Start-up Entrepreneurs' Blog

Finding the Right Co-founder for a Start-Up

June 11, 2010

The entrepreneur has a great idea and now it’s time to find some co-founders. How do you find these partners?  What makes a good co-founder?  If a start-up is to succeed, it must have exceptional performance and this level of performance is powered by passion.

I’ve hired employees that are bad, average, and good ones. Most employees work because they are getting paid to perform a set of tasks, not because they want to be at the office. They are the reason the “I’d rather be ….” bumper stickers are popular. The great employees are those that care, those that will go beyond their assigned tasks to do something because it needs to be done or because it is the right thing to do.  You will get a hundred times more work out of the great employee than any other. They are rare in any organization.  What makes them different isn’t that they are more talented at their technical skill; it is their passion and enthusiasm for what they do. It is more than just a paycheck to them.  It’s how they define themselves. It’s a part of who they are. The same is true of co-founders and partners.

What makes a good co-founder?

Founders are more than employees. It’s the difference between being married to someone and just dating them.  True founders aren’t just the people who get founding stock options. They not only share the vision, passion, and knowledge, they are able to clearly communicate these to others.  However, these alone are not good enough. They must also have the skill of doing.

No group of founders will agree on what the next steps are all the time. The path is never black and white, and there is not one path that leads to success. There will be arguments and heated discussions.  If the founders have a passion for the project then what keeps them is the internal desire to create the start-up. There is a need for the co-founders to be able to resolve these conflicts.

Where do you find co-founders? 

There is safety in numbers and comfort in the familiar, which when selecting co-founders translates into to asking a friend you’ve known for awhile or sometimes even a family member.  The problem is the founder believes they need to find someone … anyone … a willing cohort.  This is the quick and easy solution. It doesn’t work very often, but sometimes luck works is on your side.

The staked co-founder is another approach. You don’t personally know the person, so you figure if they are willing to invest money in the company then they must be a good person to have in the company.  There are two common search methods I’ve seen start-ups use. First, start-ups place a job ad looking for a senior management position and they are looking for someone to “buy” this position with an equity stake. The second is to go through accountants and wealth managers that target affluent professionals.

If you are looking for someone else, where should you look? Everywhere.  If you are looking for that rare individual, there aren’t going to be a lot of them around you. If there is any trick to finding the passionate people, it is to be out there talking about your concept. If you speak passionately about your idea, particularly publicly, they will come to you. It’s often the chance encounter that finds your partners.  

It’s time for a divorce!

Not all partners work out for many different reasons.  Offer a trial period with little or no obligations on the part of the start-up – if excitement is to wane, it will do so quickly. Keep the long-term relationship as simple as possible. It’s difficult enough to remove or replace a co-founder with salary, severance packages, stock options, benefits accruement, and so forth than to add personal and family considerations on top of it all. Try firing your spouse but keeping the marriage! I have negotiated and dealt with many contracts and partnership agreements, and worked with lawyers on the precise wording of the terms & conditions – in the end, the bulk of any legal arrangement speaks to what happens if the contract isn’t fulfilled, the relationship erodes, or the partnership falls apart.  As a rule, whenever a relationship deteriorates, there will be distortions about what happened, why it happened, and who was at fault.

It’s never an easy to fire people. It’s stressful on everyone – the person being let go, the person having to deliver the news,  the people who work with that person, everyone. It’s disruptive to the organization. The longer the situation persists, the more energy is diverted away from productive company activities to the firing process.  

Some Cautionary Tales

Many times the founders have a product idea but have no funding.   Mostly they are a group of friendly colleagues who were having beer together and someone said “why don’t we start a company”.  As a result, a bootstrapped start-up is born. The decision is to offer consulting or contracting services, and use the inflated wages to fund the product development of the start-up concept.  In my observation, the founders split up about half the time. Some of the founders will see the inflated wages from the consulting side and want to personally collect it all for themselves.

 The founders are a group of people, but there is no plan as to what role each person will play or their experience may not fit the role they want. Beware of the wannabe. I was once involved in a start-up where one of the co-founders wanted to be in the marketing and business development role, except that the co-founder’s background was engineering and was an introverted person. He wanted the job because he thought it was more prestigious than the engineering position, and want to be a celebrity in the start-up community.  But ultimately was not suited for the position and the results were disastrous.

There is one founder who is long on ego and only wants those who will do exactly what they are told to do. This is someone who often refers to the start-up as “my company” and the word “my” is often emphatically spoken in any sentence.  This founder considers himself the “lead” founder, and the other co-founders are just his assistants – so much for the true spirit of a team.

In order to survive the tough times of a start-up, the founders had better have a deep connection with the company. Otherwise, when times get tough, if they can just walk away, they will walk away.  Finding the right co-founder is a match making process.

Filed under: Team Building

Tags: co-founders, partners, start up, Team Building, technology company