WHEN YOU ARE SELECTING A CO-FOUNDER
Well, since you opened this letter, it seems like you don't have a natural co-founder in mind.
That's okay. I'll offer some suggestions below on how to find and vet someone, but you'll need to first accept that the magic formula to finding a co-founder is more complex than it seems. When it works, the equation looks like this: 1 + 1 = 3.
You probably already know that building a business is lonely and hard work. It's easier (but still not easy) with the right partner by your side. Having the right co-founder increases your chance of success, enabling you to go further faster. A few reasons why:
Having a partner increases your commitment level. Making a commitment to someone increases your chance of following through with your goals. It forces you to answer to someone. Having someone hold you accountable is especially important in the beginning, before you've taken any money from investors (other than perhaps your friends and family, who tend not to pay too much attention to the speed of progress).
A co-founder can help keep you sane. The days are filled with roadblocks and disappointments and often end with self-doubt. It can be easier to stop doing this work than to continue through with it. A partner who shares the same passion and who is driven by the same goals, vision, and values will offer the appropriate encouragement and pressure to stay at it. You can't underestimate the value of having a sounding board, therapist, and cheerleader on deck.
A co-founder enables you to do more. A great product person needs a great engineer. A great visionary needs a great operations czar. When I created WIN and Everwise, I did them with co-founders. In both instances I needed someone who was willing to run the organizations full-time. In both cases I also found having someone with me made the whole dialogue richer and the end result better. Different individuals bring different skills to the table, as well as different perspectives. Co-founders often push each other in their respective disciplines—and this interaction drives overall results. Look for someone with skills and abilities that you don't have and that will complement—and extend—your own.
You have to pick the right partner because the danger of making a mistake throws the entire equation off balance. With the wrong partner, 1 + 1 can equal 0. So, how do you find the right person? A few tips:
Consider someone you know. The best of all worlds is finding a co-founder whom you already know, someone you have worked with before, and someone you trust and know inside and out. Greatness often happens with someone you have already collaborated with. Consider how Jerry Yang and David Filo hacked together in school before building Yahoo! My co-founder at WIN worked with me at LiveOps and my co-founder at Everwise was an affiliate in my investment network. I knew the magic that could be created with these people.
Determine what they add to the equation. You'll want to select someone with complementary skills (e.g., sales/marketing vs. engineering).
Get to know them deeply, and spend lots of time together. Founding a company is a big deal. You might want to work your way into it and see if it is working. At Everwise, co-founders Mike Bergelson, Colin Schiller, and I investigated the market and spent a lot of time collaborating before we turned it into a formal endeavor. You have to review how the collaboration is working along the way. Do you crave more time together, or wish it had ended earlier? Does this person bring you energy, or take it away? Early interactions with negative chemistry are not going to get better over time.
Find references upfront (and back channel). The more of a 360-degree view you can achieve, the better your perspective will be. Look at the references they give you, but also speak to people they did not give you as a reference, but who may have worked with them or know them in a more personal capacity. (Also, if they've given you a reference and it's not strong, that's a big red flag.) Ask others about how they handle pressure and good and bad situations. You'll also want to learn what motivates them.
Is this the one person that you would seek out to solve the deepest problem? If you are choosing them out of convenience, maybe you need to spend more time looking for a great partner. Look for someone who has the deepest experience in the universe in your topic area. Maybe this person is someone you've worked with before, as was the case with Andy Ludwick and Ron Schmidt who created magic together at SynOptics. Maybe it's someone you've never worked with before, as was the case with Marc Benioff and Parker Harris at Salesforce.
Make sure you are aligned. People want different things in life. Just as you need to discuss what you want before entering a marriage (e.g., Do you both want kids?), you must discuss what you want for the company—and reconcile any differences. Some people want a change-the-world business, while others want a lifestyle business. Neither is bad, but they are different. Figure out your values and motivators upfront and discuss the following: How do you think about work-life balance? Compensation structure? How big do you want to grow this endeavor? What's the ideal exit strategy?
Determine roles and equity structure. Are you looking for an equal partner (e.g., 50/50 split)? Or, are you looking for a more junior co-founder? Think ahead about what you want your working relationship to be like. Are you okay being challenged? Are you willing to have this be totally equal in terms of equity even if only one person is the CEO? There are pros and cons and ramifications to each of these decisions and they are long-standing.
There are few decisions that you will make in your company's life— including picking the right co-founder, deciding on the right board members, and choosing a strategy—that have the potential to make more of an impact than any other choices. Take your time and make sure you potentially are making the right decisions. If all goes well, these decisions will be with you for decades.
All the best,
***** TABLE OF CONTENTS *****
Part I: Getting Started
1. The Early Days
2. Financing Your Company
PART II: Getting to Relevance
3. Managing Basics
4. Managing Challenges
5. Personal Challenges of Leadership
6. External Roadblocks
Part III: Getting to Scale
7. Operational Excellence
8. Organizational Challenges
9. Building a Company to Last