Page 22 - IBT December 2020

The Foundation
NIGHTMARES
IN THE DREAM
TEAM?
Whether it is Steve Jobs or Larry Page,
we all know that visionary companies
were not built by individuals. Rather,
a band of talented individuals came
together to work on a particular
vision, shared their complementary
skillsets, and formed a lifelong bond
that resulted in forging high-impact
startups. In essence, finding your
partner in this journey of creating a
high-growth organization is your
biggest and toughest initial challenge. when the going gets tough (and
Welcome to The Foundation, where I
will be writing about various aspects
of entrepreneurship and startups
every month. In this issue, I’ll try to
give you a comprehensive idea of the
typical mistakes that founders make
in finding their co-founders, and how
you can go around avoiding these.
Starting off in building the venture,
these are the mistakes that
entrepreneurs usually make when it
comes to choosing and working with
co-founders –
20
The Foundation is a
new section dedicated
to the startup
culture of the
country NOT CLEARLY SPECIFYING THE ROLES NOT PROPERLY DISCUSSING ABOUT MONEY
BEFOREHAND – You must understand the fact that – Let’s be realistic - people start businesses to make
not every partner will bring the same set of skills to the money. People form partnerships to make it easier for
table when partnering up to found a startup. If this was them to make money. Pretending that this is not a fact
the case, there would be no point in partnering up with is never a good idea.
that particular person, would there? Depending on the In most startup partnerships, one of the parties will put
skills and traits that individual partners possess, they in more money than the other. This will, in most cases,
should also work out a distribution of roles they will influence the ownership percentage in the company, but
fulfill in the new company. it does not have to. It is important that everyone is on
Once again, this needs to be done cool-headedly or even the same page, though.
cold-bloodedly. If one of the partners does not exactly In certain cases, one of the partners is going to be much
seem like the best person to handle day-to-day matters more involved in the running of the startup and they
with potential employees, they need to understand this. might draw a larger salary. Salaries can also be
If one of the partners is not that great with money, they determined depending on the roles each of the partners
will probably not be named CFO when the time comes. will fulfill.
This skill and personality diversity is a good thing and Friendship and enthusiasm are both very good, but the
companies tend to get messy, and often times the always be dealt with transparency, regardless of the size
money needs to be sorted out up front and should
there is no need to try and deny it. Yes, early-stage
and scale of the company.
founders seem to find themselves in a plethora of work,
ranging across multiple
NOT TAKING TIMING INTO CONSIDERATION –
departments. Regardless of all
the hectic schedule and the People often tend to ask, “When should you start
thinking about a potential cofounder?” The quick and
never-ending list of work that
needs to be done, founders
most obvious answer is ‘always.’ Huh? Yep, unless
you’re in the throes of starting a new company
must sit together and segregate
full-time, you should always have a side project,
roles among them – which will
Typical mistakes that entrepreneurs make things much more something you’re curious about. It doesn’t have to be
the next big thing. But it is the best way to start
efficient at the end of the day.
working with people you think could be cofounder
make with their co-founders
material and figure out if a partnership might be
NOT TAKING THE ‘END’
By Farhat Zishan Chowdhury
INTO CONSIDERATION –
All too often I hear people say, “I’m not ready for a
Bluntly put - Startup feasible in the long run.
cofounder. I want to have the idea first.” At least 6-12
partnerships end. According to months before you quit your current full-time gig and
Funders and Founders, 62% of “take the leap”, you should start talking to potential
all startups fail because of cofounders and working on side projects together. This
founding team conflict. When gives you time to work with multiple people, and to
BEING UNSURE ABOUT GIVING AWAY TOO MUCH you start thinking about it, this walk away from relationships that aren’t clicking. It
YOUR CO-FOUNDER - EQUITY TO YOUR is a huge percentage and if we also affords the opportunity to learn so much about
Choosing a co-founder is CO-FOUNDER –Some entrepreneurs are being totally honest, this is yourself - styles you like and don’t like, attributes you
probably the most important make the mistake of giving their almost a disgrace. Just because value and those you can do without.
decision you will make in co-founder too much equity — the two (or more) of you could When you wait until you’ve settled on an idea and even
founding your startup. Generally, sometimes as much as 50%. Indeed, not work it out, there are have a little bit of money committed (often conditional
it should be someone who splitting the equity equally between people who are now jobless and clients who are upon having a cofounder) you feel, well, more
belongs to your circle or peer co-founders is usually not the right abandoned – and that should simply not be the case. desperate. You’re much more likely to leap into the arms
group i.e., someone you are business decision — particularly This is the biggest problem with choosing co-founders of the first person that agrees to work with you. Waiting
confident will be in the trenches where it’s your idea and you’ve who are not the right fit – there are repercussions that until the end leads to bad decisions and relationships
with you fighting and clawing already spent six months on the are well beyond the reach of the company and a lot of that really don’t work because, like it or not, you feel
stakeholders tend to get affected.
venture. There are innumerable reasons why startup desperate. Searching for the right cofounder is a process
believe me it will). The splitting of equity is a significant partnerships end. Someone might be dissatisfied with and it’s vitally important, so start early.
Some first-time entrepreneurs business decision that must be the role they play in the company. Someone might think The last thing that you need to know is this – it takes
make the mistake of hiring a negotiated between co-founders based they are not being valued enough or their ideas are not sheer time, effort and persistence to build a business.
co-founder whom they have just upon their respective contributions to being heard. Someone might think nepotism in the And so is the process of finding a co-founder. It is not
met (e.g., at a conference) or who date and their expectations going workplace is a brilliant idea and keep hiring their family easy to find someone who can directly relate to the
customer problem and market gap that keeps you awake
is a total stranger. That is forward. In this context, you should members. at night, let alone jump into solving it with the same
extremely detrimental and is one probably be thinking in the 20-25% I’m not trying to sound very cynical over here, but one amount of dedication and energy. Yes, you’ll be one of
of the very common mistakes range, assuming the co-founder will piece of very important advice is for you and your the blessed few if this does happen to you. But if not,
that people tend to make. The be adding significant value. Despite co-founder(s) to sit down and discuss the possible exit then understand that this will be a slow process and
rule of thumb is that you have to being good friends or colleagues, it is options at hand, the timeframe in which you will you must put your faith in it. Work on your idea and
know your co-founder to a imperative that you put your pursue the idea and how all of you intend to dissolve assess people who are worthy of being part of this
certain degree before you embark friendship aside and go for a proper the company and go your separate ways if things do not amazing adventure with you; one that can possibly go
on the journey together. equity split with your co-founder. seem to work out. on to change the world.