How to Pick the Right Co-Founder

Microsoft-Founders-Bill-G-007Gates + Allen. Jobs + Wozniak. Page + Brin. Clark + Andreessen. Filo + Yang. Co-founders of legendary tech companies that have shaped our world. So, what makes a good co-founding team? When does it come together? Should you even have a co-founder?

I’ve been a founder, co-founder, founding partner, and held other positions while succeeding and failing at a few ideas, watching friends do the same, and having the good fortune of meeting and mentoring a lot of aspiring entrepreneurs. So, is some humble advice with the battle scars attached.

Go it Alone or Team Up?

The “two guys in a garage” mentality prevails in the start-up world; the idea that there’s usually two co-founders that give life to a company. I happen to agree that at some point early in a company’s life this happens but not necessarily always at the beginning. In some cases, although I would argue rarely, being the only founder might work. The glaring example is Jeff Bezos being the sole founder of Amazon. There are a few factors that determine what makes sense:

  • Where did the idea come from? If you truly came up with the business idea on your own (and be honest) then you could run with it. If, as in many cases, it was something you thought of together with someone else and both decide to take the entrepreneurial plunge together then  you’ve got a partner in crime.
  • Are you both jumping in? Just because you batted around an idea doesn’t mean you’re stuck with the other person. You both have to decide to start the company. If only one person decides to run with it then the other person isn’t a co-founder, they helped with the idea but its going for it and executing that matters. There is no maybe, either you’re in or out from the start. No fence-sitting then claiming to have a stake later.
  • What are your weaknesses? What are you good at and where do you need help? Is your weakness so glaring that you need someone who can compliment you asap or the idea isn’t going anywhere? If you’re 100% business and think JavaScript is what they call it when you write with ink and a feather tipped pen then you need a co-founder.

Co-Founders Are Not Always Equal

It’s not the case that the term “co-founder” needs to apply to people who conceived the idea or started the company together. Sometimes, someone can earn the co-founder tag. I’ve done this at my previous company where someone worked so hard and was so integral to success that they de-facto were included in almost all decisions and contributed as much as I did. They deserved to be a co-founder and so I made it happen. Earlier in life I started a company where I had a co-founder and were equal partners right from the start. It taught me what can happen when the hype fades and the struggle continues but not everyone is in for the fight. So, I see two options:

  • Be the Founder: start your company and add people who add value where you can’t. As you move forward be fair and award equity and maybe even the “co-founder” or “partner” tag to the person that is just as integral as you are.
  • Co-Founder from the start: find your compliment and start the company together but make sure to spell out how equity is earned over time.

The Power is Not in the Crowd

Personally I feel that three co-founders is a maximum and two is ideal. More than three and you usually get group-think, less leadership, and have to deal with multiple egos and personalities at the top. Not good.

Being a co-founder is different from being an early, valuable, decision maker. Sean Parker was Facebook’s founding president but he’s not a co-founder of Facebook. Add people to your company as needed and give them the value and respect needed…and ALWAYS make sure their equity is on a vesting schedule!

Make Sure Everyone is Vesting

I’m often meeting first time entrepreneurs that haven’t been given the advice or read about the importance of vesting. Engineer founders are more interested in coding something great and later end up getting advice on structuring the actual company and running the business. In the simplest terms vesting can be explained as follows:

  • Vesting of shares means that a person earns shares or the option to buy shares by providing services to the company.
  • You get shares, or the right to exercise the options and purchase shares, based on a set “vesting schedule” provided that you are working for the company.
  • Your shares and/or options) “vest” over time as you stay with the company. This means you are either allocated shares outright or you exercise your options and can buy the vested shares.
  • When you stop working for the company you lose the shares that haven’t vested and the company can buy back unvested options (usually at the price they were offered which means no money or very little money to you).

Example of a standard vesting schedule:

  • Co-Founder gets 100 shares that vest over a 4 year period with a 1 year cliff
  • At the one year date if the co-founder is still with the company than 25% of the shares vest, so the co-founder gets 25 shares
  • The remaining 75 shares vest equally every month for the next 3 years provided the Co-Founder is still with the company. This means the Co-Founder gets 2.08 shares per month
  • At 4 years the Co-Founder has fully vested their shares.

This is WAY better and makes A LOT more sense than saying “let’s start a company we each get 100 shares right now,” only to have your co-founder leave when you’re six months in taking half the value of your company on paper. It’s thankfully something aspiring entrepreneurs increasingly understand but still happens more often than I’d like to know of. Vesting means that if you’re with the team then you get rewarded and if you’re not you don’t.

Above everything else, even if you skipped everything else in this post remember it is 100% true that starting a company with someone is like getting married. Make sure they are a perfect fit for the success of the business, bring complimentary skills to the table and that you get along. If not, it’ll end in a messy, ugly divorce. Whether you go it alone or get in bed with someone else. Choose wisely my friends!

Why Context Matters

It’s true that many early stage companies fail because they exist before their time. The founders might believe in their innovation and it might in fact, truly be something great, but the market or ecosystem is not ready. An arguably classic example is interactive television. Launch an interactive TV effort in the 90s and you’re dead, try it now and you’re fighting for market share as everyone big and small is innovating for TV. The challenge for entrepreneurs is to know if they’re on to something special and if the world is ready. This is called context, and the success of a start-up can sometimes boil down to having the right context to make key decisions early.

