Startup Co-Founders: If You Can't Recruit 'Em, Should You Join 'Em?

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Startup Co-Founders: If You Can't Recruit 'Em, Should You Join 'Em?

 

One of the most frequent challenges I hear from current or would-be software startup founders is that they are unable to locate a worthy co-founder.  This is not surprising.  Finding a co-founder is non-trivial as it requires a rare combination of attributes.  Examples include intelligence, integrity, passion for the entrepreneurial process, self-motivation and competency  (basically, someone a lot like you, but possibly with a different background and technical/business strengths).  I wrote a couple of articles about what to look for in a co-founder, so won’t repeat that here.
 
This time around, I want to talk about one of the key reasons that co-founders are so hard to find:
 
The Ideal Co-Founder For Your Startup Already Has A Startup Idea Of Her Own
 
If you sit and think about this, you shouldn’t be surprised.  If an individual has all the traits you’re looking for in a co-founder (particularly the entrepreneurial drive, risk tolerance and skill-set), then chances are she has some ideas of her own and may even be working on a startup now.  In a weird twist of fate, many of these potential co-founders are also looking for their own co-founders.
 
So, you say, the answer is simple.  Why don’t all of these would be co-founders just team up in a form of entrepreneurial “match making”.  That, as it turns out, is an excellent question.
 
Why don’t more co-founder types team-up and start companies jointly?  
 
The answer, as it turns out, is a little complicated.  Let’s assume that somehow, you actually find this perfect co-founder who happens to be interested in the same market and has similar ideas on how to pursue it.  As it turns out, this is not as rare as you might think.  

So, here are my theories for why you and the perfect co-founder that you just found can’t or won’t come together and join forces:
 
  1. Different Visions:  Chances are, both of you have your own vision of where you want to take your companies.  It’s one thing to passionately commit yourself to your own vision, it’s another to have the ability to join someone else’s – and be just as passionate.  Though this is a pretty good reason, I’d strongly suggest you try to work this one out.  If you’re both able to leave your egos at the door and have an “adult conversation” about the opportunity, you might just come to the conclusion that some variation of the ideas might work.
  1. Different Geographies:  Though there are examples of companies that have been started with the co-founders in different cities (and even countries), this takes a special kind of situation to have it work.  All things being equal (which they never are), startups with co-founders that are closer to each other have better chances than those that are far away.  I can’t prove this, but if you ask startup founders, investors and others that have been around startups, most of them will probably agree.
  1. Power Asymmetry:  This is just a fancy way of saying that partnerships in a startup are almost never equal.  It doesn’t matter how you divide up the shares or what you pay yourselves.  One of you is going to have more power than the other.  It may work differently in law firms, venture firms and other “partnerships” – but in software startups, someone has to be responsible for the ultimate call.  If you have an odd-number of co-founders, in theory, you can “vote” on these really big decisions.  However, as fate would have it, companies live or die not by the big decisions that require a board “vote”, but by all the small and medium-sized decisions.  In my 12+ years of experience with about eight startups, I can recall only two decisions that ever went to a board vote.  In both cases, it had to do with selling the company.  I’d also add that you actually want there to be asymmetric power.  Someone has to make the calls and figure out where the company is heading.  The only thing worse than a bad or mediocre decision is no decision at all.  [Note to self:  This topic is deserving of it’s own future article]
  1. Sunk Costs (Emotional and Financial):  Often, one or both of you is already vested in your respective startups.  You have spent money, built a product, even generated some revenues.  It’s hard to let go.  Rare is the person that can treat sunk costs as sunk and simply look at the future “opportunity cost” and pick the right path.  After all, even us geeks are human.  Based on how far along each of you are in your respective pursuits, it can be difficult to join forces with someone else.
 
Summary of my point:  Really good co-founders are tough to find.  If you happen to come across one that already has his own company, then take a look at the factors that would keep you from joining forces (particularly if you’re in the same market space) and see whether you can work something out.  

Posted by on Wed, May 17, 2006

COMMENTS

I think this article is right on target! I've been looking for great co-founders for a little while now, and everybody seems to be involved in their own things and do not want to "join forces". BTW, I'm still looking, if you're interested! :)

posted on Wednesday, May 17, 2006 at 1:35 PM by



5. Potential Co founders are competitors

posted on Friday, May 19, 2006 at 1:48 AM by


This article is very informative. In fact, as someone looking for a co-founder, I have been mulling over this topic a lot myself. Thanks for sharing your views on this.
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posted on Saturday, May 20, 2006 at 3:32 PM by Chris Jackson


+1 for competitors are potential cofounders
It helps is there's some orthoganality. I.e., in our case we have distributors who are different countries. They market to an area that would be difficult for us to market to. That's marketing orthaganality.

Another is is you could find a cofounder that wants (or is uniquely qualified) to do an aspect that you do NOT want to do.

Barring orthoganality, it helps to have a strong prexisting relationship. That was the case with Microsoft, Apple, and HP, I think.

posted on Wednesday, May 24, 2006 at 4:34 PM by Clay Nichols


Sjandeep, potential co-founders are POTENTIAL-competitors

posted on Monday, May 29, 2006 at 6:34 AM by Gabriel


If by finding a co-founder you mean "partner" and helper during the "long tea time of the soul".. good luck. If you didn't found it together, they aren't a founder. They are a recruit with great stock options. There's nothing wrong with adding people to your team to do the lifting and work for lots of equity. But founder? That title is all the compensation you will have for the long nights and hell you put yourself and your families through (everyone else gets off before you do.. it's like being a captain on a ship).

If you do have a group of Founders, consider a "founders pool" for your precious founder stock. Instead of just incorporating and dividing the cheap stock, pool it, and vest it out over three years. If someone leaves, they only leave with what they have earned. If only one person stuck it out, then they should get more. Believe me, nothing is more bitter than being the last person standing and lots of people waiting for magic.

Great article. Keep em coming.

Robert

posted on Wednesday, May 31, 2006 at 3:03 AM by Robert Gagnon


I seek co-founders or to become a co-founder or both. It's a give and take world, and better to have multiple irons on the dire.  
 
 
 
Know more at: http://www.FoolQuest.com

posted on Thursday, September 03, 2009 at 5:36 PM by Aaron Agassi


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