Do You Need a Co-Founder? How can you make sure it will work?
I think having a co-founder is great, but only if the relationship is based on mutual respect and understanding. For that, you will have to check long before you go into business with that person if you are a match.
When vetting a co-founder, watch out for:
- Personality Alignment: Communication between founders must work
- Empowerment Alignment: Founders must be passionate about enabling others
- Skill Alignment: Responsibilities must be divided clearly
Be aware of misalignments that come from an asymmetric distribution of certain attributes or expectations:
- Contribution Asymmetry
- Wealth Asymmetry
- Unequal Share Distribution
- Vesting Expectations
- Outlook Asymmetry
Contribution Asymmetries
If your co-founder brings a lot of capital into the company, and you have nothing but sweat equity, make sure they will still do the work. Capital alone won't make a bootstrapped business flourish.
Wealth Asymmetry
If you're significantly poorer or richer than your co-founder, give thought to where your priorities lie. Are you both working on a long-term timescale? Or do you need to scrape together money to pay the rent? Are you aligned?
Unequal Share Distribution
If you own 90% of the shares of your company, can you realistically expect your co-founder to work towards the same business goals as you? What are the incentives? Are they aligned towards the same goals?
Vesting Expectations
If your co-founder doesn't think they'll stay around for too long, they might complain about a vesting cliff of a year. In some cases, you might have overly optimistic expectations as a founder of how long someone should work to earn a share of the business.
Outlook Asymmetry
If you want to be bootstrapped forever and your co-founder doesn’t, you’ll have a rude awakening. Same for wanting to have an exit at some time. Make sure you want the same for the future of the business.
Find a founder that raises no red flags here. Details can be found in the article I wrote on the topic called Do You Need a Co-Founder?.
Thanks for that post. How would you verify those points? To me it seems that you already have to know this person for quite a while, or be a really good communicator and approach people easily.
Being prepared when you talk to them makes this easier, and you are right to say that you won’t be able to do this within an hour. It will take a number of conversations, and many of the alignment points can only be felt in absentia, so you will only know when they are not present.
Finding a partner is not an overnight activity. Build up a list of questions about the future of the business and founder involvement, answer them yourself and give them to the cofounder you’re vetting. Having some structure helps to make a reasoned choice long after the infatuation of a meeting or a chat has subsided.