Stop Looking for a CoFounder

I recently wrote this article for Amex Open Forum. The original text can be found here.

Everywhere I go, I hear the same refrain from fledgling entrepreneurs I meet: “I’m looking for a co-founder.” I hear it from many of my students, from folks at various entrepreneurship events and meetups, and from people suffering in jobs at large companies who would love to pull the trigger on their startup—if they only had that critical co-founder.

And here’s why they’re on a fool’s errand.

The most common type of co-founder that’s usually sought is, of course, the technical co-founder, someone who can make your latest Internet-enabled business idea come to life by coding it for you because you don’t have the skills to do so. But some people also tell me they just need a co-conspirator because there’s too much work to do and they’d get lonely without a co-founder. It’s a fair point—and one that Y Combinator’s Paul Graham discusses in this incredible post.

But I’m actually here today to tell you: stop looking for a co-founder. Stop asking people to help you find one, and stop talking and thinking this way. I say this not because it’s massively annoying and clichéd by now (which it is), but mainly because the very act of looking for a co-founder is already a sign that you are hopelessly unprepared for the coming venture—and going about things in a completely backwards way.

Think about it this way. Let’s say you had this dream about sailing around the world for a few years. How would you go about realizing this dream?

Would you immediately start looking for an experienced sea captain with whom you could team up? It certainly seems a logical choice on its face, right? And let’s say you miraculously found one such old sea-dog, replete with forearm anchor tattoo and corncob pipe, in your first few weeks of searching—how would that play out?

Well, he’d probably do all the sailing, right? (Mainly because you don’t know how to sail and have zero experience.) He’d probably have to plot the various legs of the journey, too, right? (Because on day one, he would tell you that your plan to take a 36-foot wooden sailboat across the Bay of Fundy in winter isn’t the best course of action.) He’d probably be the one standing at the wheel whenever you hit rough weather, right?

Hmm. I also bet you’d have to pay him something to actually participate in this venture as well, no?

Let’s say after six months he tells you he’s run out of his favorite pipe tobacco and bails on you while you’re docked at some far off port. What do you do now? You probably should have stayed home and read some Melville or Joseph Conrad. Let’s face it—real sailing was never for you.

But hang on. Let’s say you had said this dream of yours was all-consuming and you were dead set on making it happen. Let’s say you just disappeared for a while and learned how to sail, became intimate with the latest technologies and the best routes, and became a fixture at your local sailing clubs and docks?

What likely would have happened with this approach? My guess is that you would have made great friends in the sailing community, over time. The relationships would have been genuine and based on mutual fascination and love of sailing, adventure, and the sea. You would have learned a ton about this new world and, slowly but surely, you would have become a part of it. When you finally decide to make that journey to Timbuktu, one of these friends—maybe someone with a lot more sailing experience than you, but who respected you a lot and knew your character and talents—might just suggest that you embark on that journey together.

Business is the same. Even though it’s just little old you steering your company, take comfort in the fact that we’re living in an era in which the individual entrepreneur is empowered with tools and access in a way that people could barely have imagined as recently as a decade ago. You want to open a store? In 10 minutes you can be up and running on Shopify. You want to amplify your voice with a marketing campaign? Facebook, Twitter, and YouTube are massive communities you can tap into for free. Don’t know how to build a website? Hop on Codecademy or take a Skillshare class and you’re on your way.

Even without a co-founder, you can acquire skills and employ powerful tools to get to a minimum viable product all by your lonesome. In fact, it’s so easy and accessible, there really is no excuse not to. Imagine how powerful this is. You can generate a massive amount of value before even thinking about having to dilute your equity. Ironically, this is actually the best way to find co-founders, early employees and investors—just get a real business up and running by yourself!

If and when the time comes to partner up, just know that great partners come in all shapes and sizes. You can’t predict and plan for their arrival, just like you could never decide to meet a potential spouse next Saturday night. So how will you know they’ll make a good co-founder once you meet? You won’t.

The key is not to rush into business with someone. Spend plenty of time with them, bring up difficult issues directly when appropriate, and see how they handle themselves in a variety of situations and circumstances. Are they thoughtful and considerate of your point of view? Do you share values with them? What are their other life relationships like? Like any journey, the key is slow and steady.

Why Do So Many Partnerships End in Disaster?

In my last post on OPEN Forum, I made the case that entrepreneurs should stop actively looking for a co-founder. Now I’m here to tell you that if you think you have in fact found the right partner, you should be extremely careful and not rush into any arrangements.

