Finding and selecting co-foundersFeatured

Picking a founder is very similar to choosing a partner for a boat adventure without knowing the destination. Based on my two experiences with startups, I’ve decided to dive into five questions that I will ask myself before committing to another founder relationship.

Meet PACET (Persona, Ambition, Culture, Explore, and Test Drive).

I started my first company when I was in college. I was a big fan of the show Shark Tank and the idea of building a product and presenting it in front of the most influential and successful entrepreneurs inspired me.

My first “marriage” happened very organically. My future co-founder and I ended up spending the holiday season together. We were both young, hungry, and ambitious. Here are some of the lessons I learned from it:

PERSONA

a. Knowing your own and your co-founder's SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is key to the roadmap of underlying strategic value.

Before you commit to your “marriage”, I would suggest creating a SWOT analysis of your skills that can also serve as the roadmap to your final decision of whether or not to commit to a co-founder relationship.

b. The key is to have complementary skills with shared values and a common global mission.

Let’s say you are a non-technical co-founder and your strongest skills are in marketing and operations. Your skills to your co-founder should be complementary and not overlapping.

When you are starting to work on a project it’s important to distribute the area of focus for each of you. Each of you should bring their expertise and realize each other's strongest skills.

c. Could he or she handle your feedback and vice versa? Would you be able to create a non-egoic space where your criticism would be constructive, direct, and honest?

We often go beyond emotion and our emotions can be our biggest enemy.

Communication skills and how you interact with each other are crucial. I was the shy one in our relationship and most of the time did not take the pride in strategies and ideas that were put together because of the lack of confidence. In the end, suppressing emotions and being passive-aggressive led to bigger arguments.

What I’ve learned is that it's important to put your ego aside and think of your startup as a living organism. You both need to agree on how to take care of it and let it grow.

Instead of putting the spotlight on one another, it’s important to lift each other, highlight each other's strengths, and complement weaknesses.

When it comes to communication, it’s important to always put your PRODUCT as a priority, not your ego.

Another important aspect to think through is talking about the money upfront. What I learned when we received our first investment, is that my co-founder and I were not on the same page. It’s important to discuss the financials even before you are committed to seeking financing.

Our miscommunications led to a lot of disagreements that eventually affected our relationship. We did not have an agreement on how we were going to allocate our investor's money. It ended in a spartan race. I witnessed my co-founder spending hundreds of dollars on expensive dinners, and the mismanagement eventually caused our break up.

AMBITION

a. Identify responsibilities of each founder

SWOT analysis can help you with that. Once you have both agreed on responsibilities, it’s easier to focus on the tasks at hand.

b. Long-term goals.

How do you see yourself in 10 or 20 years? You and your co-founder must be on the same page. What if they want to sell the company in five years?

What will their ambition look like in 10 or 20 years? Are they all in or all out? Do you want to pursue this project ‘til the day you die or sell it and move on to the next?

There is nothing wrong with having a goal to sell your product and move on, or be so passionate about it you’d like to work on it forever. Ask your co-founder what are the goals? What milestones do you want to achieve? And for how long can you stay in the same boat?

CULTURE

  1. Does our global mission align with our values?

I was always a big fan of Tony Hsieh and learned about corporate culture through him. Before committing to moving forward, I would create a game where you ask your co-founder and yourself to write down five values you stick to and would like to commit to when managing business.

After you both complete this task, you can exchange your answers and see if you are on the same page. This exercise would lay down the foundation of your relationship where some values are non-negotiable which eventually helps you to bump into potential conflicts.

A global mission is a set of cultural values that are embedded in the strategic core of each startup.

b. Are we passionate about the same industry and problems?

The key to a glorious partnership is that you both find it interesting and exciting to fix the same problems.

EXPLORE

Let’s say you are ready to choose your partner and are wondering where to look. Here are some of examples:

Let’s think of three inner circles. The first one is your friends and family, those people who know you well enough, know your persona or values. Introduce your idea to them, see their reaction and see if they would be interested in hopping aboard your journey.

  • 1st circle: Closest friends and family
  • Share your startup idea with family and friends

Then move to the professional network. I would suggest looking at all 3 levels at the same time.

  • 2nd circle: Professional network
  • Looking into your professional network on Linkedin
  • Chat with industry professionals about your startup & schedule quick coffee meetings (you can even do this via zoom)

The third circle is remote.

  • 3rd circle: Exploring remote opportunities
  • Explore new mediums such as Elpha, Angelist, Clubhouse, Discord

Be vocal, mention in your profile that you are looking for a co-founder, meet people, and share your project with them.

