This is part of my ongoing series on Startup Advice.
I was reading one of my favorite websites for entrepreneurs, VentureHacks, this weekend and noticed that they are running a long piece on how to pick a co-founder.
If you’ve read my blog for a while you’ll know that I’m a fan of starting businesses in a non-traditional way. I recommend that you start a company by yourself and own 100% of it. Once it’s set up I recommend bringing in a co-founder and giving them 10-30% of the company depending upon when you bring them in. I advocate treating them like a co-founder in every way except when they join and how much equity they get.
I know this is unconventional thinking but if you want to understand more I cover my rationale on this post about The Most Common Early Stage Startup Mistakes and again in this post covering how to implement startup prenuptials. If the topic is important to you and you haven’t read these posts I think they’ll be worth your time.
In the VentureHacks post Naval Ravikant argues in “the power of two” – that you should have two co-founders as in Bill Gates / Paul Allen, Larry / Sergei, Jerry Yang / David Filo. He talks about the instability of 3 and the unmanageability of 4 or 5. For me 3+ is usually a non starter.
I know that people find safety in numbers (and there always seems to be 3 amigos) but imagine this for a moment – you go and raise venture capital and you’re fighting over whether to dilute with a VC by 25% or 30% as a company. You agonize over whether it is better to take a “A investor” for 30% dilution or a “nice to have” investor for 25% and on better terms. Well, duh, if you have 3 equal co-founders you personally have just diluted by 66.66% and you haven’t even raised a penny!
OK, so I know that some of you already have 3 co-founders and I’ve met many of you. You’ll be fine. But I would hate to not tell future entrepreneurs the truth at the risk of slightly upsetting some of my friends. And if you’re honest I think the next time around most of you would probably admit yourself that you’d do it with 1-2 maximum.
But whether it’s Naval’s “power of two” or my “start things and then hire your co-founder” approach the reality is that you’ll need to find a partner. I don’t plan to cover how to best pick your co-founder as it seems the VentureHacks is about to do a bang-up job on this. I want to focus on a narrower point that can be applied to a co-founder or any senior member of your team in the early days – which is to find somebody complementary to you.
Know thy weaknesses
I’ll use me as an example. I’ve had the same weaknesses since I was young. One of the most critical weakness is brought on by my ADD (or I think more commonly called ADHD now), which is that I’m not a “completer-finisher.” I’ve always known this about myself but could never put any rationale behind it until I read “Driven From Distraction,” which if you suspect you might have signs of ADHD I highly recommend you read.
I have always been able to go very deep on details and I’ve always been able to get things done (JFDI). I think ADD is totally misunderstood – it’s a very PRODUCTIVE condition but it has downsides. I’ve always been able to shape deals and get LOI’s done and I’ve always been able to plow through the first 2-3 revs of a legal agreement. I’ve always been able to do a 12-tab budget in Excel. But I’m never able to dot the final i’s and cross the final t’s. I just don’t.
And understand a bit more about how my brain works it makes sense to me now. For those without this affliction I know you’re scratching your head saying, “just finish” but honestly it’s as hard to explain to you as it is for me to understand why some people are afraid of public speaking. I can throw bombs by I can’t move the ball forward 1 foot at a time every day of the month until we’re in the end zone.
Because I’ve been aware of this deficiency since high school (even before I had a label for it and therefore an excuse!) I’ve always surrounded myself with “completer finishers” in any important tasks and at my companies (and, incidentally in my home life ) But it’s also true that many completer finishers aren’t as good at the areas in which I shine. They are often less good at defining things that are abstract or knowing where to best start strategically. They are often not as creative in shaping things, one of my core skills.
Plug your holes
I guess the second point is already self evident. Your company of 10 people doesn’t need 5 that are like you. You don’t necessarily have to have a ying and yang c0-founder. But if not in your co-founder make sure that you think through all of the functional roles in your company: sales, marketing, finance, product management, customer support, technology and think about which ones match your strengths and where you need to plug holes.
You may be introverted and need the more externally facing person. You might be highly technical but lacking in business acumen. You might be great at networking and leading but bad at planning and managing. I think taking an honest inventory if your strengths and weaknesses is the most important starting point.
- Are you a shaper vs. a completer-finisher?
- Are you externally savvy vs. more inwardly operational?
- Are you a leader vs. a manager?
- Are you technically inclined?
- Do you understand how to lead a sales process?
- Have you worked in marketing / customer acquisition before?
- Are you intuitive vs. process oriented?
Take your inventory. Know thy weaknesses. Resist the temptation to hire clones of you. Plug your gaps.