- What are the main factors that need to be taken into consideration while finding the right co-founder for a startup? There are many sources for good advice on building good cofounder chemistry, including the blogs at Y-combinator, must-read books like “Do More Faster” and “Founders at Work”, and closer home, our community at Yourstory.in. Here are some of the key factors we have experienced, that need to be addressed between cofounders, when starting out.Reasons for starting out: They need not be similar, but reasonable alignment is critical. If one founder wants to go for a high-growth high-beta startup and the other is more comfortable with a services business and regular cashflow, it’s best to part ways early.
- Stock Split: There is no magic formula. Totally depends on the team. Fairness has to be a major basis for deciding this. It is not about deciding the final share of each co-founder. The establishment of value each partner brings to the table has to be fair and mutually agreed upon. This is the foundation of a lasting relationship. Eventually, more often than not a partnership amongst equals has the best shot at making it.
- Roles and Responsibilities: A startup by its nature, iterates fast and learns a lot. It can be challenging to clearly demarcate roles and responsibilities. One way to do this is by broadly agreeing on areas where one team member takes the final call in an area. Given that successful businesses are built on unfair advantages, it’s a good idea to incorporate the strengths of each founder into the business strategy. This gives each founder a clear purpose in the venture.
- Planning for changes in the team: It is quite hard to predict the path a successful business will take. Accounting for things like future partners may or may not be completely feasible. It is a good idea nevertheless to incorporate a mutually agreed framework for the same. It may not be adhered to, but can serve as a good basis for future discussion. Similarly, having the option for founders to move out in a clean manner, has actually been proved to increase the chances of founders sticking it out through the rough. It is best to have a clear vesting schedule even for the cofounders. We have seen one startup not address this, and it can get ugly rather quickly.
In our experience, starting a company is like falling in love, where as running a successful business is like being married J There are ups a downs, and a healthy mix of passion and fun, along with structure and clarity in key areas, helps keep the morale up though the lows.
What are your thoughts on building the right relationships in the founding team? Leave your comments below.