It's a spectrum; like dating you have to see how committed both of you are
4 min read
As we all embark on our journey to founding a new business we will inevitably consider whether we want to join forces with a complimentary co-founder. There are tons of articles about this decision, so I'll avoid the pros and cons. However the HBS Book 'HBR Guide to Buying a Small Business: Think Big, Buy Small, Own Your Own Company' had a funny quip about this something like: "If you want a partner get a Dog, It'll save you a lot of money". There might be something to this, as not all of us are equipped to be co-founders.
Once you have made the decision though to have a co-founder or two, you need to decide the level of commitment they have and that you have. It's a spectrum running from Uncommitted / Part Time Contributor to Fully Committed + Full-Time Co-Founder.
My Thoughts on Full-Time Co-Founders
Fully committed team members have a few obvious traits. This includes you, if you don't demonstrate these traits, someone out there with your idea likely is!
Willing to make big life changes
Move across the country to co-locate
Take minimal days off
Quit Job, School, Hobbies
Willingness to put costs on their own credit card
Loads up on grunt work
Schedule mid-day phone calls anytime a customer can talk
Sends tons of outreach
Writes code late into the night to get one more thing done
Pushes you to work on the weekend
Beware that this list means you better be following the golden rule. Treat others like you expect to be treated. If you expect to be pushed you better be pushing. You better load up on the dirty-dishes work too!
Uncommitted Part-Time Contributors
Very valuable team members and collaborators, and in the beginning maybe this is all you can find. Work with them, but just tell them to read this article and they'll understand where they stand on the spectrum and hopefully be bright enough to translate that to appropriate compensation and equity/options.
Unwilling to make sacrifices or prioritize the project/startup
Unwillingness to move
Has lots of family obligations
School, Job, Household Chores, etc consistently are more important
Not willing to invest money
Loves to meet for an hour or so every other day irregularly
Rarely signs up for actual grunt work
Now some folks may be put off that I mention family sacrifice including kids and soccer practice. All of us are on our own journey but the fact of the matter is, if you are making those sacrifices, you better be in bed with someone who also wants to do the same. Otherwise, you are going to have some serious animosity down the road. The only way to work around this is serious sacrifice in terms of equity grant. It's not 1:1 either, because if the person who is part-time is sitting on a "co-founder" title but part-time involved, that means there isn't room on the cap table for a fully committed version of that co-founder.
It's not you it's them...
Them is the VCs and Investors who will inevitably start to ask you the tough questions when you show them the cap table. They'll inevitably start asking you questions about how your co-founder is contributing, why they didn't make that last-minute call, or why they didn't attend any of the fundraising meetings.
At first, the spectrum won't matter, because you'll be happy to have a collaborator. Then after a while, you'll start to meet with folks who are interested in investing and after a few meetings in they'll start to get more interested. Inevitably the question will come up "Hey what about your co-founder, where are they today?" You'll have to say oh they are working on their Ph.D. or they are at their job today. Sometimes you won't get any feedback but you'll be able to piece it together after a few months. You are being viewed as a solo co-founder. Now this will work but you've now likely given away Co-founder equity in your business.
A scenario where this may work is if both co-founders are getting things organized in stealth as they both continue to collect healthy paychecks from their jobs. Maybe another way it can work is if the non-committed co-founder doesn't vest any of their shares until they fully commit. Alternatively, maybe the non-participating co-founder offers to invest to help the committed co-founder have a salary pre-investment. There are plenty of ways to make this work, but something has to give otherwise there will be problems down the road.
Look, everything here is a conversation. Maybe you and your co-founder both have a family and so prioritizing time with family ahead of the startup is important to both of you. The important part is to have the conversation before blowing a ton of time on building something together. If there seems to be a mismatch between time investments or inputs, make sure to have a conversation about equity ownership percentages. That's the bottom line.