spoke on the phone for about 30 minutes, and I told him that while this kind of thing wasn’t exactly my expertise, I’d be able to cover the basics.
After the call, out of curiosity, I asked ChatGPT a couple of questions about this to see what it would say.
The result? Well, I arrived at a couple of conclusions: I’m a really good pitch coach and fundraising strategist, but for more general startup advice, I’m probably rather average. In fact, I couldn’t stop laughing when I was reading ChatGPT’s replies to my answers because I told the founder literally every point that ChatGPT made here, almost word for word. Not more. Not less. Exactly the same information. And ChatGPT is a hell of a lot cheaper than I am.
So, here you have it: It seems like I was an AI all along after all.
Below, you’ll find ChatGPT’s advice, which might as well have been a transcript of my conversation with my client.
Me: I am a startup founder, and I need some advice.
ChatGPT: Of course, I’d be glad to help! Please go ahead and tell me what specific advice you’re looking for as a startup founder. Are you seeking guidance on business strategy, funding, product development, team building, marketing, or something else? Let me know so I can provide you with the most relevant information.
Me: The company has been running for 6 months, and I’m bringing in a co-founder. How much equity should I give them?
ChatGPT: Determining the right amount of equity to offer a new co-founder involves several factors and can be a complex decision. Here are some steps and considerations to help you decide:
1. Assess the Value They Bring: Consider what the new co-founder will contribute to the company. This includes their skills, experience, network, and the role they will play. Will they be instrumental in the company’s growth, or are they filling a gap that could be addressed by hiring an employee?
2. Current Valuation: If your company has been running for 6 months, you might have some traction or revenue to help determine its valuation. The amount of equity you offer should reflect the current value of the company and the expected future value that the co-founder will help create.
3. Vesting Schedule: Typically, co-founder equity is subject to a vesting schedule with a one-year cliff. This means that if the co-founder leaves before a year, they forfeit their equity, and after that, their equity vests monthly or quarterly over a period of usually 3–4 years.
4. Equity Pool: Consider how much equity you have set aside for future employees and advisors. Offering too much equity to a new co-founder could dilute your stake significantly and limit your options for incentivizing future key hires.
5. Negotiation: The equity offer is often a starting point for negotiation. Be prepared to discuss and justify your valuation and the reasons behind the equity amount you’re offering.
6. Consult with Advisors: It’s wise to consult with mentors, advisors, or even a lawyer who specializes in startups to get an outside perspective on a fair equity offer.
7. Future Investment: Think about how future funding rounds will dilute the equity of all shareholders, including you and your co-founder. Ensure that after potential investment rounds, you both retain enough equity to remain motivated.
8. Market Standards: Research what is typical in your industry and region for a co-founder joining at your stage. This can vary widely, but it’s not uncommon for a late co-founder to receive between 10% and 25% depending on the factors mentioned above.
In summary, there is no one-size-fits-all answer, and the equity should reflect the value they bring, the stage of your company, and the amount of risk they are taking on by joining your startup. It’s a negotiation, so be prepared to discuss and potentially adjust your offer based on the conversation with your prospective co-founder.