Although it’s shocking, the fact is, a huge percentage of the companies I come across in my various roles as an entrepreneurship professor, mentor, and investor are doomed to fail essentially before they ever get started, due to founder incompatibility.

The reasons for these breakups that are given in retrospect by the founders are some variation of the following:

“The equity split was wrong from the beginning.”

“We had different visions for the direction of the company.”

“We never saw eye-to-eye on major issues.”

“He took advantage of me and stabbed me in the back.”

“Once the VCs came in, she sided with them and pushed me out.”

Guess what? These are symptoms, not causes.

I would say that the most frequent cause of co-founder disputes is the simple reality that the founders were never well-suited to each other (and often unsuited for the market they sought to enter) for any number of reasons. Some of the typical incompatibilities I have seen over the years include:

• The reason they’ve teamed up is simply because they’re in the same class, they’re roommates, or they live down the hall from one another in college.
• They’ve never spent significant time with each other outside of one familiar setting (e.g., school, dorm, work) and thus haven’t seen how the other handles stress and operates in a variety of environments.
• They haven’t considered each other’s values and motivations carefully enough. In all likelihood, these are quite different.
• One or both of the co-founders has no experience in the market.
• One is totally committed and the other just likes the idea of being “part of a startup.”
• There are simply too many founders in the equation and everyone’s equity has been diluted from the get-go—you shouldn’t need more than four founders.
• Instead of working from mutual and complementary strengths, the entire reason for the union is based entirely on the insecurity of having to go it alone.

No doubt there are plenty of success stories out there in which the founders were roommates—or there were “too many” of them—but in my experience, these are truly exceptions to the rule.

Here’s the qualities that successful co-founders usually possess:

Complementary skill-sets (such as a designer and a coder)

There’s a lot to do when you’re launching a company. It makes sense to have a co-founder that has aptitude where you don’t, doesn’t it? Some teams have one founder as the frontman/woman and one as the ops person, while some companies are founded by a coder/designer combination. Jobs and Wozniak are the classic example of the hacker and creative partnership.

Shared values and mutual respect

I tell this story to my students. Years ago a prospective investor interested in a company I was launching asked me if I had ever been to my co-founder’s house. I was literally tongue-tied. The answer was no, but I had never even thought that this might have been important. I didn’t realize at the time how right he was. When I then visited the co-founder’s home, I realized that I was not going to be in business with him. He treated his wife somewhat disrespectfully, the place was a total mess and in one fell swoop I saw a completely different side to the façade he had been presenting to me and others.

Shared motivation

John Doerr at Kleiner Perkins is well known for saying that the best teams are comprised of missionaries, not mercenaries

What this means is that the best entrepreneurs are motivated by the mission of their startups and not the money. Make sure you are in this for the right reasons—and that your co-founder is, too.

Deep loyalty and friendship

There’s an old saw out there about never doing business with a friend. I always thought this was a flawed premise.

As I’ve stated earlier, the primary reason for co-founding with someone needs to be the value they bring to the table, but if that other person happens to be a true and loyal friend, you are extremely lucky. You’ll never need to waste a minute worrying about his loyalty or about getting stabbed in the back.  If you’re not that close yet, take your time—but if you don’t at least see yourselves getting to be super loyal to each other as co-founders, don’t partner with him.

My main point is you really have to know the other person deeply. You both must be self-aware and understand how important the relationship is, and be mature enough to handle the inevitable disagreements with great professionalism and understanding. Remember this—if you both want what’s absolutely best for the company, you’ll always find a way through.

(Click here for the original post on Amex OPEN Forum)

Be A F---ing Pro

This is part of my ongoing Series on Entrepreneurial Culture. I see people in the startup world being careless, screwing up, cutting corners, making excuses, and worse (a lot worse)- all the time. I'm far from perfect just like the next guy and have made my share of mistakes as we all have. Most of the time I see the little things- but sometimes- and that's when it gets really unfortunate- it's the big things.

