“Many ideas grow better when transplanted into another mind than the one where they sprang up.” – Oliver Wendell Holmes
You have the perfect idea for a startup. Before the fundraising, before the research and development, before the marketing, you need to find someone who believes in you and your product enough to work for little or no money now … with faith in a future multimillion-dollar exit.
You simply can’t go it alone.
Having a co-founder is necessary to participate in Scratchpad Accelerator and to be seen as a credible startup by investors. Whether your strengths are in business or technology, you must find a co-founder who offers what you are lacking to create a dream team. Remember, you don’t want to simply hire another version of yourself. But how do you find the perfect fit of complementary skillsets so you don’t step on each other’s toes?
When considering a co-founder:
Find a tech expert if you have a business background. If you are a techie, find a business whiz.
Meet with your prospective co-founder multiple times.
Look for someone who has high intelligence, energy and integrity.
Make sure you align on many different levels and share the same vision.
Make sure he or she can work under stress and pressure.
Understand how that person manages his or her work/life balance.
When you have found the ideal partner, key components must be discussed during negotiations. These include title, role and responsibility, salary, equity vesting schedule, intellectual property and termination clause. All terms must be drafted and reviewed by an attorney.
’Til Exit Do Us Part?
The title of co-founder is one that many people covet, but it cannot be given out lightly. Selecting your match is like a marriage. There should be a lot of courting, and it’s important that you take your time with this decision. There’s always a sense of urgency in the race to get market share, but true motivations are revealed, not declared. If you make a mistake and then realize you aren’t on the same page, it’s very hard to untangle this relationship. You aren’t just hiring an employee, after all. You are giving this person equity and a title.
Defining Roles and Boundaries
To maximize time and resources – and reduce stress – you must be clear about roles and responsibilities. Create a system for accountability and articulate boundaries between roles. This is especially important in overlapping areas, where you need to define at the outset who will have the final say.
Typically, one person is in the trenches managing day-to-day issues while the other focuses on the big picture. Each needs to stay in his or her own lane – with an understanding of the gray area in between. You both can’t be dreamers. Who would do the work?
You should already have the essential technology and business skills covered between yourself and your co-founder. If you recognize a deficiency elsewhere, rather than bringing in a third co-founder (which makes the delineation of roles murky), it’s time to start adding your C-suite.
A Pitch Plan
How the founding team communicates is key when pitching to investors. Ideally, one of you will be the charismatic salesperson who can lead the show. (The tech person is typically behind the scenes.) If both co-founders participate, each must have strong presentation skills, or it will detract from the pitch.
Investors from all over Maine have shared with Scratchpad Accelerator what they consider to be the most important qualities of co-founders. A common theme is that they need to be driven, not just excited. They need to be confident but not arrogant. An investor’s dream team will show strong teamwork, trustworthiness, motivation, diverse skillsets and ability to handle conflict well.
Breaking Up Is Hard to Do
One example of a co-founder partnership gone wrong is the story of two college roommates and friends who came up with an amazing innovation. It soon became clear that one of the founders didn’t want the startup life’s extremely long hours and nonstop fundraising. It was a hard breakup, and the remaining founder struggled to replace that lost skillset.
You always want to have a termination clause. That’s your prenup. And just as with a marriage, it’s a hard conversation. But you must be able to have hard conversations with your co-founder. If you can’t communicate effectively about hypothetical situations during the courting process, what will you do in real life? That’s a big red flag.
The Finish Line
Unlike a small business, a scalable, investment-oriented company has a $100 million market. The goal is to capture as much of the market share as possible and then be bought out, or take it public. A successful scalable company will need different levels of sophistication as it grows. Your co-founder roles will likely outgrow you; therefore, you both must be able to put your egos aside and be comfortable being replaced. It’s a hard, relentless road that will result in you being jobless. If you do it right, you’ll both leave with a large pile of money.