This is the subject of an article I wrote published on June 20, 2016 in CEO Refresher webzine. http://www.refresher.com/
If you have an idea for a product or service you may need a co-founder for your new company. This article is about – finding that co-founder, finding the right co-founder, allocating equity in the company, and then putting in place key protections for the founders and the company you are building.
Below are some further comments on this subject, from another piece I wrote, that compliment and further introduce my new article (link to my article is below) –
Are you a hacker?
Or are you a hustler?
Success in technology based startups requires both. Some of the most successful founders teams are two-person teams (Wos and Jobs among them) where one founder (the hacker) is more technical, but just that, he or she is a problem solver who can make the technology work to meet the real needs of customers, do it one time and do it efficiently. The other founder (the hustler) is more business oriented, but not just a salesman but a team builder who can orchestrate marketing, sales and operations. Sometimes teams have three, four or even more founders, but that can get unwieldy and sometimes indecisive, often gravitating toward two leaders in the group. Most common are single founders and they too can be quite successful (Zuckerberg for example), but it’s important that the single founder quickly build a core team to fill in the gaps for things that aren’t his strengths.
How do you find co-founders?
How do you recruit a core team?
You guessed it – networking. That includes trade groups like ENET but also your own personal network. There are also groups that provide matching making for co-founders. But you do want to be careful. Joining with a co-founder is like going into a marriage. You could spend years and go through much of your money, and you need to both trust and respect your co-founder to share that with you. So, it’s best not to just jump in bed but rather get to know your co-founder for months before or perhaps prior work experience.
How do you allocate equity among your founders and core team?
Even split… or based on past contribution… or based on what each will add to the pie. How to do it?
Even then you still want to protect yourself. Things change. For some, family becomes more important. For others they can’t continue to live on ramen.
It’s critical to have both core team but also founder’s vesting – so that if someone leaves you can get all or most of their stock back. There are other issues too in protecting yourself – relations with past employers, ownership of IP, keeping trade secrets. You also want to manage expectations of founders, core team as well as investors. You need a plan. It doesn’t have to be a 50-page business plan, but some drawn up plan and targets you hope to achieve. It will change often and being agile is an important trait of a successful team, but you want to be honest with everyone and keep all on the same page and engaged in the decision making including when major course corrections are needed.
Those are some of the issues of Co-Founders and Core Team, My article discusses still more. To read my full June 20, 2016 article, go to LINK: http://www.refresher.com/co-founders-and-the-core-team/
If you are a founder of a startup company and face any one or more of these issues, I hope my article will be of help. Don’t hesitate to contact me if you have questions or would like to arrange a consultation.