Jan 22, 2021 | Looking for a Co-founder? Read This Before You Make Your Choice
On the Typical Way of Running a Startup
When I started building my company in 2019, I was interested in learning the general principles behind business development. How to build a functional company? Especially when you don’t have any roadmap? And if you don’t know whether it’s going to scale or not? I should start from looking for a co-founder, right?
The issue is that we usually learn about business development from big names such as Bill Gates, Richard Branson, Mark Cuban, or Kevin O’Leary. These famous people built billion-dollar ventures operating due to the classic startup company development scheme. They have since become role models and now write bestselling books and give lectures on how to be successful in business.
Due to this classic scheme, two or more enthusiasts come together, work out a new business idea, share the responsibilities (usually, distributing the roles of the “hipster,” “hacker,” and “hustler” among them). And then, they put the concept to life using funds from “3 Fs” (namely, “friends, family, fools”). Subsequently, they seek funding from angel investors in the seed phase, before going for round A, round B… This is the typical development trajectory followed by virtually every successful startup – or at least, that’s what we think.
But, is this assumption even correct? What if we thought out of the box? What if we questioned the axiom that a looking for a co-founder is essential for your company to survive? Perhaps, the first question we should ask ourselves is not “How to find a co-founder” but rather, “Do I need a co-founder”?
Let’s first talk about some pros and cons of looking for a co-founder.
1. Legal Reasons.
When a solopreneur makes a loss, the responsibility and financial consequences are put on their shoulders. On the contrary, a limited company led by two or more co-founders is accountable as a legal entity. In other words, in a startup, the company assets and the founders’ private assets are independent of each other, while in a sole proprietorship they are not. This means that a startup is a form of the legal protection of your own assets.
These losses may come from taking loans without the ability to pay back. It is, arguably, your fault to some extent. However, the losses also result from events fully independent from you. For instance, they can originate from malicious actions of other companies and individuals who abuse your intellectual property or file lawsuits to wipe you out of the market. It doesn’t happen all that often, but it is not a possibility you should completely rule out.
For this reason, many budding entrepreneurs naturally think about a company as a startup. They search for inner peace and aim to make sure that their personal assets are not at risk.
2. Division of Responsibilities.
Perhaps, you are a polymath with many talents, from technical aptitude to salesmanship. Even if it is the case, the range of actions you need to take to put the company on the right track is so broad, and the number of calories to burn so high, that almost no one can do it in isolation. For this reason, it’s good to have at least one more person around who can take a part of the burden on their own shoulders.
A co-founder is not only a person who works on behalf of the company but also a trustee: someone who has personal interest in making the company flourish, and who can brainstorm ideas any time. Your family and friends might not understand your point of view, as the quality of your life will be much lower than it appears to be on social media, but your co-founder will.
The biggest downside is that, creating a company with another person is like marriage. And, in case you grow in different directions and separate from your co-founder(s) in the process, the consequences might be even more severe than in the case of a regular divorce. Namely, in divorce, you separate after — hopefully — years of quality time and thousands of memories that will stay with you for a lifetime. It is an asset no one can take away from you.
However, if you say, “Goodbye” to your co-founder, you separate after months or years of a grind. You went through the dark times when you were working around the clock hand in hand hoping that one day, the good times would come. And in the end, the good times never came, while now, you need to cut your baby in half or give away the whole custody to only one of you.
2. Shared Decision-Making.
Once you get a co-founder on board, you won’t ever be truly independent. Even if you have a majority share, you won’t make independent strategic decisions. All the major decisions in the company happen by consensus (the same concerns investors, by the way). If you are the type of person who enjoys making decisions by consensus, it works pretty well. But if you are a strong individuality, a type of visionary, and a risk-taker, it might be extremely frustrating if your co-founder is more reserved than you. Or, the other way around: imagine that you are tired of developing your company. So, you want to exit, selling the company for a few million to a bigger player and enjoying early retirement. However, your co-founder disagrees and pushes you to stay on the project. And then, a few years later, the company flops. Imagine how frustrating that must be!
One often overlooked aspect of finding a co-founder is time. Namely, the more decisional people around you, the more time you need to spend on bare communication. If you make decisions alone, you not only gain decision power but also save lots of time. You don’t have the pressure to consult your every move with your co-founders. It can take a huge chunk of every working day! I often hear from startup co-founders that they spend the whole lunch break, or the whole morning (if they live together) on brainstorming and talking about the company every single day.
The day only has 24 hours, so what will eventually be a better strategy to reach your goals? Spending the only free time you have during the day on brainstorming with your co-founders? Or, spending the same time in the spa or on watching a movie, recharging, and reconnecting with your intuitive mind? And then, making better decisions on your own? In many instances, the second strategy would work better.
On the wrong reasons to find a co-founder
In principle, there are two biggest sins while looking for a co-founder.
1. Do You Need a Co-founder? Or, a Cheerleader?
Startup founders often invite friends or family members on board because deep inside, they don’t need a business partner — they need a cheerleader. Someone whom they like, whom they trust, and who comfort them and tell them every day that they are doing great. So, perhaps, it’s good to ask yourself: what types of competencies do I need to match my competencies? Is this the right person? Do I already feel good enough to pull the project off? — Since if you don’t, even a cheerleader won’t help in the long run.
Mind also that you won’t ever be alone when running a company. The family will still be there for you. You will chat with your clients, employees, subcontractors — and they will also share their ideas with you. You will chat and discuss on social media. If loneliness is what you fear from, the co-founder is not necessary to solve this problem — as it will solve itself.
2. Do You Know How to Put Your Idea to Life, and You Are Counting on Someone Else to Rescue Your Project?
My observation is that fresh business developers often have high-level ideas — which might hold water as they address some real problem — but they don’t have any idea of how to pull the project off. Why type of hardware or software should be built for this purpose? How to find the target group of clients? So, they find someone to save the project. In the end, a few people come together to build the project but none of them has a helicopter view of the project — and in the end, the project can’t be completed due to the fact that a few pieces of a puzzle don’t fit together.
It’s just not how successful projects are created. Steve Jobs didn’t ask Steve Wozniak to build the first prototype of Macintosh because he had no idea if it is even possible — but rather, because he knew that Steve Wozniak is a very talented engineer who will do it best. When Steve Jobs started the project, he had all the pieces in the right places on his mind already.
Besides, unlike 20 years ago, today, many digital solutions are automatized. You can build a website, an online store, a simple application, and a CRM system without any coding. Many businesses start with a technical co-founder just because the author of the concept (or, the “hipster” on the project) doesn’t know enough about the available solutions to tell that they don’t need any technical co-founder in fact. As I mentioned in the post “How (not) to build a business,” many business developers are detached from technology. They tend to think about high-level concepts, hoping that someone else will take the whole implementation on their shoulders.
Are There Any Successful Solopreneurs out There?
Lastly, if we don’t hear about successful solopreneurs as often, does this mean that there aren’t any? Nope! The list of success stories is very long, including, e.g., Sara Blakely, a self-made billionaire and the creator of Spanx, and Pierre Omidyar, the creator of eBay. Not mentioning the crowd of less known solopreneurs who might not be billionaires, but managed to achieve wealth and have a net worth well exceeding a million dollars. So, perhaps, looking for a co-founder is not as essential as the mainstream school of entrepreneurship dictates.
Mind that eBay is an IT company, yet its creator was able to pull off the project alone. Therefore, there is a choice — and it’s good to spend a while deliberating whether you need a co-founder before you give away part of your baby to someone else.
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