Some little things I see:

• People in the tech world being petty, small, selfish and manipulative - and not helping out the community (translation: only out for themselves)

• Folks who go into every meeting with an agenda and see the world entirely through the lense of what can I get from this person (translation: robot, non-human)

• CEO sending out invite for a call to his advisors without checking with them on dates/times. I tell him to use doodle, etc. He tells me he's too busy and whomever's available will join call. (translation: sloppy)

• Fledgling entrepreneur comes to meet with me, we discuss his proposed business- at end of convo he says, "that sounds like a lot of work". (translation: a joke)

• Entrepreneurs talking smack and minimizing others (competitors, other entrepreneurs) the first time you meet with them.  (translation: insecure- shows weakness)

• People intro'ing others to strangers without asking for permission. (translation: laziness & lack of consideration)

• People with huge problems with their calendar and email. I know some great people that just can't get organized, are always canceling meetings last minute- and are just a train wrecks. (translation: a real shame)

• People ask a direct question and the person responding evades the question with a long-winded response full of hot air. (translation: pathetic)

• Forwarding emails clearly marked "confidential" without a second thought. (translation: careless)

Some big things I see:

• Founding team (first-time entrepreneurs) "goes dark" on their early investors for months and then emerge saying they are shutting down company. They do so with an evasive email full of legalese and nonsense. When called-out on it, they say they were pressured by their lead investor and "didn't know better" because they were "first-time entrepreneurs". (translation: pathetic & corrupt)

• Junior VC's and Venture Partners taking meetings with entrepreneurs knowing they'll never invest but wanting to gather competitive intel. (translation: jerks)

• Guys in the startup world hitting on every woman they meet with in professional settings. (translation: deeply uncool and pathetic)

• Broker-dealer types posing as angel investors that take advantage of unsophisticated/fledgling entrepreneurs. (translation: predatory)

If you do any of the "little things", I highly recommend you stop doing it. It will serve you well in your career. If you do the "big things", well, I've got nothing to say to you other than "take a hike".

I recommend that if you see others doing the little things to call them on it and help them out. If they're doing the big things- I recommend you stay away from them permanently.

There's really no room for this in the startup world. We're a small community and we shouldn't be cutting corners, short-changing each other or worse.

As Marvin Lewis says below- Be A F----'in Pro.

Here’s the video.

The Supremacy of Warm Introductions

This is part of my ongoing Series on Entrepreneurial Culture.

In the tech world, we hear the term “warm introductions” bandied about ad nauseum, often from the horse’s mouth—namely, that it’s the best and sometimes the only way for entrepreneurs to meet angel investors and venture capitalists. A so-called warm introduction occurs when person A introduces person B to person C with an express endorsement of person B. Person A is basically telling person C that they are vouching for the character and worthiness of person B.

That’s the explicit message, of course. The implicit message is quite powerful as well and can best be expressed by what types of behavior just won’t suffice when it comes to introducing yourself. The short list includes some or all of the following admonitions:

• Don’t wait in a long line to talk to an investor after she speaks on a panel.
• Don’t cold email an investor with a long email and business plan.
• Don’t assault an investor in the hallway with a cold pitch of your business.
• Don’t email an investor asking for five minutes of his time.
• Don’t ping an investor on LinkedIn with your pitch and 18 hyperlinks to your deck and press coverage.

Any of these sound familiar? Well, you’ve probably been either on the delivering end or on the receiving end of some of these, if not both. That’s because this sort of behavior is endemic in the business world. These behaviors are all symptomatic of the root problem, which can be summarized as “being lazy and thinking short-term about your human relationships.”

Let’s go deeper.  Are any of these behaviors familiar to you as well?

• You haven’t heard from someone in years and they reach out asking for you to recommend them to someone. Why? They’re looking for a job now. Typically their email begins with “Hope you’re well, it’s been too long since we last spoke.”
• Someone you know pretty well makes email introductions to you without ever checking with you first.
• You receive multiple emails and phone calls from someone you don’t know who insists on meeting with you.
• They’ve never heard of or respected the habit of a double opt-in

All of these behaviors are the result of deeply flawed understanding of how human beings operate and what they value. They also reflect a rather selfish and opportunistic way of looking at the world. In the age of the internet and social media, it also reflects an immense laziness and amateur approach to connecting with other people.

So let’s get back to this concept of warm introductions. Why are they the sine qua non of business world interaction and the supreme currency of all business networks? Well, at its core, a warm introduction is an endorsement wherein the one introducing is explicitly vouching for the value, authenticity and character of the person, and making an implicit statement that there is mutuality in the sense that he or she is worth the time of the person to whom an introduction is being made. If this currency is abused, the one making such introductions will no longer be respected, his judgment will be called into question, and his reputation in the community will suffer. That’s a pretty high standard indeed. 

