Like many things in life, starting a business is a lot harder to do by yourself. In fact, not only is it harder, frankly it’s a lot less fun. That’s why we have co-founders! But how do you choose who to work with? What should you look for in a co-founder? And what should you avoid?
What Co-founders Bring to the Table
Before we discuss the traits that make for a good partner, let’s first look at some of the benefits of having a co-founder. Because there are some drawbacks. One in particular stands out: having co-founders means giving up a share of the ownership pie.
To counter this, your aim should be to find co-founders that bring enough to the table that it mitigates the loss in ownership. In essence you are looking for people who through their contribution will make the overall pie larger, so that a lesser share of this bigger pie is actually worth more than the whole of the original.
Personally, I am also of the belief that if you’re going to be successful there will be more than enough pie to share around. And if you’re going to flop, then it doesn’t really matter whether you have 100%, 50% or 25% of 0, because it’s all 0 anyway!
So why is it worth having co-founders?
- They Can Keep You On TrackStarting a business can be a very difficult experience, particularly if you are doing it with normal life going on at the same time. I’ve known many people who began starting a business and then simply never finished because there were distractions. Having co-founders means that even if you get temporarily distracted, there are other people who have a vested interest in keeping things going and getting you back on track.
- You Can Bounce Ideas Off Each Other and Get a Second OpinionWondering if something is a good idea? Well a co-founder is there to wonder with you! Having a team means you can throw ideas around, discuss the merits of pursuing certain options and share in collective wisdom.
- They Spread the WorkloadStarting a business is hard work. There is a lot to do not only to make the business work, but to do things like register trademarks, open bank accounts, find an accountant, hire a lawyer, choose web hosting, write a business plan and all the other nitty gritty of getting things started. Co-founders means you don’t have to do everything all by yourself!
- They Spread the Investment LoadEvery new business needs some monetary investment. At the absolute least you’ll need to pay for accounting and legal advice. More likely you’ll need to pay contractors or employees, buy equipment, software, domains, hosting and a million other things. Who’s going to pay for all that? Well that’s up to you to figure out, but certainly co-founders are an opportunity to spread the investment load of starting your new business.
- You Can Share the Startup ExperienceStartups are exciting and unless you have a team you’re going to bore the pants off your friends talking about your plans and news. Having co-founders means you can share the experience, both the highs and the lows. I often find myself having a cup of tea with my fellow co-founders from Envato reflecting on how far we’ve come.
- You Begin With a Bigger Team2 people is a team that is double the size of 1. If you have one or more co-founders it means you’re already ahead of the game. You already have way more resources, and often they are cheap resources as opposed to employees who you have to pay from day one.
- You Have More Connections to Draw OnKnowing people is a big leg up in business. Whether it’s knowing a good accountant, knowing someone who can give you business advice, or knowing people in the industry who can help, connections can pay off big-time. Every co-founder in your team brings their own set of unique connections and people to draw on.
- You Have More Skills to Draw OnEvery co-founder will have their own set of skills, both technical and personality-wise. Having more skills to draw on will make your team a lot stronger. The question is what skills do you need?
A + Z is better than A + A
Over the last few years I’ve been approached on numerous occasions to partner in new business ventures. Some of these propositions have actually been quite attractive but thanks to my rather all-consuming work at Envato, I always decline.
The least attractive offers are the ones that come from people with lots of ideas. You see that’s what I, myself do best. I have heaps of ideas. Way more ideas than I could ever use. So partnering with a person who is full of ideas but not necessarily much in the way of execution makes no sense. They don’t bring anything new to the table. In fact most likely we’d clash about what ideas to pursue.
What I need from co-founders are people who think and act differently to the way I do. People who have strengths where I have weaknesses and weaknesses where I’m strong. And I think this is something everyone should look for in a co-founder: balance.
I’m Not Very Good at Business
I have many, many weak spots as an entrepreneur. For example I’m terrible at negotiating and I’m very sympathetic to what other people might need. As a result I have a very high tendency towards overpaying for things or negotiating deals that are more favourable to the other side. In business that’s a pretty big failing!
Another example is that I’m not very good at day to day tasks, the old rinse-and-repeat type of management stuff. Very quickly I get distracted, stop answering emails, get slower and slower to respond and go off starting new projects.
Yet another example is I’m a big risk taker. I like to play it fast and loose when it comes to money. Left to my own devices I will almost always push expenses very close to income leaving only a tiny margin of profit, often veering into losses, so long as it means growth.
And that’s just the beginning of my various weak points. In fact you could reasonably accurately say I’m pretty bad at business! So what’s a not-very-good-at-business guy who loves starting businesses to do?
