Co-Founder: It’s a match! Caution when choosing a partner! (Englisch Version)

Founder find their co-founder in most of the cases directly in the social environment. This can be colleagues, friends or relatives, who give all their enthusiasm to the same idea and want to realize it. A good founding team is worth a mint but many fail because next to enthusiasm, coordination processes are neglected. This article should help founders choose the right co-founder and give ideas about a clear distribution of roles between various co-founders.

At the beginning, it is important on the one hand co-founders have various, complementary skills. If both do have the same capabilities, the added value will be comparatively low and it is reasonable to ask why to hand over 50 per cent of the business shares. Every individual must find his role in the business with their own individual core skills regardless if the co-founders have a university degree in the same field.

On the other hand, having one founding team’s value system is necessary. Constant conflicts of interest arise where different perceptions concerning elementary things as liability or punctuality dominate. The initial euphoria often covers up the different opinions, which distill little by little when the company starts growing and professionalizing. In this situation, the question has to be asked whether the founding team actually matches.

Complementary skills and a joint value system are decisive factors

A structured process with predetermined and standard criteria(s) can avoid unpleasant surprises. Does the company have the right vision? What about the commitment of every individual? Are fees and funds from perquisites, which are earned during working hours, awarded to the company or to the co-founder? A check list with eleven issues at the end of this article, which was drawn up by myself, can serve as a guide for things like company shares, voting rights, profit distributions, salaries and perquisites. There is no right or wrong but it is more important to discuss these things in advance.

Moreover, it is helpful to discover in a kind of trial period if agreeing on a common denominator is possible in a long-term period. It would be wrong to look for a business, print stationary and rooms for rent at the first place.

Different skills, a joint value system and a definition of collaboration are namely important, but individual priorities and commitment can change over the time. Periodic strategy meetings do not only help to clarify where one wants the company to be in the future but also where the founder partnership stands. In doing so, special developments in the private area like spouses or the desire to have children and thus the changing priorities play a decisive role. Here, the journey becomes the destination by talking about it periodically and working on a goal collectively.

Co-founder must function as a team and set the pace

The co-founder team must be the closest form of unity, independently from the business model. From my perspective, approximately 80 per cent of all founder teams are dysfunctional because the distribution of roles, the line of approach and the decision-making are not defined properly. In many cases, this makes it very hard for employees and is comparable with the parenting, where mother and father pursue different educational concepts. One’s decision whom to contact is depending on the specific situation and the expectation, whom of them is giving the right answer.

Like in a rowing team, the co-founder must set the place bindingly and collectively. But only very few succeed in doing so: co-founders spend too little time together to discuss the impact direction of the company, which is based on the business model and the organizational unit. This is due to the various personalities: While one pre-structures a lot, the other one wants to get started right away.

Founders also need management skills

When founders feel persistent dissatisfaction, they often struggle with naming where this feeling comes from. For instance, this finds expression in not enjoying going to work anymore or in shirking necessary tasks like appraisal interviews. If this behavior is noticed within oneself or one’s co-founder, an immediate action is needed, for example discussing what could be changed or getting help from an expert.

The founder’s tasks change a lot over time. At the beginning, a “maker” is needed, who establishes the company and afterwards the tasks change very quickly. At some point, the managerial role is required, which implies optimizing the details and leading the teams. However, many founders are bored of this task very quickly and do not feel like doing things such as appraisal interviews or motivating the team. At this point, it is all about figuring out if it is just a lean period or to pave the way and decide who the company needs at this position.

At the end of the day it is a personal decision if someone is not happy in the company anymore and decides to commit oneself to a new project. Nevertheless, the co-founder should be the person with whom the problem is discussed with prematurely and a solution is searched instead of facing him or her with a fait accompli. When someone struggles with the current situation and must think seriously about how to continue this, it is important to initiate a joint process. If required, external support can be useful if emotional topics are discussed. This expert should be a person that should not deal with the company in any other way.

If single founder or founding team: One person has the say

The advantage of single founders is the clear, encompassing responsibility. Even in the case of two or three founders, there should be one person who has the encompassing responsibility for the company and whose original function is to care about the company’s future. The CEO needs a strategic foresight who is the visionary and main driver of the company.

Accordingly, I personally see the other co-founders in more passive roles. This approach might not be very popular, but in my opinion, it is more sustainable. The person in the founding team, who puts the pressure on, speaks about conflicts, questions processes and structures and pushes issues is in most cases the company’s CEO and should have more decision ruling. In the end, upcoming decisions have to be made by the CEO, not by overruling his or her co-founders but challenging them at eye level, questioning the status quo and recognizing, when the co-founders reach the boundaries. For the very big decisions, the CEO sometimes needs a sparring partner and he has to think if he engages someone external.

For everyone the right role within the team

Every team member should be honest and question him- or herself if they have the required potential and skills for a role of a manager or CEO or if they should stay in their role and their field of expertise. This role distribution will happen over time. A lot of people emphasize that everyone is eye-to-eye level to each other, however most of times that is not the case because they do not have the same expertise or personalities. In some situations, not everyone can achieve as much as someone else, and in other situations the roles are reversed. Everyone should be working in the field where they can maximize their potential. That is why I think not everyone can have the same position in a freshly found firm, not everyone can practice the same role and that is why not everyone should be responsible for the final decisions made for the company.

Checklist: Guideline with eleven issues for founding teams

1. Salary

2. Title

3. Side activities

4. Investment

5. Vesting

6. Company shares/voting rights/decisions

7. Case of death

8. Pregnancy

9. Right of first refusal

10. Role

11. Further training / education

About

Julia Derndinger is an experienced founder, entrepreneur and investor. For several years, she has established herself as “die Gründertrainerin” (www.die-gruendertrainerin.de) in the German start-up scene and knows the szene quite well. As a sparring partner and networker, she supports many well-known and successful entrepreneurs. Furthermore, Julia has already successfully founded and established companies and invested in promising business models. In addition, she is member of diverse juries, advisory and supervisory boards and dedicates herself honorary to entrepreneurship in Germany.

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