The quality of the founding team is probably more correlated with the success of a startup than the idea the company is founded on. Yet, few entrepreneurs are as diligent in building their founding team as they are in even finding office space. Often, founding teams are assembled from a convenient and available group of friends or coworkers. That is, of course, when there is a team at all. Entrepreneurs frequently set out on their own, taking on the incredibly difficult task of building a startup without any else’s help or support.
Let’s face it, 9 out of 10 startups fail. Don’t you want to do everything possible to increase your odds of success? It makes sense to start off with a solid founding team, right?
With a great founding team, you increase your odds of getting funding, getting into an accelerator, recruiting people to help you out, solving problems more quickly and efficiently and balancing the load. So, why is the creation of a great founding team so often overlooked?
- Everyone is in a hurry to get started
- The makeup of the founding team just doesn’t seem that important
- It’s difficult
Typically, what happens in a startup is that someone has the flash of an idea and decides to start a company. Instead of taking the time to look at skill sets and personality matches, they choose people to join them who are most convenient - usually friends or co-workers. I often see new founders act impulsively as they rope in someone with specific skills to address an immediate need as the company is just starting out, or someone who other people suggest they need without really thinking about the future of the company or its long-term requirements.
As you can imagine, these situations rarely turn out well. Occasionally, you might get lucky, but most often, they lead to the most difficult problems you can have in a startup. Issues with the founding team are divisive, unproductive, and are an external red flag for everyone involved in or with the company - especially investors.
Fortunately, most of these problems are avoidable if you understand the importance of the team aspect of the founders and you take the time to think through and be diligent about the process. Let’s start by looking at the most important criteria in choosing a co-founder - personal alignment.
Choosing the right co-founders to build your startup is as much about finding the right personality match as it is about talents and skill sets. The relationship between co-founders is one of the special relationships you’ll have in your life. It can (and likely will) also be one of the most difficult. It’s a high stress relationship. The intense pressure of starting a new venture and then building momentum takes a toll on these relationships. Unfortunately, many, if not most, don’t survive.
At the core of the co-founder relationship, there must be mutual trust and respect among all parties. What level of trust are we talking about here? Virtually the highest level of trust. One in which you can share your dreams and aspirations without fear. Yeah, you-have-my-back-in-a-foxhole kind of trust.
When you trust one another, then you can safely disagree and have open conversations. You’ll need this as you debate the best course of action, timing, and a million other details that go into creating and launching a product and the actual company.
Truthfully, few relationships can withstand this level of intensity and commitment. As you look at possible co-founders, ask yourself if you’ll be able to disagree with them without taking things personally. Ask yourself if you can put aside yesterday’s argument to move it forward today. Ask yourself if you can put aside your anger or frustration with a co-founder to appear united in front of the startup team, your early core team, including founders, employees, and your extended advisors and board members.
Only after you conclude that you can establish and thrive in such a difficult relationship, you’ll want to carefully assess your ability and those of your co-founders to play the key roles that founders need to play
Filling Key Roles
Ideally, your co-founding team should fill in your weaknesses or the areas you’re not interested in performing so that, together, you create a solid foundation to grow the company. For example, perhaps you don’t love to be in front of people evangelizing the vision of the business. It doesn’t have to be you. It can be another member of the founding team. Or, say, for example, you aren’t a great manager of people, but you’re an outstanding individual contributor. The structure of the founding team should account for that. All the roles of the founding team need to be filled, but it’s not required that each of the founders can do all of them.
As part of this, you need to be brutally honest about your strengths and weaknesses. You can’t fill in your holes and augment your skillset if you don’t admit where you have weaknesses. We all have them. Your goal should be to find co-founders who are good at the things you are not - technically, procedurally or emotionally.
As you can tell, finding a co-founder for your startup is one of the most important decisions you’ll make when it comes to your startup. This is one of the few decisions that can truly make or break your new company; that’s how important it is. Finding the right co-founders can accelerate your startup enormously. You’ll figure out vexing problems quicker, you’ll get more work done, and you’ll feed off the energy and alignment that you each have.
My advice to you when trying to build your founding team is to slow down and choose wisely. You can avoid having to navigate through an unfortunate situation where you chose the wrong co-founder quickly just by stepping back, casting a large net, and taking your time to thoughtfully consider (i) what you and the company need in a co-founder, (ii) whether you want and can closely work with that person on a daily basis, and even (iii)where that person is located geographically (even if working virtually most of the time, location still has an impact).
Finding the People
So, how do you find the perfect people to fill out your team? When looking for co-founders, start with current or previous co-workers and colleagues. Talk to mentors. Ask your friends. Consider the industry your company will be engaged in and attend meetup groups (events where people with common interests get together and share ideas) in your area, or check out conventions and conferences - even virtual ones. Join industry associations, use professional social media networks such as LinkedIn or AngelList, and seek out accelerators (although these groups have a different mission, you can still find alignment with people of similar minds). In our experience, the best co-founders have been colleagues of colleagues. Someone in your network likely knows the right person.
In the end, it comes down to activating your network and telling people who you know and trust that you’re looking to build your founding team. Share your idea and tell people about the strengths you’re looking for in a co-founder and the needs of the company. If you’ve made an honest assessment of your weaknesses, and you know what gaps need to be filled for the company to succeed, then this list should come easily to you. When you’re armed with a detailed description of your ideal co-founders, then this significantly drives your ability to activate your network for help. You’ll get better leads on potential co-founders when you can say to people, “I have this idea for a company. Of the four things I need to optimize for success, I possess two of the capabilities. Now, I’m looking for one or two others who can bring in these other capabilities to round out my team.”
If you plan to bring on a co-founder you don’t know, then consider working with them briefly first before you decide to go into business together. You’ll want to do this carefully due to intellectual property and legal issues - you don’t want to create a competitor right out of the gate- but it can be a great way to test the waters before jumping into a co-founder relationship without enough data. If you decide to test the relationship before committing, then put together the appropriate paperwork to protect yourself and your potential co-founder. At a minimum, set up a contractor relationship where it’s clear that the work being done is owned by the company, and in exchange, there will be some compensation. That compensation can be in cash or even stock in the company. If you decide to pursue this path, you should quickly talk to a lawyer to create a legal agreement describing your relationship.
The founding team of the company is the most important, most leveraged team in your startup, especially at the beginning. It’s not only critical to how you build the company, but has the biggest impact on shifting the odds of success in the startup’s favor. It’s also one of the primary metrics that are used to judge the company externally. Strong teams demonstrate a lot about the potential strength of a business. Weak teams do too. It’s always worth it to take a step back and build the best team you possibly can. It’s the best way to start building a successful company.
More on this topic, and many other perspectives on building successful startups can be found in my book, The Startup Playbook. Super easy to read and chock full of startup wisdom. Written by founders for founders. Check it out.