Welcome to a new BetaKit weekly series designed to help startups and entrepreneurs. Each week, investors Roger Chabra and Katherine Hague tackle the tough questions facing founders today. Have a question you would like answered? Tweet them with the #askaninvestor hashtag, or email them here.
As we discussed in last week’s post, you don’t always need a co-founder to succeed. That said, many founding teams can benefit from adding a co-founder — whether it’s a solo founder adding their first co-founder or a company adding a co-founder to fill a gap in their founding team.
Generally speaking, a startup needs both builders (technical founders) and hustlers (non-technical founders). It needs people to create the product, and people to go out and sell it. Some technical founders can get away without adding a hustler for some time, focusing their initial efforts on building a killer product. However, more often than not a great product without a proven market is simply not enough to sustain a company or attract investment.
To bridge the gap between product and customer, some technical founders take on the role of the hustler – particularly on teams with multiple technical founders. Companies where none of the technical founders can make this leap find themselves either recruiting the hustler as an employee (if the capital is available) or bringing on a non-technical founding team member.
Adding a co-founder changes the DNA of a company, and you need to make sure that you are excited about the changes adding this new person will bring.
Non-technical founders generally find it harder to fill the gap of a technical founder themselves. While I’ve seen some incredible examples of non-technical founders teaching themselves the skills they need to build their own product, it’s certainly the exception to the rule. Without the technical skill to build their product themselves, and without the money to outsource the initial development, non-technical founders are usually left with no other option than to bring on a technical partner. And I’ll be honest, it’s usually not an easy task. In fact, “How do I find a technical co-founder?” is one of the most common questions I get asked.
While the rest of this post is mostly tailored toward non-technical founders looking for technical co-founders, much of it is also applicable to a technical person looking to bring on a non-technical partner. We’ll cover where to look for a co-founder, what to look for in a potential partner, how to make yourself attractive to a potential co-founder, and a few things to do before you make it official.
What to look for in a partner
You need someone that is comfortable working in uncertain circumstances. A startup is no place for a big company exec that is looking for predictable work, big budgets, and a steady, predictable paycheck.
You need someone with shared values and a shared vision for the future of the company and culture. Adding a co-founder changes the DNA of a company, and you need to make sure that you are excited about the changes adding this new person will bring.
You need to find someone that has a genuine passion for the customer problem you are solving. That doesn’t mean that they have to be the customer. But they do have to care about the problem and want to see it solved.
You need someone whose skills complement your own and fill some gap in the company. Adding someone with a skillset that is redundant or not of core importance to your company’s success is likely a poor use of the company’s equity.
Finally, you need to find someone that is willing to take on the level of commitment and responsibility that a founder has. Co-founders are not just expected to come into the office, work on a specific task, and go home at the end of the day. They’re expected to help shape the vision for the product. To live and breathe the company. To be passionate about the customer problem. To make the company’s worries their own. The initial glamour of startup life fades quickly. When looking for a co-founder you need to find someone that has the persistence and stamina to make it through the rollercoaster.
Where to look for a co-founder
There are many ways to connect with a possible co-founder. But don’t expect a match to be made overnight. Finding a co-founder is a lot like dating. You are going to have to build many relationships, investing time in each of them, in order to find the perfect match.
Much like marriages, many co-founder pairings are forged from pre-existing relationships. Colleagues, roommates, classmates, friends. Going through your rolodex of pre-existing contacts is a great place to start on your co-founder hunt.
If your network is short on possible technical leads, joining a coding bootcamp is a great way to build your network. At a coding bootcamp you can up your own skills, gain credibility in the development community, and your mentors, teachers, and classmates in the program could all be potential partners. While I still certainly consider myself non-technical, I’ve taken a number of technical courses over the years – including a three-month boot camp at HackerYou. I took the course to help me build my network and be a better business partner and leader.
Non-technical founders seeking technical co-founders have a really bad reputation. They are largely viewed as people that can add little value.
The next best thing to pre-existing contacts would be referrals. Tell your extended network that you are looking to find a partner. Periodically, I receive emails when companies are either looking to fill co-founder roles or when people are looking to join a startup. As recently as a couple of days ago, I got an email from a friend saying they had a former employee looking for a role as a technical co-founder (if you know someone that’s looking — shoot me an email!). Having your network spread the word could result in unexpected opportunities.
You can also find possible co-founders through founder dating websites, through programs like Next Canada, or by attending networking events or hackathons. If you decide to attend a meetup, don’t just drop into an event once and wonder why you couldn’t find a co-founder on your first try. Finding a co-founder is about building relationships. Make yourself a known commodity in the community. Sign up for your city’s Startup Digest and start attending lots of local events. Become a regular. If your city is low on networking opportunities, you may want to consider moving to a different geography with a larger startup community to increase your likelihood of finding a co-founder.
Cultivating relationships with potential co-founders can also be done through online engagement. Actively participate in discussion on sites like Hacker News and Stack Overflow, make insightful comments on the blog posts of people admire, engage with people on social media. By cultivating these online relationships you build a reputation and grow your network.
How to make yourself attractive to a potential co-founder
Even if you are putting the word out in all the right places, you need to make sure you’re doing it in the right way so as to be attractive to a potential co-founder. Non-technical founders seeking technical co-founders have a really bad reputation. They are largely viewed as people that can add little value, relying on the development community to come in and do their dirty work for them, for no pay and often little to no equity.
