The dreaded co-founder topic - from the trenches
The process and logistics of searching for and surviving with a co-founder is a problem many people face, but much of the time, the answers are academic in nature with no experience to back them up.
Here’s what I can confirm is of utmost importance in the co-founder relationship (based on 15-months of experience):
- Make sure you GET a co-founder. Many people try to start their business as a one-person show and it dramatically decreases your chances for success because there is too much work to do at the beginning.
- That being said, make sure you have a co-founder you can share the load with. Having a co-founder that is capable of handling tasks with little to none of your involvement is incredibly valuable. If you must be involved with every aspect of your co-founder’s job, something’s wrong and either you need to lighten up, or find another co-founder. Don’t wait.
- Having a co-founder that isn’t a mental-clone of yourself is extremely important to your ability to approach problems. You will never be able to see all angles all of the time. There is strength in diversity.
- Co-founders are like marriage partners. Really. I mean it. I’m not joking. So make sure you get someone that can weather the storm. If you’re having an off day, they should restore balance. And vice versa. Flexibility is required on both sides.
- Respect. Respect is pretty huge. Your co-founder should be someone you respect within their area of responsibility. (same goes for you) Not respecting what they do or how they do something, introduces layers of complications and stress to both sides.
- Trust. This is often overlooked. Not having to worry about your co-founder go behind your back, or have less desire than you to actually see this succeed is paradise and difficult to find. So often I see one-person that’s committed, one that’s not so much. It forces you to constantly reevaluate whether or not the same effort is being put out.
- Discuss equity early and get it out of the way; but give yourself breathing room to back out if things don’t work out. Typically there’s a 1-year cliff before any equity is actually earned/vested.
- Set expectations early. This is another area that is often overlooked. Divide up areas of responsibility and try to call out milestone achievements that can be used as performance metrics later on. Also call out what constitutes a breach of responsibility and how that will be handled. It’s really difficult to address these types of situations after the fact, when someone hasn’t been performing well, and a clear set of rules/repurcussions weren’t laid out in advance. So establish ground rules in terms of conflict resolution/decision making; again, it’s extremely important to discuss these expectations as early as possible.
So now that some guidelines exist around the type of co-founder relationship that you should have, how do you go about getting one on board for an equity stake? The issue, is that finding people looking for co-founders is not hard. They’re everywhere. However, many founders are going in the wrong direction with their idea or focusing on mediocre ones or talk about working, more than they actually work; this results in a lot of noise and makes it much harder for anyone to take you seriously, because no one knows you and you have no startup track record to lean on.
Well the simple fact is you are either 1 of 3 things:
- First time out into the startup arena, with little / no progress on your idea
- First time out into the startup arena, with serious progress on your idea
- First time out into the startup arena, but a celebrity in your industry
Not your first time out and previously successful
If you’re in the realm of #3, you are ahead of the game, and shouldn’t have much trouble getting someone to work with you. So, given that most people fall into #1 or #2, I’ve learned that there are 4 areas that must exist to maximize your chances of getting someone on board with your project (presumably for equity).
- The vision. They MUST believe in your vision; usually that means finding someone close to or in that vertical space. After a few months of working for equity, the only thing that keeps someone going is if they believe in it. We’ve lost several people due to lack of motivation around the vision, in spite of equity, over the past year.
- You. Your job is 100% sales when looking for a co-founder. You’re selling a story, and even if they believe the story, they must also believe in your ability to pull it off. If you can demonstrate serious competency in your area, and the next 3-6 months of EXACTLY what you want to accomplish/focus on to move your idea to the next level, that will go along way to getting someone to believe in you.
- Performance. You must be able to demonstrate that the co-founder isn’t walking into an epic greenfield. There must be some level of formality & structure in place. That shows you’re committed and competent. If you have a business in progress, you should be able to explain your revenues clearly and how they got there.
- Networking & Perseverance. You must be prepared to network your tail off to find someone that’s a fit. For every 10 rejections, you’ll get 1 interested party. For every 10 interested parties, you might have 1-2 people you’d be really interested in working with. And above all, DO NOT under any circumstances, settle for less than what you’re looking for. I know it will be super exciting to have someone *finally* interested in equity, but have options. As a co-founder, you’re essentially married to this person for the next 3-7 years so choose wisely. So make sure you talk to enough people to know exactly what you want so that you can make an informed decision.
So if you manage to get someone that’s interested in you, your idea, and everything seems to be great, the first thing you probably should do is not start by working on your idea. This is a mistake many people (myself included) make. Find a project that is similar in nature, not topic. e.g., if your plan is to build a website company for children, do something similar but for a different target such as plants or fishing. Do a multi-month trial. 1-2 months should do it. See if you can work with them, if they can work with you. Do not risk your idea / time on that idea until you’re working with someone that you really want to work with. This will save you a lot of pain by knowing how you work together, BEFORE you work together.
Please leave some comments as I am anxious to hear thoughts of people out there on this topic.
