After spending a significant portion of the last couple of years talking and collaborating with countless entrepreneurs (through FounderDating) a few clear themes have emerged around partnering with cofounders. We’ve noticed some valuable best practices…as well as some very common mistakes. In the hopes that we can save more entrepreneurs some time and heartache, here are three of the biggest mistakes:
I actually don’t like to spend a lot of time convincing people they need a cofounder. There are enough people out there that either came to that conclusion right away, or felt the pain of not having one and realized it pretty quickly. Sooner or later, people will usually figure it out. For their sake, I hope that it’s sooner rather than later. But let me briefly to explain why the right cofounder is important (emphasis on “right”).
You don’t know what you don’t know
That’s always true, but in the case of starting a company or even a side project, you should assume that the body of knowledge you’re missing is vast. There is no way to make up for it all, but if your cofounder has complimentary skill sets, it will help shrink the missing body of knowledge. Chances are that it’s not only your role or the areas you know well that are tough to do and tougher to learn. It’s not a coincidence that, according to the Startup Genome Project, balanced teams with one technical founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams.
Your emotional partner
Beyond skill sets, starting a business is a test of your emotional will. Do you have any friends that are single parents? It’s not merely twice as hard, it’s exponentially harder than raising a child with a partner. Your cofounder is your partner – through every decision, every idea, each and every up and down of the emotional roller coaster. Only a cofounder will feel the high and lows like you do. Advisors and friends are great, but they aren’t nearly as emotionally invested as you are.
How do you approach someone about potentially being a cofounder? So many people start by thinking about an idea. I get that. It incites passion, you get excited, feel like there is something tangible to work on. But then you start thinking about a cofounder and pitching or hard selling someone on a specific idea. That [almost] never works. Chances are so good that your idea will change - either somewhat or completely - that Vegas wouldn’t even lay odds on it. So, let’s say you hard sell someone on the idea, they fall in love with it … and then the idea changes. Then what are you left with? Fall in love with the person, not the idea.
Even worse is pitching someone as though you’re offering a job that centers around your idea. The people you want to be your cofounder don’t just want to work on an idea, they want to be a part of something bigger. FounderDating ManagingDirector for Vegas and CTO/Cofounder of Wedgies, Jimmy Jacobson, sums it up perfectly:
“When I get someone pitching me an idea, I hear ‘I need someone to build my idea. I can't pay you in cash, so have some equity.’ That's not attractive to me. I have a LinkedIn account full of spam from recruiters, developer groups I belong to get spammed by people like this as well. This is why FounderDating exists. I don't want to work on a wine app. I want to work with awesome people, and if the idea we pick is a wine app, so be it.”
An idea is just that, AN idea. When the dust settles, it’s not likely to be THE idea, so don’t lead with it.
Which brings me to the final and probably most common mistake: When should you start thinking about a potential cofounder? The quick answer is ‘always.’ Huh? Yep, unless you’re in the throes of starting a new company full-time, you should always have a side project, something you’re curious about. It doesn’t have to be the next big thing. But it is the best way to start working with people you think could be cofounder material and figure out if a partnership might be feasible.
All too often I hear people say, “I’m not ready for a cofounder. I want to have the idea first.” At least 6-12 months before you quit your current full-time gig and “take the leap”, you should start talking to potential cofounders and working on side projects together. This gives you time to work with multiple people, and to walk away from relationships that aren’t clicking. It also affords the opportunity to learn so much about yourself - styles you like and don’t like, attributes you value and those you can do without.
When you wait until you’ve settled on an idea and even have a little bit of money committed (often conditional upon having a cofounder) you feel, well, more desperate. You’re much more likely to leap into the arms of the first person that agrees to work with you. Waiting until the end leads to bad decisions and relationships that really don’t work because, like it or not, you feel desperate. Searching for the right cofounder is a process and it’s vitally important, so start early.
Finding your partner should not be the last thing you do, it should be the first thing you do.
As an entrepreneur I’ve learned a lot from my own mistakes, but in this case you can learn a lot from the mistakes we’ve seen others make. Find the right cofounder is game changing – make sure you approach it like you would a partner and make it an early priority.
This was a guest post by Jessica Alter. Jessica is the Cofounder & CEO of FounderDating, the premier online network for entrepreneurs to connect, share and help one and other. Previously, Jessica led Business Development and was GM of Platforms at Bebo (Acquired by AOL). She is also a mentor at 500 Startups and Extreme Startups.
