Getting the Co-Founder Decision Right
In my recent list of #ifiwereafounder tweets, I started with the assertion that "I would aggressively seek out one, but no more than one, co-founder to complement my deficiencies". This generated a number of questions from founders about the ideal composition of a founding team. This post will expand on what I was thinking with the original tweet in a way that can not be captured in 140 characters.
At face value, the first question is why have a co-founder, and if you do, why only one? First, it is worth recognizing that founders form the soul of any start-up. It is their conviction, passion and unrelenting desire to succeed that powers the company forward and through all the tough spots. It is hard to hire this skill set, so starting a company with a co-founder means that this does not rest solely on the shoulders of one person. Further, start-ups are all about developing hypothesis, testing these assumptions and moving forward in an unrelenting manner. This is more effective if you have someone to run these ideas by in a high-bandwidth manner and to parallel process on tasks, especially in the early days. Finally, no one founder has all the requisite skills to execute on their vision and bringing in a co-founder that complements areas of relative weakness and potential blind-spots results in a far stronger team operating right out of the gates.
So if these statements are true, wouldn't more co-founders be better than fewer? In my experience, unless the founding team has all worked together before, the answer is no. The worked together comment is a big caveat as our founding teams with more than 2 co-founders that have worked together before are performing quite well, in large part because the issues discussed below are less applicable for teams that have learned over the years how to work together. I believe there are three reasons for two co-founders being the magic number. First, if you think of all the requisite characteristics of a co-founder - a shared vision, complementary personalities, similar work ethics, aligned goals - it is incredibly hard to find the right co-founder. Looking for a third or fourth such person exponentially increases the time and difficulty of this task as you not only need to find additional people that fit you, they also need to fit each other. More often that not this results in making compromises and sub-optimal choices. Second, while having one co-founder results in faster and better execution as two people can be incredibly aligned and efficient, more than two cooks in the kitchen tends to slow decision making down as consensus is sought and the trade-off of perhaps better decisions by having a third or fourth opinion does not compensate for all the advantages start-ups get by executing faster than incumbents or their competitors. (A related note is that some critical decisions really do require multiple viewpoints and differing perspectives and this can be an ideal role for your outside advisors and supporters). A final point is economics: founding equity is incredibly valuable and if you are dividing the initial pie by 3 or 4 and the incremental 3rd or 4th co-founder is higher risk and likely to slow things down, you own less of a less productive and potentially more contentious company. Not a good trade.
So what makes for a great co-founding team? Noted above are the first critical points: a shared vision, complementary personalities, similar work ethics, and aligned goals. In particular, alignment on vision and goals is critical as they are the hardest to reconcile and most likely to lead to major blow-ups. To find the best fit on the personality front, it helps to understand your own biases, strengths and weaknesses and to find a co-founder to fill in those gaps. If you are extremely intuitive and high concept, find a co-founder that is analytical and more considered in their actions. If you are naturally wildly optimistic and a throw caution to the wind type, find a co-founder who considers what can go wrong and how to plan accordingly. These personality differences, while at times likely to infuriate, will result in better decisions but as you will spend more time with a co-founder than anyone else in your life, make darn sure you enjoy each other's company. Last, from a functional skills perspective, our best co-founding teams of two tend to have one co-founder who is awesome on product and technology vision and the other who is always thinking about market opportunity, positioning, growth and how to best bring the product vision to the market. In today's parlance a Product person and a Growth Hacker. If you look at successful companies across the tech landscape, this pattern emerges over and over again.
Good luck in finding the right partner with whom to launch your company. Don't rush to the altar and take the time to get the decision right and it will pay of down the road.
Chip Hazard is a General Partner with Flybridge Capital Partners. You can find this post, as well as additional content on his blog called Hazard Lights. You can also follow Chip (@chazard) on Twitter by clicking here.