The most important aspect of launching a startup is the team behind the idea. Here are best practices and helpful tips for identifying your ideal co-founder.
Whether you're a first-time founder or a seasoned entrepreneur, choosing who you'll go to battle with is, quite possibly, the most important decision you will make in the process. The co-founder relationship is like a marriage based on a large pool of shared resources. If you've had spats with your significant other over money, imagine you're fighting over millions of dollars that have the potential to make you millions more.
"Behind the glamorous facade of founding and working in startups, being a founder (and especially a CEO founder) is one of the most stressful and LONELIEST jobs in the world. Having co-founders means you have people who are going through the same struggle and challenges as you are every single day with you," said Tim Chae, entrepreneur-in-residence at 500 Startups.
There is no standard formula to help you find your startup soul mate, but here are a few things to consider when choosing a co-founder—or multiple co-founders.
Go with who you know
"The most successful true co-founder situations are ones where the people have known each other in other contexts, prior to the company at hand," said Andreas Stavropoulos, a managing director at Draper Fisher Jurvetson.
This isn't a license to go out and found a company with your childhood friend, it's more of a charge to connect with someone on the interpersonal level beforehand. Spending time socially is not enough, you should spend time together working on a project—spending time together for the business. According to Dane Atkinson, CEO of SumAll.com, this can make or break a company.
"Co-founders are the foundation block that rocks most failed companies and strengthens winning ones. You MUST have a lengthy relationship with a co-founder PRIOR to founding. The ideal is a being part of another fox hole work environment where you can learn about each other through trials. As counterintuitive as it sounds, friends are your second best bet. In both cases you want to have common ground at the moral ideology level with a serious dosage of respect."The goal is to learn to work with someone before you learn to start and run a business. Relationships are hard, and it is best to work out the kinks before you decide to put it on the line starting a company. There is a honeymoon period for founders, when you feel like your ambition to disrupt will carry you to exit; but that period will end. According to Stavropoulos, investors are looking for a team that can weather the storm together. They want founders to "get through their first couple of fights before the money is in." Stavropoulos said he is looking for a track record of getting things done, not just an impressive idea or rock star résumés.
Skill, style, and ego
Human beings tend to gravitate towards people that are similar to them. According to research on twins published in the journal Psychological Science, even our genes play a role in who we seek relationships with. With founders, the goal is to find the right amount of similarity.
"You're looking for complementarity of skills, but similarity of styles," said Stavropoulos.
In complementarity of skills, he means skills that enhance one another and help to fill in the gaps that may be lacking in your skill set. In addition to filling out your repertoire of skills, founders need to be looking for someone who can help complement other aspects of their business mindset. But, according to Scott Friend, a managing director at Bain Capital Ventures, it goes beyond just complementary skills.
"The crux of my opinion is to focus on complementary skills, capabilities, AND egos," Friend said. "While the first part probably sounds obvious, it really comes together with the last (ego). It’s critical that co-founders not only have complementary skills—the classic 'inside-outside' split is common where one co-founder is the lead on sales, marketing, fundraising, business development and the other focuses on engineering, operations, product, etc.—but that their egos are wrapped up in different areas too."
What Friend is getting at here is the concept of partnering yourself with someone whose sense of identity or victory is tied up in a different aspect of the business than yours is. That concept of "ego" has to do with where your pride in the business comes from. Does it come from giving presentations about your business or from building a team and meeting a deadline. Typically, the spotlight is only big enough for one person, and you need to establish who that person will be early on. The tech industry's archetypal examples of this are Steve Jobs and Steve Wozniak at Apple and Bill Gates and Paul Allen at Microsoft.
Up to this point we have talked a lot about complementarity, but similarity of style is just as important, especially in the early days. Most startups employ just their founders for quite some time, so you need someone whose style or work is similar to your own. You can diversify as you grow, but when you're first starting out it is important that your rhythms are in sync. A morning person needs a morning person, an extrovert needs another extrovert, and so on. The way you work together needs to be compatible because you will probably be the only two people working.
Once you have an idea, you need to be able to pursue it, even in the face of adversity, if you want your startup to succeed. Although it is a great idea to support your pitch with data, investors want to know that you are going to follow through even when it is difficult. With that being said, there is a difference between being courageous and being reckless.
When investors like Stavropoulos are evaluating a team, they want to see people that can push to accomplish the ultimate goal of a company. With that in mind, they also want to see founders that are wise enough to know when one approach is not working and nimble enough to be able to change direction.
This is where a co-founder comes in handy. Founders will typically arrive at conclusions like this at different times, so it helps to have someone who is willing to point out flaws in an idea early so the course of action can be corrected.
Aside from these things there is one more trait a founder can have that VCs look for, according to Stavropoulos: "The ability to inspire others." This is going to look different for different founders, but you want someone who will inspire people in their domain; whether that is finance, technology, business, or something else.
In evaluating your founding team, you must ask yourself: If you two are leading the charge, will others follow you into battle?