I attended an event earlier this year where Howard Gwin (@howardgwin) spoke about context and what he said stuck with me. These aren’t his exact words (I’m probably butchering it) but the message is what’s important not my limited brain power; it went something like this…

“I may not be building the next great company right now but I’ve been around a lot. Over the years I’ve worked with start-ups and major corporations, on multiple boards, and in venture. So, I have been fortunate to see a lot of things work and not work. What I have is context and context is a key thing entrepreneurs need when starting and growing companies.”

Context comes from asking people who have valuable insight because they’ve been there and done that, work in the industry, or are from your target consumer audience.  For example; if you’re building something targeted to automotive designers, you should go talk to someone who designs cars for a living. If you’re building a product that you want moms to buy, no one will give you better context than your neighbor with three kids.

Not exact science but below is graphic to share the point. Even visionaries that throw caution to the wind and change the world start from a place of context. They see a problem, dream of a solution, and let nothing stop them. But they do so knowing that their idea may have never been tried or that they had that all illusive lightbulb moment, tested their theory, and it all made sense. And sometimes they’re still wrong and live to fight and change the world another day.


Why The Big Bang Theory is No Good For Start-Ups

No disrespect to the actors here from the Bing commercial or anyone that dresses like them, unless you're a faker not a hustler.
No disrespect to the actors here from the Bing commercial or anyone that dresses like them, unless you’re a faker not a hustler.

Two people in their early twenties, maybe even still in school think of something and it becomes the next big thing. They built an early version in their dorm room, garage, or basement (maybe dropped out of school), get an early investor/mentor and the rest is history – acquisition, IPO, millions and billions of users and money. The stories of YouTube, Facebook, Google, even Microsoft are the stuff of legend and over the past 10-15 years has resulted in more people than ever chasing the start-up dream. If it can happen to them why can’t it happen to me?

When Google bought YouTube mainstream culture changed. The whiz kid behind Facebook cemented that change. Now its cool to be a nerd.

People everywhere heard stories that Google was buying a company for over a billion dollars that was less than two years old and created by two kids. What?!? A billion dollars! That’s crazy. Then along came Facebook with its baby-faced founder taking on the world hoodie and all. Shit, even Justin Timberlake wanted to be in on it. A world that was once reserved for geeks became pop culture.

My favorite comic Bill Burr (@billburr) laments how the natural order of things has been upset now that the nerd is cool. That’s not how it used. I’m lucky enough to make my living doing the digital things I love but growing up I was at the park in my neighborhood playing basketball, football, and road hockey until the street lights came on. The kids that were coding in their basement usually weren’t the most popular kids at school. When they did come to the park they would take their lumps. Doesn’t make it right but that’s how it was (before I get “you support bullying” emails let me be clear…any bully needs to have his ass kicked…yes I know that defeats the purpose but that’s how I was raised. Its called self-defense).

But just like the stock market, you hear about the few that hit big not the many more than sank. You hear about and celebrate the winners and try to forget the losers. Behind the hype is the hustle. There’s a lesson in that for first time founders.

Zuck is this generation’s Bill Gates. The difference is that when Microsoft was growing up it wasn’t cool to be a techie. The company’s software was on every computer and desktop but its young founders weren’t in social media or talked about on the internet. Because these things didn’t exist or were not mainstream in the 80’s and a large part of the 90’s. The last 10 years are special, and the last 5 even more-so. Bill Gates became famous for being rich not for what he created while he (and Ballmer, Allen, etc.) were creating it. If Bill Gates was in high school in the 80s he would have been picked on. Today, Zuck would be the Prom king. Times have changed.

I absolutely love the mainstream recognition that anyone can live their dreams, even those guys you once thought were nerds. That’s the great thing. Tech has joined the glamor group of music, movies, and sports but the problem is that just like in those industries there are too many fakers in the game. There are so many people who dress geek, talk geek, and want to be associated with the “start-up scene” but aren’t prepared for the hard work, rejection, and struggle it takes to make it big. It’s the guys (and girls) that are grounded that make it happen. I usually meet them through a connection because you don’t see them around much. They come up for air at important events but mostly they’re busy working not pretending. Don’t get me wrong, get out there and meet people but do it as part of your hustle not to play the part.


Steve Chen and Chad Hurley (YouTube) worked at PayPal and learned from the bright minds there before they created YouTube. Zuckerberg listened to great mentors like Peter Thiel and Sean Parker who taught him the ropes. These guys all dreamt big but they also learned, put in work, and hustled. Success came because of all the risk, sweat, pain, and belief that made it happen. That they became as mainstream as rock stars was a by-product of the success that came from the hard work. Elon Musk is the guy you should follow. He’s a throwback; really changing the world and your mother doesn’t know him.

So, have an idea? Get at it. Don’t walk around like you’re a Big Bang Theory cast member and just talk about what you’re doing without doing it.

  • Put less time “talking the talk” and more time building.
  • Seek out mentors that can help you learn and grow.
  • Build something you’re proud of then show it.
  • Learn, refine, fail, come back harder, stronger, and wiser.
  • Keep hustlin’ like hell.

Have your hustle strong and something special? Drop me a line, I’d be glad to help.

If you have an appetite for honest comedy and not stuck on political correctness, then here’s Bill Burr on nerds (skip to the 3:00 minute mark, and incase you’re reading this at work, there is swearing).