If you have a great idea for a startup then you better make sure you’re not alone. The best companies usually have at least 2 co-founders, in fact many VCs will expect it.
Co-founding does come with its own challenges over solo founding. When you begin a co-founder relationship it’s important to clear the air, be open and transparent and set everything out on the table. Doing this is almost always the foundation of a strong partnership.
It’s all about expectation management, if things don’t come as a surprise to people and they know to expect it then everything usually pans out.
Having seen a few dysfunctional co-founder relationships in our community, I’ve summarised what you can do to avoid the pain:
- Set role specialisations up front – often founders clash over who does what. We all like to own a role or specialisation and we need our space to innovate and be creative. Try and write up all the roles on a whiteboard before you start, then in private pick what you want and what you think they want. Then compare notes, settle on what you agree with and debate where there is overlap.
- Sign A Founder Agreement – these agreements outline a ton of legal clauses and a good lawyer can draw one up (you can get templates as well). What if one of you dies, quits or got bankrupt? These are the hard questions that need to be agreed upon early days.
- Agree on time commitments – in the pre-launch phase how much time will you commit to the project? Is it every night until 3AM, weekends and no holidays or something less? Lots of people just pause everything except their current employment. You need to agree on this as well as turnaround times.
- Agree on an exit plan – I have nothing against lifestyle businesses, those that you don’t plan on selling. I just don’t think I’m ready for one at this point in my life. I want something I can work on for 5 years then sell to the highest bidder. This aligns with what venture investors want as well. Not everyone is aligned to selling their pride and joy. Make sure you both agree on an exit plan.
- Agree when to wind it up – this one hurts to talk about. No one plans to fail and everyone thinks they have the next big thing. Don’t change that mindset, you have to drink your own Kool Aid. Just speak about when to pull the pin. Usually one founder wants to and the other does not. A lot of people say if we are not generating $x by this date or experiencing less than x% growth we stop.
It’s never easy, but when you have the hard conversations and bear all as it will serve you well in the long run. Good luck!
Try our Co-founder Agreement Generator, it will give you a basic agreement that you could work on.