The Co-founder Relationship and Why It’s So Important

by Katie Hughes, DFJ Talent Partner

Startup founders spend a great deal of time focused on hiring the next sales and marketing executive, but what’s rarely discussed is how to vet the person that will stand alongside you to build your company. And let’s face it, co-founders are much harder to get rid of. Here are three essential steps to take to have a healthy co-founder relationship and, in turn, a productive business.

  1. Ask the less obvious questions about motivation, timing, and ethics.

Most co-founders focus their early conversations on the what — what problems they observe in the market, their ideas for a solution, their plans for executing that idea. They also talk about the who — who they will recruit early to join their team and help them build the what. We think it’s critical for co-founders to cover the how, why and when. DFJ’s Operating Partner Heidi Roizen recommends that you ask questions related to motivation, timing and ethics, and that you revisit them yearly, if not more often, as the answers can change as time goes on.

  • How hard are you willing to work? What kind of hours can you put in?
  • How much money do you need to make today? Next year? In three years?
  • How long can you go without a raise or a liquidity event?
  • When do you expect to move onto your next company?
  • Why do you want to start a company?
  • How far are you willing to go to win? Come up with a blind ethics test.

2. Write job descriptions for yourselves and divide the equity accordingly.

Draft job descriptions for yourself and review them with your co-founder. Discuss how these roles will change over time as you expand the team and revise the job descriptions often. In terms of compensation, many co-founders plan to split equity 50/50. This could be a mistake. Who’s the boss? Work it out now. Noam Wasserman and Thomas Heller studied over 3,700 founders across 1,300 companies and found that companies who spent more time talking through motivations, timing, division of labor, and getting to know each other ended up not dividing the equity evenly. Co-founders who rushed through the discovery process, eager to get started and build, or just uncomfortable with the tension inherent in this conversation, ended up dividing evenly. This can create major complications internally as well as with fundraising.

3. Bring in a professional before things get rough.

Co-founding a company is like a relationship: you will fight. The only variable is how you work through those fights. Co-founder and Executive Coach Khalid Halim recommends that co-founders “determine how you deal with stress and resolve conflict.” Khalid has an operator’s manual that he asks his founders to fill out that covers topics like motivation, response to stress, and preferred methods of giving and receiving feedback. Jeff Lawson, co-founder and CEO of Twilio, recommends having practice disagreements with your co-founders to figure out how each person works through conflict.

There are few relationships in your life that will be more important and potentially meaningful than the partnership with your co-founder. Take the time before you start to get to know what makes each other tick to ensure you are committed to the same path.

Things move fast in our world and your answers may change over time. It is equally as important to create a framework for open and honest communication. If you have these hard conversations at the beginning, it is easier to navigate challenges together later on while you are building your company.

Katie Hughes is the talent partner at DFJ