TEST DRIVE

  1. Founder vs an employee

Now we are ready for a drive or maybe a test drive. Everyone’s situation is different but my biggest lesson learned is that YOU don’t need a co-founder. Ask yourself, what is the biggest help that you need at the moment? If you are deeply rooted in your project personally, sometimes it can be hard to translate your vision to the co-founder. Ask yourself, do you need a co-founder? Maybe you just need an employee.

A founder must be willing to board the ship with you and go through the sweat, tears, and blood.

b.Timing

It's better to waste one month learning about each other rather than digging in on a project, getting everything on paper, and finding out along the way that he or she doesn't have the time or is not that passionate about the product.

c.Test the dynamics and compatibility with your future co-founder before you both agree to make it official.

Let's say you pick someone who you are passionate about working with. Set a deadline for each other to see how long you can last, and if it's beneficial, and not emotionally drowning.

To summarize, keep the PACET in mind (Pesona, Ambition, Culture, Explore, and TestDrive).

You can’t foresee everything, but you can create a framework and blueprint for your future relationship with your co-founder.

DianePrince's profile thumbnail
Great article @alinabutina! I especially agree with the Ambition/long-term goals - knowing what each person wants to get out of the experience from the company is my #1 filter in selecting a co-founder. Good read -- I enjoyed it.
alinabutina's profile thumbnail
Thank you @DianePrince! I appreciate your feedback so much!
HannahDrain's profile thumbnail
This is fantastic! We also like to recommend not getting into long-term business relationships with someone until you've known them for about a year. Usually, within 12-months, you can witness someone go through a high moment and a low moment and see how they respond - if how they respond is something you respect, appreciate, etc., then it increases the likelihood that the relationship will workout in the longer-term.
alinabutina's profile thumbnail
Thank you @HannahDrain! I agree with you 100%!
nipukabadi's profile thumbnail
Great insights and information @alinabutina. Thank you. I am on the lookout for a cofounder and found the article very helpful.
alinabutina's profile thumbnail
This makes me very happy, thank you @nipukabadi!
jodiweitz's profile thumbnail
Thanks so much, @alinabutina. I have a co-founder who wants me to join a start-up and pay with only stock-options with a vested schedule, as the products may not bring in any revenue for 3-5 years. Is there a hybrid payment option of a percentage stock options/salary that you're familiar with? Is there any information that you can suggest about co-founder remuneration? I want to limit my risk as much as possible while still paying the bills. And, at this point, there is no funding.
alinabutina's profile thumbnail
My pleasure @jodiweitz! Like any other business, there are always risks involved. You will not be able to purchase shares before year one while your equity is on a four-year vesting schedule - which means that it could take an additional three years to fully realize these benefits if things don't go as planned.If you're thinking about taking a job with an equity or salary trade-off, here are few questions to ask yourself:1. How much time am I willing to invest? 2. Do I think this "boat (startup)" will sink or not? 3. Is the alternative compensation package comparable in value (time*expertise vs current financial situation)? When it comes down to it, you'll need to make a well-researched decision when choosing between additional remuneration and equity for your new startup job know what can actually afford whether this is going to last at least a couple of years if any - as well as whether the trade-off offer from employer offers comparably valuable incentive. Also, maybe these articles can help:https://carta.com/blog/value-equity-offer-startup-equity-calculator/https://www.ycombinator.com/library/5x-how-to-split-equity-among-co-foundersGood luck!
jodiweitz's profile thumbnail
Many thanks for your insights and great information, @alinabutina! This will be so very helpful in negotiations as a potential co-founder!
AnnaLindbergCedar's profile thumbnail
Curious: What platforms do folks use to find co-founders? I'm asking for a male friend who is searching now and (obviously :) is not on Elpha.
katherinebernstein's profile thumbnail
You can also try YC's co-founder matching tool, which just launched publicly a few weeks ago! :) https://www.startupschool.org/cofounder-matching
AnnaLindbergCedar's profile thumbnail
thank you so much!
AnnaLindbergCedar's profile thumbnail
thank you! thank you!
LaniAssaf's profile thumbnail
Hi @AnnaLindbergCedar - we actually put together a resource on this here! Lots of ideas along with what has worked for other Elphas! :) https://elpha.com/resources/meeting-cofounders-what-to-look-for-and-the-10-best-places-to-find-them
AnnaLindbergCedar's profile thumbnail
This is awesome, thanks!
DigitalWoman's profile thumbnail
Really well articulated @alinabutina! That is exactly the advice I share with the entrepreneurs that I work with. If it's OK, I will share some of your examples with them.
alinabutina's profile thumbnail
Thank you so much @DigitalWoman! Yes, please it would be an honor!