Steve Jobs had Steve Wozniak, Bill Gates relied on Paul Allen, and Mark Zuckerberg had the Winklevoss brothers (well, sort of). The tech industry's most famous duos rely heavily on their partners to get the most done. And so do most successful startups; they only make it due to the winning strength of a powerful founder/co-founding team.
Our CEO’s writing onhow to find a co-founder already tackles our most honest approach to the question of how topick the best co-founderfor a startup. For now, we’d like to dive into a few different questions about co-founders. These queries highlight the exact differences between founding teams or solo startup founders and an investor or other business partners.
What is a co-founder?
A co-founder is an individual who plays a pivotal role as one of the original creators or initiators of a company, organization, or project. Typically, they are engaged from the outset, actively participating in shaping the core idea, business model, and foundational strategies.
Understanding the role of a co-founder
Co-founders typically share the responsibilities, risks, and rewards of the venture, and they play a crucial role in shaping the direction and success of the company. The reasons why anyone would play the role of a startup co-founder are as many and as varied as there are startup companies, but the main roles and driving forces of a co-founder can roughly be divided into two groups.
Collaborative skill sets
Co-founders can each have different skill sets and areas of expertise, which combine to form a well-rounded team capable of driving the project forward.
Unfortunately, most business people at first fail to know what’s truly needed to bring a company project to life favorably. It’s perfectly okay to want or need another person or persons who can help fill the diverse needs of making a particular idea come true. Think of areas of expertise like programming and development when compared to other roles like sales, marketing, or business administration, for instance. In most cases, and especially for first-time founders, it's unreasonable to expect a solo CEO to be able to manage all these. Cover your own blindspots and bring the perfect team together to be ahead of a given niche with leaders in a specific industry.
Experience in the industry and ecosystem
Competitors to a starting business might already have a great product and stable positioning before new business comes in, too. And new entrepreneurs with innovative ideas can profit from those with the most know-how to win battles and position victoriously. People can also just come into the startup game without knowing anything about doing business. That’s also very much okay. Yet, strong and knowledgeable connections are a must in those cases.
Ally with experts with a lot of business background. Make sure they can step in and help a new company from straight failure. Make strategic business partnerships and other liaisons a real strength.
Differentiating between a founder and a co-founder
A founder is a person who has the initial idea and establishes a business. A co-founder is the one who goes along with that founder’s initial thoughts and helps make the new company flourish.
There might be cases in which each person in a starting duo is equal in terms of rights and obligations. Yet, each founder and co-founder’s role and responsibilities tend to be different to make the best of their starting group. Define those from the get-go. Divide chores and obligations based on each person’s strengths and skills and do so very clearly from the start.
What is the difference between a co-founder and an early employee?
Founders usually have a more active and decisive role in a given company. Employees, on the contrary, are hired and compensated for getting a specific job done.
Although our first team members can sometimes even get board seats and stock options as motivation, that’s not always the case. They’re valuable and crucial, but the legal implications are enormously different.
Founders are likely to own a large percentage of equity, for example, and they might or might not receive a salary at first. Early employees are luckily there for a company’s start. They run on a fixed salary and aren’t responsible for a startup’s ownership, direction, and overall operation.
What is the difference between an investor and a co-founder?
An investor funds a company without necessarily being involved in its day-to-day activities and obligations. A co-founder is actively engaged in a company instead. They seek to make it grow and profitable and play a vital role in its daily operations.
What is the importance of co-founders in startups?
A few stellar companies didn’t ever need a co-founder to create a successful business. There are high chances that exceptionally effective people out there create and run a new business all on their own. In tech, in particular, people can have a great idea, execute it, and sell their creations - all by themselves. Those are exceptions, however—irregular and very singular cases.
In most scenarios, people with profitable ideas know they can sell their thoughts if they unite with other experts, or seek great people in their field for a healthy market insertion.
Even if a single person were to have the greatest of all ideas, someone alone doesn’t usually have all the necessary skills or time to make it in business. That’s when a co-founder figure becomes crucial. Partners complete the necessary skillsets or even human resources to bring a business idea to fruition.
How to find the right co-founder
Picking a co-founder is an essential task for most first-time startup founders. It comes with research, thinking about our networks, and having difficult conversations to bring others on board. As we said, this process is just as important as defining your product and picking a potential investor.
People who come together for a new company will most likely have worked together in the past. They can also be people of a similar age range who share interests or visions in some areas. Those alone can get people to build a company together. In the end, we’re trying to find the correct fit to grow a successful business. We talk to these people, explain our vision and mission, and hope to bring them on for the ride.
Here are a few more answers to some relevant questions onfinding the right co-founder for a new business.
Best questions to ask a potential co-founder
You get to spend a lot of time with someone as a co-founder. Therefore, know which areas to discuss before building a startup with someone. Ask potential co-founders relevant questions that help you understand if this new relationship is beneficial and about to last long term.
For that, ask what potential candidates’ working styles and motivations are. Check if they can go unpaid if needed because that might be crucial during a startup’s starting stages. If they are, try to define for how long.
Find out what a person’s personal life looks like and what their core values are. You’ll need to see eye to eye on a few of these factors at the end of everyone’s string. Seek to know how they deal with conflict, too, and if they can give direct feedback. Also, find out about their ideal equity split whenever it comes to that.
All of the above areas are important check-in values for a suitable match.
How to choose who should be the CEO of a team of co-founders?
You’ll need to decide who the new CEO will be. For that, ponder on that role for a considerable while. And remember, this person will deal with investors, the press, most business contacts, and public scrutiny. That includes news reports, official statements, company pitches, accelerator liaisons, board meeting representation, etc. That role will also be the first in charge of hiring talent and being the startup image when raising funds. Clarifying this aspect is vital to deciding who the best CEO will be. And it should be easy to determine.
First, go for the person who can answer all the questions that the press, potential investors, and anyone interested in partnerships or sponsorships are most likely to ask. Get someone who can make decisions and fix problems quickly. Ideally, this person also has lots of energy and high interest in their role. More points apply if they’re also charismatic and charming. It sounds unimportant, but hopefully, the new CEO is very talkative to others on great terms. And an excelling representation of company culture and branding. A non-negotiable item is how this person truly needs to see and drive a business’ big picture, for example.
What are the most important points in a co-founder agreement for a startup?
And finally, our last answer in this read. A co-founder agreement is essential to establish terms in a founder/co-founder team. It clarifies specific areas and business tasks and settles them according to a binding document we call an agreement.
Transport all your needs to that record to avoid misunderstandings. Include in it everyone’s company ownership percentage along with the names of everyone in the founding and co-founding team. Add company goals along with each person’s roles and responsibilities. And outline how you’ll make the most significant decisions. Include equity breakdown, salary, compensation, intellectual property, and exit clauses.
