Estimated Time

• Reading: ~9 minutes
• Video: ~62 minutes
• Activities: to be completed prior to the next week

Insights

• Starting a company is hard, and it can be even harder to do it alone
• There are several advantages to having a co-founder
• Do your diligence on what you need in a co-founder to take your company to the next level before hiring one

• Why do you need a co-founder?
• As a single individual, it is rare that you will have all the skills and experience required to run a startup by yourself
• There are a lot of components and moving parts when starting a company — spreading out the work between founders is helpful
• From analyzing the need for your solution to developing the product
• From identifying customers, marketing to them, and ultimately selling your solution
• From bringing the vision to life to growing a team and finding investors
• All of these are often happening simultaneously at a startup and you need to be on top of them all
• It is totally normal that you do not have all of these skills
• Finding a co-founder or two that balances this skill gap can improve the chance of success
• There are lots of decisions to be made every day
• Product design and features
• Weighing vision and customer feedback
• Hiring full-time or part-time help
• Fundraising
• Or simply being able to have a conversation about day to day life as a startup founder
• Having another founder to confirm, validate, or challenge those choices is another benefit
• It can be lonely as a startup founder
• It is nice to be able to share the small wins with another person
• It helps to have someone who will share the negative experiences with you
• Few will understand what you are going through
• Having a co-founder you can have honest discussions with regularly can play a big role in your mental health through the process
• It is also worth noting that solo founders really do have a more challenging time fundraising.
• Investors are nervous about placing a bet on a single founder
• It is a riskier bet for them than investing in a company with two or three co-founders
• If you quit they lose their money — with a co-founder if you quit there is still a chance the company moves forward
• When you are fundraising it is a full-time job
• You can not neglect the other requirements of your startup
• You still need to be building product, marketing, selling, and delighting customers
• A second or third set of hands can make this process slightly more manageable
• How do you find a co-founder?
• Co-founders should have a complementary skill set to your own
• One is a UI/UX wizard that can build a great product and one is a spreadsheet guru that can build a go-to-market roadmap, handle fundraising, and recruit a team
• One is a builder (a developer or designer) and one is a visionary (a big picture type who can recruit, sell, and market your product)
• Think about Apple with Steve Wozniak and Steve Jobs
• Jason has a three-step process to recruit a co-founder
• 1. Identify what skills you have and the skills you don’t have. Then identify what your startup needs.
• 2. Find people you know with those skills that you are lacking.
• 3. Reach out to those people, have coffee with them, and let them know how enormous you think this opportunity is and that you can’t do it without them.
• Ask them for their feedback on the idea and tell them they would be crazy not to join you

• So how do you convince talent to join you?
• If you are early you probably can't offer them a huge salary
• You need to find the right type of person who is okay taking the risk with you
• Maybe they have a lot of money from a previous exit
• Or they are at a large enterprise and want to try something new
• You can offer equity for the right person
• No matter the percent it is a great idea to vest it over four years (ideal) or two years (not uncommon for really in-demand hires) with a one year cliff
• One year cliff means they won't get any equity until they have been with the company for one full year
• This protects you from giving up a part of your company and having them bail
• Mark Suster's talks about this in "Both Sides of the Table" from a 2011 blog The Co-Founder Mythology

Here’s the reality: most people don’t want to start a business. They don’t have an idea. They don’t want to come up with one from scratch. They don’t want the risk of the first 3–6 months with no salary and having to walk around with a tin cup for funding. So most people join companies. That’s OK. It’s the more sane thing to do. Startups have high failure rates. Most senior employees who join are given 2% if they join early. Maybe they get up to 10% if they joined really early and were senior. Who gets 30%? Nobody. That’s who. So trust me when I tell you that you can hire incredibly talented people for 30% of your company. Or 20%. Let’s be honest — even 10%. Hire your co-founder. Give them a large sum of equity. 20%. 30%. Even 40%. Vested over 4 years. If you ever fall out of love you have a pre-nuptial agreement.