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If you're starting a company, one of the most important decisions you'll make early on is the selection of a co-founder. Some might advocate just “going it alone” because finding a great co-founder is hard and fraught with risk. It is hard and it is fraught with risk. But going it alone is harder — and riskier. Startups are very challenging and having someone to share the ups and downs with, to be a great sounding board for ideas and to just help get things done is immensely valuable.
One additional thought: I'm an introvert. I don't enjoy being around people very much. If you're like me, the notion of just doing something all by your lonesome might seem appealing. And, it is — but I think it's a mistake. Even for introverts, having someone on your side is useful and fun.
Another consideration is speed, captured well by this African proverb: If you want to go quickly, go alone. If you want to go far, go together.
So, you might be wondering: “Hold on there! As a startup don't I want to go quickly? Isn't it all about speed? Why should I wait to get started…I should go NOW!”
These are reasonable sentiments. Great entrepreneurs have a proclivity for action. I'm not suggesting that you stop everything and spend all of your time on the holy quest for the perfect (and mythical) co-founder. I'm suggesting that part of what you're doing should include being on a deliberate lookout for her. And, I'm saying that when you find someone that is awesome, resist the temptation to worry too much about things like dilution and control and what-not. If it's the perfect person, none of that will matter. Back to the African proverb. Yes, you want to go as quickly as you can, but what's more important is going far. You want to build a company that attracts amazing people and solves important problems. A company you can look back on and be proud of. There are very few experiences in life that can match that feeling.
So, I'm going to assume for a minute that I've convinced you (or you were already convinced) that a co-founder is a good idea.
Choosing A Minimally Viable Co-Founder
1. You trust them and they deserve to be trusted. Not just in the “he won't cheat me” sense, but in the “if I'm being a dolt, she'll call me on it” sense. And in the “even when I can't be there, he'll keep my interests in mind” sense. By the way, as it turns out, this need for trust is not an abstract thing. During the course of your startup there will be many occasions where you are vulnerable and dependent on the integrity of your co-founder. You want to find someone that is constitutionally incapable of screwing you.
2. They have to be brilliant at building or selling. They're exceptionally good at building something people want or they're exceptionally good at selling something people may not know they want yet. And by exceptionally good, I mean, they're one of the best you've ever met. Also, I mean they're good at of one those things not just good at convincing you they're good at hiring people that are good at those things. You don't want someone that can manage [X] but actually do [X]. Example: You don't want someone to manage product development or even the better sounding “own” product development. You want someone that can actually do product development. Same with selling.
Related note: In my opinion, marketing can be selling. If you find someone that can “sell” by simply writing exceptional content that pulls people in to your business, and then writing great copy on a landing page that converts them to customers — that's awesome, and it counts. Being brilliant at selling doesn't necessarily mean talking directly to humans and selling. It means getting customers to pay you money.
3. They’re committed to the company, not just the current idea. Anecdotal data suggests that as fantastic as you may think your idea is, your idea will likely change. A great book to read is “Founders at Work” by Jessica Livingston. It's a great collection of stories from some great entrepreneurs and you'll see a recurring pattern. Even spectacularly successful startups ended up changing their idea along the way. If your co-founder is married to a specific manifestation of an idea, trouble will brew when the company is no longer pursuing that exact idea in that exact way. You need a co-founder that's committed to the cause — and committed to you.
4. They are likable. You and others enjoy spending time with them. You’re probably going to be spending more waking hours with your co-founder than you are with your friends and family. (You might even spend some non-waking hours with them too — some founders I know sometimes dream about their startup. No, it's not weird at all.) So, it’s imperative that you like the person and enjoy spending time with them. If you dread having meetings with them. If you can't have a 4 hour dinner with them. If you can't see yourself locked in a room with them for a weekend. There's something wrong. Beware. Another reason that them being likable is important (outside of the “life is short and you want to maintain your sanity” argument) is that it's imperative for others to like them too. Future members of the team that you're trying to recruit. Maybe investors. Maybe customers. They don't need to be cruise-director level nice, but if you join forces with a jerk simply because they are dazzlingly brilliant at something, you will likely fail. And it won't be fun. Don't talk yourself into it.
5. They do stuff, not just think about stuff. They do a lot of stuff. They do whatever is needed to move the company forward. This includes unpleasant things. This includes banal things. This includes things they didn't go to MIT or Harvard undergrad for (like ordering pizza). Startups are not just about the fun stuff. Not just about the building and the selling and the late nights cranking. At some level, a startup is still a business. It exists in the physical world, and as such, it often requires doing boring things (like opening mail and paying bills and such). You should try to minimize that ugly stuff as much as you can, but any task should not be beneath any of you.
