A partnership between co-founders is a well-known key to startup success. According to David Cohen, the co-founder of startup accelerator Techstars, the ideal number of co-founders is somewhere between two and three. Techstars has funded and trained founders from more than 1,000 companies. These companies have gone on to raise $3 billion and create a market cap approaching $10 billion, so Cohen definitely has the experience and data to back this up. While partnerships aren't always easy, they are often necessary. Here's why you shouldn't go it alone as a founder:
- Bandwidth. There are simply too many things to get done.
- Loneliness. Launching a startup is hard -- very hard -- and single founders can become very lonely and isolated.
- Diversity of opinion. Having a partner to act as a sounding board allows you to work through key issues from a variety of perspectives.
- Resources. More founders means more resources, particularly when it comes to social networks. Having a co-founder adds their network to yours.
- Signaling. What does flying solo say to future investors, employees, and other potential stakeholders? If you are unable to recruit someone who's dedicated to your solution and to serving your customer segment, does that suggest that your opportunity isn't good -- or worse, that you don't play well with others?
Paul Graham, founder of startup accelerator Y Combinator, lists being a single founder as the number one preventable reason for startup failure:
"What's wrong with having one founder? To start with, it's a vote of no confidence. It probably means the founder couldn't talk any of his friends into starting the company with him. That's pretty alarming, because his friends are the ones who know him best. But even if the founder's friends [a]re all wrong and the company is a good bet, he's still at a disadvantage."
So what does it take to form a startup dynamic duo? Co-founders used to come only from your immediate network -- who you know, and know well, and know directly. That means your friends, family, competitors, workmates, etc. But in 2018, finding a co-founder has gone digital.
Many compare the process of finding a co-founder to dating before marriage, and that's not wrong. Similarly to a marriage, a strong business partnership is build on trust, respect, good communication, and a shared vision. So it's not surprising that there are a lot of co-founder matchmaking services. For the most part, these sites have aped online dating. Sites like HiddenFounders, Co-Founders Lab, FounderDating, TechCofounder, and Founder2be let you create a profile, as you would on an online dating site, to help find a co-founder.
Finding the perfect co-founder is only the beginning, just as a wedding is only the start of the marriage journey. Here are my favorite strategies when it comes to starting a business with a co-founder:
- Define roles and responsibilities early. Figure out who does what. Make sure you have all areas covered (sales, product, etc.), but more importantly make sure you have an implicit agreement on your roles and responsibilities.
- Sign a founders' agreement. A founders' agreement is a legal agreement that outlines the relationship among founders formally and explicitly. It is similar to a prenuptial agreement. Typically, founders' agreements include clauses on equity division, decision making, authority, intellectual property, dispute resolution, and -- most importantly -- how to break up the partnership without damaging the venture.
- Agree on resources. When it comes to time and money, decide who is putting in what and when. Is everyone full-time? Find a level of commitment each person agrees on. If you think that everyone should be putting in 60 hours of work each week, make sure your future co-founder understands and agrees.
- Have an exit plan. Agree in advance on what the ultimate goal of the company is. Is this a lifetime adventure, or are you hoping to exit in three to five years? To be clear, it doesn't matter what your goal or exit plan is, nor does it have to stay static over the lifetime of the startup. What is really important is that all co-founders have a meeting of the minds on this.
- Have a Plan B. Startups rarely end where they began. In 2018, almost all successful startups have pivoted (changed an aspect of their business model, like how they make money) multiple times. Talk through, in advance, how you and your co-founder will deal with this.
In 2018, entrepreneurs are no longer limited to choosing partners just from their direct network and immediate geography. Today you can find a co-founder through a variety of means. But while the options for finding co-founders have grown dramatically, their necessity remains the same. To increase your probability of startup success, team up!