Things to look for in a co-founder or potential partner
Learn from the mistakes I’ve made.
Anyone who has ever aspired to run their own business knows that the hardest part is finding the right partners. Even if you started out on your own as a sole proprietor, you probably realized quickly that to really grow the business you have to find a co-founder. It’s no wonder that many refer to this partnership as a “marriage.” While you might not be with this person forever, you’ll probably spend as much time with them as your girlfriend or husband…if not more.
Over the years I’ve had my share of business ideas, and have executed on many of them. Aside from often partnering with my brother, which has worked out well for us, I have worked with several other would-be co-founders. I may not have found the ideal partner just yet, but with every experience I’ve gained more clarity as to what it takes to have a sustainable, and hopefully profitable, business relationship with someone.
Trust is more than just believing you won’t get screwed over
It’s ideal that you work with someone like a good friend or even a sibling (despite what some people might tell you). There are certainly people that you might worry about straining a relationship with, but for the most part it works well. Some clear examples of great friends or relatives working together are: Reddit, Virgin, Google, Microsoft, Airbnb, HowAboutWe, Apple….alright I’ll stop here. Why does this work? Because people like working with their friends. It makes it easy to wake up for work every day. And there’s another key element, friends tend to trust that the other person also has their interests in mind.
But situations are not always ideal. Often times your potential partner might be someone you’ve only been working with for a few months, or in certain cases someone you just met. In this case you have to make sure their equity is vested (see note below), and that you really believe they will continue to add value. Thus you must trust that they will always execute, and that they will do a better job at their role than you would. Or at the very least do it as well as you, since you’re perfect, obviously.
Team Dynamics is not just buzz words
This one might seem obvious, but it’s not always easy. Your partner has to have had successful experience working in a team environment. Have they partnered with others in the past? Have they worked for a small startup? Did their job require interdepartmental collaboration? If these questions are hard to answer then you’ll see for yourself soon enough. The best way to judge their team dynamics is by pitching your product together, or even simply talking to others with them. If you bounce off of each other’s comments and can easily develop a good story together, then you’re much more likely to work well in the office and hopefully be aligned on important issues as they inevitably arise.
Debate is healthy, but listening is key
If you’re ambitious enough to be an entrepreneur, then you’re probably a fairly confident person. As a result you expect others to take you seriously, and often might think that you’re right even if that’s not the case. We all probably have this flaw on some level, but some people are much better at admitting when they’re wrong and keeping an open mind when getting input from others. Debating is a great way to bring important issues to the table, and when both parties have an open mind there’s a much bigger chance of the argument being productive. Every great decision probably came as a result of long deliberation or debate. If you think it was easy for Kevin and Mike to pivot Burbn into Instagram then you’re in for some surprises when you start on your entrepreneurial journey. Your partner must be a person who listens to reason and isn’t blindly stubborn in their beliefs. While staying true to your beliefs and gut instincts is important, there must always be room for debate so that you don’t miss out on potentially great opportunities that can change your life.
Openness will make or break you
Since a startup has limited resources, its time efficiency has to be the priority. It’s essential that the lines of communication between you and your partners are always clear and open. When something is not working it has to be addressed swiftly, and that can only happen if you’re comfortable being candid, if not blunt, with the person when necessary.
At least if you’re open with each other from day 1, when one of you decides it’s not working out, or another opportunity looks better, then it won’t come as a total surprise. There’ll be enough of those on your entrepreneurial path as it is.
Note: Most startup founders know that with any partnership where equity sharing is involved, a vesting schedule is pretty standard to set expectations of future commitment and protect the company from founders leaving. The most common vesting is over 4 years, where the equity vests on a monthly basis. In many cases there is a cliff of 6 months or a year. For example, if you own 20% of the company then after a year you will receive 1/4th of your shares (5% in this case), and get the other 15% over the course of the next 3 years at (15 percent/36 months) per month. As you can see, if you decide to jump ship after a year, at least the company can still have a chance of raising funds. Investors don’t like to see a key partner leave with 20% of the company. That’s more dilution for them and less equity for you to be able to offer potential new talent.
Note 2: This list is not meant to be exhaustive, and there are plenty of other great articles out there addressing this important issue. But in my experience, without these key attributes a partnership of any kind has little chance of success and you’ll save yourself a lot of time and potential headache by keeping these things in mind.