6. They crank and grind. They are not working under the delusion that there will be work-life-balance in the startup. There are two kinds of co-founders in the world. The kind that work maniacally, just like you do, and the kind that you're likely going to resent someday. I also don't think there's such a thing as a part-time co-founder. Sure, there are people that are willing to help you in the early days. Maybe they're just wrapping up their day job and figuring out how to exit and come on board full-time. That's fine. But they're not a real co-founder until they're fully committed and cranking.
7. They're reasonable, rational and realistic. A surprising number of startups die because one of the co-founders gets some weird notion in their head. Causes vary. Sometimes it's ego. Sometimes it's insecurity. Sometimes it's greed. Sometimes it's just pure schmuckiness. Whatever the cause, the situation becomes toxic creating much unhappiness. Remember, competition is much easier to contend with than co-founder conflict. One way to address this issue early on is to have some of the hard conversations up front. A good place to start is my article on the questions co-founders should ask each other. Have those discussions early. Even though you may not get to closure on all of them, it'll give you a sense for how you both deal with difficult situations. And, be prepared for some surprising reactions/responses to those hard questions.
That's all I've got. I know I've set a pretty high bar for what I labeled as a “minimallly viable” co-founder. There's a reason for this. If you get it wrong, you can get a bunch of other things right and you'll still likely fail. If there was ever a time to be selective and spend some calories — this is that time.
What do you think? Any other criteria you'd put in the “bare essentials” bucket? Any positive or negative experiences you've had with co-founders?
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The following is a guest post by Scott Dinsmore. Scott is an entrepreneur, Personal Freedom Coach and value investor. Read more of his articles at Reading For Your Success or grab his free eBook.
The day of the founder doing everything is dead. No one is really a salesperson, marketer, graphic designer, developer and customer service rep. As an entrepreneur you may do all these things, but that doesn't mean that's the smartest way to run your business.
Years ago Michael Gerber coined the the term E-Myth, referring to the entrepreneurial myth of people going into business to do what they love, only to realize that 80% of the business has nothing to do with their passion--but instead with building and running a company.
This often results in one of two outcomes: The founder hates his job or the business fails--usually the former follows the latter quite closely.
It shouldn't be this way and it doesn't have to be.
I’ve started two businesses in the past two years. Outsourcing made this possible. Without it I'd be nowhere. With it, I have two profitable ventures and the time to think and work on the projects that make the biggest difference in each of them.
Outsourcing has become a must. As a founder and entrepreneur, you can't afford not to. Here's why.
1. You need a prototype early. Scratching your idea on a cocktail napkin long after you should be at home is a start, but only a start. You need a prototype to sell your vision- to friends, investors, your future team and charter customers. Depending on your skill-set, you may need a designer, developer, artist or a kick-ass storyteller to get you a presentation-worthy prototype fast and on the cheap. Any of this can and should be outsourced .
2. You need to stay lean. As entrepreneurs we live and die by our burn rate. While you may need help with a website or prototype early on, you cannot hire someone fulltime from the start, especially before you've sorted out how you'll structure pay, stock options and the other headache-creating benefits. It's premature and expensive. You are likely still forming your crystal clear vision. You no doubt need help, but you may need very specialized help. That's what outsourcing is made for. Hire your generalists and outsource your specialists. Only pay for what you need, no matter what stage your business is in.
3. Test your team. Regardless of how much capital you have, no one can afford to hire a dud. Whether you outsource or not, starting out with a trial (via internship, project-based work or some sweet competition) is a must. You may be looking for a team in India or right down the street from you. You can screen by location (and a ton of other criteria) with the resources I mention below. Get clear on what you need and find the people who were made for the role. Let them know a full-time job is on the line. That'll get the healthy competition cooking. Hiring and firing is a pain in the ass (and expensive). Try before you buy, and avoid those duds.
4. Be forced to know what you want. Since outsourcing is project and skill set based, it forces an entrepreneur to do something most never fully do — define their vision and the actual tasks they need done to make it happen. Sure, these will change over time, but nothing is more frustrating than hiring someone (or being hired) when neither side has a clue what the target is. If you don't know the skills you need then how could you ever expect to hire the right person? Founders are notorious for loving the vision but avoiding the details. Force yourself to take your medicine.
