Prenup for a Startup 6: Are you the one for me?

Image: Unsplash

"In every partnership there is a person who stacks the dishwasher like a Scandinavian architect and a person who stacks the dishwasher like a racoon on meth." *

This Instagram post might makes me smile because it captures differences in personality and ways of doing things so vividly. Maybe the way the dishwasher is stacked is not a big thing; it's outcomes based right? As long as the dishes are clean in the end it should all be ok in the partnership.... unless it is a business partnership. Then the stakes are much higher and choosing someone who loads the dishwasher in a way you can relate to and agree with, much more important in the long run.

Choosing the wrong co-founder or business partner can destroy your business and in some cases your friendship, family, relationship or marriage. Ending up in a partnership that is not working can be destructive, it takes an emotional toll on you and if the dissolution includes legal implications it can be very costly. Sanity and savings out the window....

In an article by Eric Johnson in Elite Business magazine 9th May 2021, he mentions:

43% of entrepreneurs are forced to buy out their co-founders due to rifts and power struggles
71% said the breakup was due to differences of opinion on the company’s direction
18% felt it was because the ousted co-founder didn’t share the venture’s values
In 92% of the cases, the final uncoupling was due to a single specific disagreement regarding a decision that was to be made, which was usually the culmination of a period of unrest among the founding team.

90% of founders I have come across have a founder fallout story. In some case it was an amicable parting of ways or natural next step dissolution, in other cases it led to irreparably damaged relationships between childhood friends and lost businesses.

You are going to spend more time with your co-founder than with anyone else while you are growing and scaling your business. It is important to want to be around them even when things are rough.

What will help you choose the best co-founder for you and your business?

Be clear on why you need a co-founder

What is the reason you want a co-founder? Does your need for a co-founder come from:

a space of lack - a skill, knowledge, networks, finances
a space of longing - shared risk, shared experiences, shared ideas and minds
a space of self-awareness - I perform better in a team, I like being part of a bigger team, I like working with someone who complements me and what I'm good at. I prefer to work with different people and different personalities and learning from them.
a space of choice - I choose to work with a team because I believe our skills and resources can complement each other and we can go further together and achieve more than I can do on my own.

2. What kind of co-founder do you want?

If you could make a wish list, what would that look like? (The same principal as when you dream about a romantic partner or a holiday.) What characteristics would be on it? Do you want someone who is easy going but focussed and able to handle stress well? How important is a sense of humour to you? Do you want someone who comes highly recommended in their field and has lots of experience? Do qualifications and education matter more to you than their track record of running a successful business. Do you prefer working with a family member or friend you have known for a long time? Must the person be similar in personality to you or not? Are you comfortable with someone who is completely different from you? We tend to choose people who are similar to us and in doing so we lose out on diversity and fantastic learning experiences. Do you know which values you are not ever willing to compromise on?

3. Which rivers are you fishing from?

If you prefer to work with family or friends then it is easy to know where to find your co-founder. However, if you are starting from scratch and you want to find a new co-founder, more options and unfamiliar places can be exciting. If you don't find the right person in your networks, social media, the startup eco-system or your previous corporate company. Don't limit yourself, be open to finding a potential new co-founder at a dinner party or on the sports field.

4. Does age matter?

Age is not just a number it can also be an indication of a stage of life. If there are huge age gaps between you and your co-founder it might lead to conflict. After 3 years in business you are ready to start again while your co-founder is wants to take it easy and retire. If you have small children who need your attention and your younger co-founder is single that might impact how much time each of you can spend on the business and should not automatically be seen as a lack of commitment. Your older co-founder might be more averse to risk taking because they believe time is running out for them to gather a nest egg and that they should guard what they have.

A big age gap could also matter more in cultures where age is automatically deferred to and given respect. Are you comfortable with this? Will your older co-founder be comfortable with decisions that are made by a younger person?

These points don't mean that you shouldn't get an older or younger co-founder, it is merely an indicator of what to keep in mind so that it doesn't lead to unnecessary frustration or misalignment of expectations further down the line.

5. They don't live round the corner

What matters more to you than you and your co-founder being in the same physical space? Some founders work together for a year or more before they meet each other in person. If you live in different countries or continents; how are you going to ensure that you are a strong team who work well together? If you've met before this might be easier because you have some history, if you start out as new co-founders you have to think about:

What does building trust long distance look like?
How do you communicate?
What are you going to put in place to replace incidental contact and conversation at the water cooler?
Which systems should be in place to keep track of progress, roles and responsibilities?
How do you celebrate your wins?
If some of the team work in the office and another founder works from a different country, how do you make sure that they are not inadvertently excluded from information or events and feels marginalised?

6. What are your expectations about working together?

Sharing a vision, a passion, values and a sense of purpose does not automatically lead to a great working relationship. It is important to be clear about the expectations you have of each other and of working together to make the business thrive. Think about:

If you don't have the same business outlook and values, you are going to waste a lot of time convincing one another of why you are doing something or why you choose to work with a certain client. What questions are you going to ask potential co-founders to find out what their business outlook and values are?
For how long and for which tasks do you need them? Do you want to have a co-founder to help you build, scale and sell, or to stay with you and manage the business for years to come? Do you have a time frame in mind? Can you offer money or only equity? If you can only offer equity and expect them to finance themselves until funding comes in, how does that change what you can expect from them?
How are you going to handle mistakes?
How do you and how are you going to handle conflict? Disagreement doesn't have to lead to conflict but you are going to encounter plenty of things that go wrong and lead to friction and blowouts. How are you going to try and preempt or prevent these and how will you minimise unnecessary conflict?
How will you know that the relationship is not working out and what are the guidelines for terminating it? Will you know if you are taking too long to make the necessary changes? This is even more important if your co-founder is a friend, partner or family member. You don't want the conflict to impact more than just your business relationship.

7. What will you base your decision on?

Choosing the right co-founder is an important decision and even with all the right intentions and trying to be as careful as possible you finally have to choose. Only time and business pressure will tell if it was the right or wrong co-founder for you and your venture.

Once all the other credentials are in place and you have spent enough time getting to know potential co-founders better, what will inform your final choice? Logic, your gut or intuition, hope, your heart , faith in the universe or a combination of all of them?

* ColeyTangerina