To facilitate a warm introduction, first get permission from the person to whom you’d like to make the introduction via a short, crisp email that gets right to the point. If they are amenable to being introduced, here’s an example of what the actual intro could look like:

Liz,

Thanks so much for your willingness to be introduced to Arthur. As I mentioned, he is a veteran business development professional who is looking to join his next venture. Given that your company is right in his sweet spot of enterprise security, I thought it would be good for the two of you to meet.

I worked with Arthur for four years at -------- and can’t say enough about his effectiveness and work ethic.

Best,

Dave

Notice I asked for permission first in an earlier email, and then in the actual introduction I reminded Liz of some of the details about Arthur. I also expressly vouched for Arthur once more. I didn’t go overboard, but kept it short and sweet while still hitting all the relevant points.

So who are people that often receive and give warm introductions? Here’s my take on what qualities they typically possess:

• They value human relationships and are in business for the long haul.
• They are exceptionally thoughtful about who they introduce, how they introduce and to whom they introduce, always looking to provide mutual benefit.
• They are open to helping out quality individuals and giving of their time.
• If they want to get to know someone, they do it in an authentic way and are out to build a relationship, not just to consummate a transaction. This might involve spending time commenting on the person’s blog or Twitter feed, inviting them to an event as a speaker, or to a breakfast, lunch or dinner gathering that might be of interest to them .
• They don’t finish every meeting they have by saying, “My takeaway is…” or “What are the next steps?”
• They respect other people and don’t take advantage of others or of their time.
• They don’t look at people as a means to an end.
• They have integrity.

Apart from capital, warm introductions are literally the most important currency in business. They get people jobs, initiate partnerships, help people raise funds and can often make an extraordinary positive difference in people’s lives and the lives of businesses. When they are made carelessly they can literally be devastating. If you think about it, it was a warm introduction that probably got you into most of your jobs, most of the capital you’ve raised, and possibly even how you met your spouse. Treat the whole process with great thoughtfulness and care—it will make a huge difference in your career.

(Click here for the original post on Amex OPEN Forum)

Measuring Founder Strength

This is part of my Series on Entrepreneurial Culture.

I recently came across this absolutely awesome post as well as the accompanying infographic above having to do with identifying the sort of founders investors can feel good about backing. It was written by Saar Gur a partner at Charles River Ventures.

Saar points out that his fund has developed an IQ-like quotient (the "Founder Quotient") for determining founder strength after many years of tweaking and refinement.  A number of these insights may in a broader sense be similar to others we've seen over the years, but if you go through them carefully you'll find a lot of originality and nuance here. The line, "startups are like chess" and the "Values" section resonated with me in a huge way. I think angel and seed investors would do well to really pay attention to these and add them to their body of knowledge. Here they are:

1. Original product thought. Most founders copy. We look for the 1 percent of founders who have their own original strong views on how to build a great product (e.g. it took a Steve Jobs to set the touchscreen standard for smartphones).
2. Psychological factors. What drives this person? Are they driven to face the adversity and uncertainty of startups? Do they have a chip on their shoulder and/or something to prove? Do they have a strong desire to win? Are they willing to make the sacrifices required to succeed? This is often influenced by their childhood.
3. Authenticity. Does this company align with the founder’s beliefs and values? Do the founders care deeply about the problem they are working on? How passionate are they?
4. Unique market insight. Do they have a unique insight into what the problem is, market timing, how the future may play out?
5. Intelligence. IQ, EQ, self-awareness, ability to hold convictions loosely, etc. Startups are like chess. The founder needs to be able to think several moves ahead as it relates to product decisions, business decisions, and people decisions.
6. Values. Are they honest? If they are in a people-intensive business, do they genuinely like and value people or are they too focused on themselves?
7. Judgment. Product judgment, people and hiring judgment, etc. Do they exercise good decision-making skills no matter how small or large the decision?
8. Experience. Are they uniquely capable of executing? Do they have a relevant 10,000 hours?
9. Ability to recruit. Includes selling a vision, being respected, build a cross-functional team, having a network, etc.

The entire "Values" section, though short, is actually massive. I've made this mistake a couple of times already. People too focused on themselves don't really value other people at all. Huge problem with a founder.

Figuring all this stuff out takes time, doesn't it? It's a good argument for not rushing into an investment. I'll also add that checking out a list is something anyone can do- but being able to "know something when you see it" takes a lot of experience. What also never ceases to amaze me is that a founder you might want to invest in might have all of the above qualities save one, but it's often that one missing piece that destroys everything. 

Anyway, many thanks to Saar for sharing some serious wisdom with us. Wow.