The last thing you want to do is go into a developer meetup, stand up at the microphone, declare yourself to be an MBA with an idea, looking for someone to build it for you in exchange for equity. It will not go over well. Adding phrases like “I’ll tell you more if you sign an NDA,” or “You’ll get 10 percent,” or throwing in arbitrary coding languages you read about online will only make it worse. Someone that goes into an event and makes that pitch, or who creates a similar job post or recruitment email is making a lot of classic mistakes.
As a non-technical person, you need to prove your value to your potential co-founder. Unless you have an amazing track record for building successful startups in a non-technical role, you’re an unknown commodity. There is absolutely no reason that you should, as a non-technical co-founder, have nothing but an idea. Do not overestimate the value of your idea. Ideas are a dime a dozen. Execution is what matters, and execution is about so much more than code. Earn a co-founder by proving your value and ability to build a company.
There are tonnes of things that a startup needs that aren’t technical that you do to prove your value before seeking a technical co-founder. Naming the company and designing a brand. Designing mockups or wireframes of what you imagine the product will be. Conducting customer development research. Building a mailing list or online following. Getting letters of intent from prospective clients. Taking pre-orders. Building pitch decks. Or even building a rough MVP by learning some basic technical skills.
When you start talking to prospective co-founders, don’t dive right into a specific skillset that you need or how much you intend to compensate them. It shows that you view finding a co-founder as transactional. Being a co-founder is so much more than just lending a skill to a company. The way to get someone excited about joining you on this journey is not with a job description; it’s by building a relationship over time.
The non-technical person that puts time into building meaningful relationships in the development community, who has learnt the technical skills to build a demo or MVP, who has built a brand, signed customers, and who sets out to find not just a developer but a true partner is the one that will get people’s attention.
Before you jump in
Remember that bringing on a co-founder is not a decision to be taken lightly. Many business partnerships are forged after years of knowing and working with someone. If yours is formed on a blind date or after just a few casual meetings, you need to take the time to work together and get to know each other before jumping right in. Walk before you run, so to speak.
Start by asking each other all of the hard, messy questions that all too often get avoided in early conversations with potential co-founders. Do you know what each co-founder’s role will be? Do you agree on who will be CEO? What will the composition of the board be? How much equity will you each have? How long do you each envision working on the company? How much will each of you get paid? Would you be willing to or want to relocate? Do you want to raise money from VCs? Would you want to sell the company? You and your co-founders need to be aligned on the answers to these questions. Your ability to get through these tough questions together will be a good test of your partnership.
Beyond just making sure you’re on the same page, you need to make sure you actually work well together. Before you dive in, run multiple strategy and work sessions together or decide on a small test project related to the business to work on together to get started. Don’t feel bad about asking your prospective co-founder to work with you a bit. It should be in everyone’s interest that you get to know each other’s work styles and personalities before you take the leap. My co-founder in ShopLocket started on a one-month contract and the relationship grew into a partnership (Note: if you take the same approach I did — make sure the prospective co-founder signs a contract that includes an IP assignment agreement before you start working together).
As hard and as important as finding a co-founder can be, it’s just one of many, many challenges you’ll face as an entrepreneur.
Once you’ve decided to make your partnership official, be sure to get everything that you discussed regarding equity, compensation, roles, and company milestones in writing. While you shouldn’t be afraid to give a co-founder a meaningful equity stake – something that reflects the value they bring to the partnership — just remember to protect yourself and the company. As we discussed in our post on firing your co-founder, vesting agreements and paperwork documenting the partnership are a must!
My final word on this topic would be that as hard and as important as finding a co-founder can be, it’s just one of many, many challenges you’ll face as an entrepreneur. While I really do hope that this post helps get you thinking about ways to approach the problem, you’re the one that ultimately needs to solve it. It’s your first big test as an entrepreneur. As Gregg Fairbrothers, mentor of Flightcaster and 42Floors’founder Jason Freedman once said, the good entrepreneurs seem to figure it out.
Katherine’s post here is pure gold.
From an early stage investor’s perspective, the makeup and potential of a founding team is the central component in deciding whether to invest or not. As Katherine outlines, proceed with extreme diligence and caution when forming your early team.
If you are a pre-product or pre-revenue company looking to raise an early round, your VC or lead investor will want to see evidence of past success together from the founders to get them excited enough to invest.
The mantra of investors here is “winning begets winning.” The more time and success you have had together, the better. This may be in the form of previous work stints at another startup company, ideally as founders, but perhaps also as key employees of a larger startup that was successful. People risk is the number one risk in an early stage startup. Evidence of past success is the best way to mitigate this risk. Choose founders who you have worked with together in the past, and have had measurable success with.
If you are post-product and have revenue traction, collective success at a prior company together is still important, and will help your fundraising efforts tremendously, but it isn’t as important as when you were pre-product. The more traction you have, the more you can demonstrate that the founding team is gelling together and producing tangible value. So, if you are choosing to work with someone new that you have never worked with before, recognize that you will need to demonstrate a history of success together quickly in order to gain interest from investors. Put your heads down and build value. If it’s working, pretty soon you will be doing great things together and will be finishing each other’s sentences. This will set you up well for your business and fundraising prospects.
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