5. Live and die by the 80/20 rule-Only do what you're best at. Say you started a business because you know AJAX, MySQL, PHP or some other technologies above most the world's head, and you are going to build a kick-ass web app with it. Then how much sense does it make for you to be burying yourself in PhotoShop trying to create a logo? None! You have super human strengths (we all do) and you know what they are. Things you feel you can do better than most anyone in the world. That is your personal edge. Leverage it as much as possible. This is your 20%. Focus all your attention on the 20% of your workday that truly moves the needle, based on your natural strengths, and outsource the rest. This might mean customer service, design, social media marketing or coding. It's your job to assess yourself and your team. If you aren't lights-out good at it, find someone else to do it. They'll do it better, in less time, and surely for less money.
6. You can't afford not to. Would you believe me if I told you I have a team in India who handles all my SEO/SEM, deep analytics, web research, graphics and coding for between $3-$5/hour? I do. Ravi leads the team. He has for three years. He's loyal, trustworthy, wicked smart and best of all, he works his ass off. These guys have college and advanced degrees and are happy to work for rates often between $5-$20/hour for just about any technical task you could imagine. But the real clincher is how hungry they are. Not only are they qualified to do the work, they will do it in half or a fourth the time. It's pure geo-arbitrage. The pay is great for them and the output is awesome for us. Does it get anymore win/win?
7. You are worth more than you think. If you're telling me you could do the stuff yourself for cheaper, remember the 80/20 rule. Just because you can do it yourself does not mean it makes any sense to do so. First off realize that as a sharp entrepreneur with fire in his belly, your time is worth a lot. I'd say $50/hr at the least. This may help make the decision. And don't forget about the opportunity cost. Your mind and time are your most valuable assets. Spend them wisely.
8. You can outsource anything. Literally anything...Over my past four years, I've outsourced more business jobs than I thought possible and more personal tasks than some would consider appropriate. The only limit is your creativity. Here's a taste of projects I've sent afar so I can focus on my core of writing, coaching, investing and business building:
- web research
- customer service
- web and blog design
- blog and copy writing
- blog comment moderation
- locate best courses in your area for various subjects
- voice transcription
- SEO, SEM and Social Media Marketing
- personal or administrative tasks, travel plans
- locating the perfect gift on Valentine's Day (who said it has to be all business?)
For more ideas check out Elance's 100 Projects You Can Outsource.
9. It feels awesome to know someone's working as you sleep. No joke. Not only is it unbelievably efficient, but it's just plain fun to have all your tasks completed while your off dreaming (since some of the best outsourcers are found in India and other cheap foreign lands), leaving you ready to keep the ball rolling when you wake. And there you have it. The holy grail: You've found a way to work 24/7 without losing your life.
Where to outsource.
The list is endless but the below should be all you need. I've had personal experience with most of these.
- Elance- One stop shop for anything outsource
- V Worker (formerly Rent A Coder)- More technical focus
- Fiverr- Every job for five bucks, graphic design to grocery shopping
- Ask Sunday- Large team for any task under the sun
- Virtual Assistant Board- Job board for outsourcers and providers
You're a Founder, Now Start Thinking like a CEO.
What does a CEO actually do? They don't build products, they build businesses. They are nothing more than master outsourcers. Their expertise is having a vision and creating and motivating the right team of superb skill to make it reality. They don't bury themselves in a manual to learn Photo Shop to design their website. They find a designer so they can keep the train moving forward. There is no pride in doing everything yourself. If you expect to really be competitive, it's impossible. Spend your time on the work you know deep down only you can do. The work that will really change the world. Find someone else to do the rest and success starts to become a lot more realistic.
So, what do you think? Have you tried outsourcing non-critical tasks that are not your superpower? How did it go? Would you do it again? Would love to hear your experiences and lessons learned in the comments.
One More Thing...A FREE Special Event And Gift To The OnStartups Community
OnStartups is helping put on a free "virtual event" in conjunction with the PlusConf crew on December 7. It starts at 12 pm EST, is 100% free, and all you need is a computer with an internet connection. Speakers include some awesome Boston natives such as David Cancel of Performable and Todd Garland of BuySellAds.
OnStartups Presents PlusConf
Where: Anywhere in the world via your browser at http://www.plusconf.com
When: 12/7/2010 12:00 PM EST
Register For FREE At http://www.plusconf.com
Learn from the most successful web app founders and CEOs on what makes your startup tick.
Hiten Shah- CEO of KissMetrics
David Cancel- CEO of Performable
Todd Garland- CEO of BuySellAds
Noah Kagan- Co-Founder of AppSumo
Dan Martell- Co-Founder of FlowTown
Allan Branch- Co-Founder of LessEverything
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