Balancing Out Your Weaknesses
I have three co-founders at Envato and one employee who was around so early he’s practically a co-founder. All four in a very clear way balance out my problems, and I’d like to think that in my own way I bring something to the table that none of the other four have either.
Let me explain how our team balances each other out:
- Co-founder #1: My Wife Cyan!
My first co-founder was my wife Cyan. Aside from being the best woman in the universe, she’s also really good at project management. In the three years of Envato she’s been lumped with managing, organising and systematizing virtually every part of the business. In each case I start something new, get it working … sort of … and then Cyan takes over and implements workflow and systems so that it can carry on successfully. All that rinse-and-repeat management that I’m terrible at, she’s great at!
- Co-founder #2: My Best Friend Jun!
My second co-founder is a guy named Jun who I went to high school then university with. Along with being my best-man when I got married, Jun also really likes making money. He’s got that careful knack of staying on top of our bank accounts, counting pennies and filing invoices. So we put Jun in charge of money.
- Co-founder #3: My Big Brother Vahid!
My third co-founder is my big brother Vahid. Where I am terrible at negotiating, Vahid is excellent. He’s quite happy to point blank tell a real estate agent that they need to do us a better deal or we’re walking, or to push for better terms in a partnership. If the rest of our team are cuddly sheep, Vahid is the wolf.
- Our First Employee: Ryan!
Ryan has been with us since day 1, and though unlike the rest of us he had a pay check the whole way, he’s a founder in spirit. As opposed to the other co-founders who bring personality traits, Ryan brings a very specific, very valuable professional skill. He’s a hacker. He’s one of those guys who startups dream of finding, someone who can architect a huge site all on his own. Someone who sets good practices and conventions and who worries that our codebase needs more tests, or that we need to refactor the code so that we don’t cause problems down the track.
To be perfectly frank, I really lucked out. I can’t really imagine a better team, and the reason I think we work so well is that we all balance each other out. Certainly my own worst weaknesses are covered by the team.
We all have separate roles in the company and most of the time nobody envies another person’s job. I know I sit around all the time thinking “Thank goodness I don’t have to do that!” about my various co-founders work, and I’ve been told they feel the same way about my role. And that’s important because it means there isn’t much clashing, we all just get on with what needs to be done.
Trustworthiness & Commitment
Of course it isn’t just a balance of skills that makes for a good co-founder. There’s a reason I went into business with best friend, my wife and my big brother. That reason is that you need to trust who you work with. Getting into a serious business together is up there with getting married in terms of commitment, so you need to be sure about the people you choose. This is incredibly important because if you do well there is going to be money involved and if there’s one thing I think we can all agree on, it’s that money can cause a lot of weird behavior in people. If you work with people you trust then it means you’ll spend your time working on the business not working against each other.
It’s essential that you seal any co-founding deal in paper and ink with a lawyer making sure that everyone’s rights and shares are sorted out in black and white. I like to think however that even without the paper and ink, I’ve selected people I trust enough that we’d still be OK.
On the other hand I’ve seen companies where even though there is plenty of legal documentation, the people involved spend their time looking for loopholes to mess with each other. It can get pretty nasty and you don’t need to look far to find people burned in business.
So don’t skip out on having a legal agreement with your co-founders under any circumstances, but when you choose those co-founders, choose them as if there wasn’t going to be a piece of paper holding you together.
Unity of Purpose
In medieval Europe a not uncommon method of execution was to tie a man’s limbs to four horses and then spur the horses to run in different directions. Aside from making me grateful that I was born in the twentieth century and not the fourteenth, this morbid analogy sums up what will happen to your business if you and your co-founders all have different aims.
It’s important that when you get into business with someone you figure out what their plan is. Are they looking to just invest some money and then not do anything? Are they looking for a quick exit? Do they see the business as being all about them? Are they passionate about growing a business or just after a cash cow to fund their lifestyle?
Sometimes you will have to turn away from someone who complements your skill-set perfectly and whom you trust implicitly, simply because they want different things.
Having a unity of purpose means you avoid friction caused by your team all trying to fulfil different objectives. So instead of working against each other, you’re working with each other.
A Big Decision
Finding co-founders means making a lot of big decisions. Go with your instincts about people, take the time to ask them what they are after and ask yourself if you complement each other in skills and personality. And remember you’re going to be stuck with these people for a long time to come, so choose nice people that make you happy!
If you have someone in mind already, I highly suggest reading OnStartups list of 10 Important Questions Startup Co-Founders Should Ask Each Other.
from The Netsetter