Sayem Faruk |
September 30, 2021 12:30:09 AM
People say that choosing a co-founder is more important than choosing a life partner. Founders likely end up spending more time with their co-founders than their spouses. In the process of building a startup, founders often realize how difficult it is to find someone to complement them. There is actually a lot of thought behind choosing a co-founder.
If one of the founders is from the business world, the other co-founder must be from technology. It is also a common preference of investors. However, this is not a hard and fast rule. It is entirely possible to hire technical knowledge and fill any knowledge gaps if the startup is funded properly. Along with that, having an age, background, position, work ethic, etc. similar, is a big advantage.
Two potential co-founders should hack a side project before fully committing to working together. The project could be a landing page or an easily buildable product that could be used in the future. It will help them to have a common vision. Two co-founders may disagree on which route they will take on their journey, but it is absolutely imperative that they share a common vision. Both must be sufficiently motivated and motivated to carry out the vision. It is important to keep in mind that sustained motivation is more important here than short bursts of excitement.
This is perhaps the most important compatibility factor. Most of the founders’ disagreements stem from a difference in the underlying values. These are usually subtle things like one founder may want to keep growing the business forever while the other may want to sell it at some point, or it can be something as simple as the way founders want it. that business processes are designed.
These two are probably the least discussed between the co-founders. If a co-founder is going through grief, divorce, or depression, it will affect the startup. Having a frank discussion about these issues as well as revealing any underlying health issues is the way to go.
While it’s natural to think that two Founders will spend time outside of work and become good friends, in some cases this may not be possible. For example, a founder may prefer to separate his personal life from his professional life. If such limits exist, it is always a good idea to discuss the frequency of contact outside of work. However, it is advisable not to be too professional in this regard. It’s not natural for two people to spend so much time together and not talk about their personal lives.
Before two founders decide to join forces, they must make sure that they also discuss what their tie-breaker or conflict resolution mechanism would be. It will make them both better if they regularly give and receive constructive feedback to each other.
On the other hand, having the mindset to compromise for a bigger cause is something that humans find difficult when the ego takes over. Sometimes it becomes more important to win an argument than to find the optimal outcome. It shouldn’t happen. The interests of the startup must come before its own ego. Founders should also discuss a compromising mentality early on and list their non-negotiable elements.
A 50-50 split between a technical and business co-founder isn’t really a bad place to start if both founders bring similar levels of value to the table. However, if a founder brings money and / or traction, the ratio may need to be revised. There is no scientific approach here. The founders just have to trust their intuition and negotiate a win-win scenario.
Ditto for the salary. The amount could be equivalent to the cost of a decent living in the city where they are located; but it cannot be the going market rate for someone in their profile since they are giving up short-term liquidity for long-term upside potential. It is easier to calculate salaries if the two founders have similar circumstances. If the two have day jobs, they can agree on a certain number of hours each day. But things get complicated when conditions are different – for example, one founder has a family to support while the other does not. The other founder probably lives with his parents or may live in a city where the cost of living is lower. In this case, a practical solution could be to settle on equal wages after taking into account all living expenses, which excludes any form of luxury expenses.
If two founders start together, they must have an acquisition agreement signed. An acquisition agreement is simply a contract that requires founders to spend a certain number of years in their startup in order to receive their equity. This guarantees protection against a co-founder who can leave the company after a few months and take his capital with him. A usual acquisition agreement has a four-year acquisition with a one-year bluff – meaning that at the end of the first year, 25% of the equity will be released, an additional 25% after the second year, and and so on.
Often, founders tend to choose the first person closest to them. It could be a friend from college or a co-worker. Best friends aren’t necessarily the best co-founders. When it comes to choosing a co-founder, it’s okay to be picky and greedy. It should never be rushed. Incorporating a co-founder is easily one of the most important decisions a founder will make. The success of any early stage business rests disproportionately on its founders.
The writer obtained his BBA from IBA, University of Dhaka, and is the founder and CEO of Remotely, an independent invitation-only market in Bangladesh.