• You want to be careful with giving away your equity, but Suster makes a great point — there are ways to find great talent if you are willing to sacrifice
• How much you are willing to sacrifice is up to you, and something you should not take lightly
• If you can't find a co-founder by pitching your idea, talking to those within your network (and your network's network), and offering talented people generous equity this is a red flag to Jason
• In other words, if you can't sell a single co-founder on your vision and the opportunity to change the world while becoming rich... d
• Do you have the ability to tell your story and grow a business with customers?
• Why are technical co-founders so coveted?
• Investors are obsessed with technical founders and tend to believe that they're more valuable because they bring the product and vision to life
• It is expensive and slow to build without them
• If you are outsourcing the product development, then it is slower to pivot and can get expensive quickly
• A highly skilled developer can de-risk your startup in the early days
• With a technical team, you can iterate quickly, improve the product in real-time, and stay ahead of the competition
• If you're having trouble finding and hiring developers as a non-technical founding team, you'll have to utilize no code (doable) or a dev shop (not reliable or sustainable)
• However, if you have a technical founder on the team, they can carry the load while also helping scout and source job candidates, since they likely have a network of developers
• Technical co-founders often have a better understanding of who to hire on the development side to hit the goals you have established — they will better understand what it takes
• You need to demonstrate that you have a ton of value if you’re not a technical founder
• If you aren't building the product - what do you do?
• Can you sell the product?
• Can you sell your vision and fundraise?
• Can you recruit and hire talent?
• A non-technical founder needs to be good at raising money, getting press, hiring world-class people, designing the product, sales, partnerships, or other valuable skills.
• The emergence of no-code and low-code has impacted this to some degree
• Non-technical or very lightly-technical founders can now get to a Minimum Viable Product (MVP) by using tools like Bubble, Webflow, or other no-code platforms
• Validating your idea, and acquiring customers without taking on funding is a positive signal to investors and no-code is a great way to do this
• Even technical founders in some cases are leveraging no-code because of the speed to market that it provides
• A lot of the no-code platforms can handle scaling to a significant volume
• LAUNCH recently invested in a company built on no-code
• Mary Fox built her career coaching startup Marlow entirely on Bubble
• She didn't have the budget to pay someone technical to build Marlow and didn't want to give up half the company to a technical co-founder when she felt she could deliver on her vision
• There are a few instances when you don't need a co-founder
• When you've founded a startup or two before, and had a successful exit, you might not need a co-founder
• You have the money to fund it yourself
• Or you can raise a round based on credibility
• You can find a supporting team based on your past success

I don’t think it’s a good idea to have a co-founder unless you absolutely love working with that person and it’s just what you want to do. - Jason, 2014

• There is an alternative to finding a Co-Founder
• You can establish a founding team
• Maybe you already have a working product
• You have some paying customers
• You have product-market fit
• A lot of the heavy lifting is done to get the rocket ship launched
• But you want or need to bring on some support
• You can create a founding team
• A group of individuals that come on as early hires but are not co-founders
• You could take a 10-15% equity pool and split it amongst the 3, 4, 5 founding team members you bring on
• With any hire, it is a good idea to vest it over four years with a one year cliff
• If you have a solid product you should be able to hire a senior level developer for a reasonable salary and 5%
• You can then fill in the rest of the team with 1-2% each
• The founding team gives you some leverage to find a fit that works for everyone and the vesting allows you to try it out without sacrificing your cap table
• You stay as the solo founder but have surrounded yourself with a team to alleviate some of the reasons you'd want a co-founder
• Regardless of the route you go, you need to identify your top skills
• Be honest with yourself about what skills you have and what skills you can learn
• How far can these skills take you and your company?
• Can you learn the skills you need quickly?
• Is hiring support to fill the gap worth it?
• Would it be better to outsource some of the tasks?
• Do you need full-time team members?
• What skills do you need?
• How soon do you need them? Do you need them now?
• What skills will you need in 6 months? 18 months?
• Do you have the runway to get you there?
• As we've discussed before time and resources are limited at a startup
• The sooner you can identify what gaps exist and if you're the person to fill them the better

• It might not be fun to think about, but something that is just as important as finding a co-founder is to be direct if it isn't a fit
• Technical co-founders are too expensive to hold onto if they aren't providing immense value
• If it’s not working out you need to cut your losses and move on
• When firing anyone you should always do it with respect
• Keeping in mind that no one sets out to fail
• And you were the one who brought them on in the first place when it turns out that is wasn't a fit
• It is vital to keep your communications transparent with your team, especially your co-founders
• Take the co-founder relationship dead serious and invest in it, if that’s the path you take
• Keep in mind it may be more optimal to recruit a founding team
• No matter the path enjoy the journey
• Take time to bond with your team, especially with your co-founder(s)

Additional Resources

• The Founder Dating Playbook
• Questions You Need To Ask Your Potential Startup Co-Founder
• Jason's view on needing a co-founder in 2014
• Ask Jason: Best way to find a technical co-founder
• YC's platform for finding a co-founder
• Ten Tips for Finding Your Co-Founder Match (and Do I even need a Co-Founder?)

Activities

• How do they provide value to your startup?
• How far can these skills take you?

• To reach goals in 6 months? in 18 months?
• Can you learn these skills?
• Is the gap too large that you need to find a co-founder?