No matter if you’ve known your co-founder since Kindergarten or met them a few months ago at a networking event. There are topics you naturally gravitate towards in your conversations: the problem you want to solve, how your solution will evolve, the exciting ideas you had just as you fell asleep or were thinking about during your morning shower.
While these are usually the easy, and fun conversations to have, they often miss out on important details that could make or break your success in the long term. To truly understand whether you are a good co-founder match, and be assured that you can weather any future storm together, you need to ask the tough, uncomfortable questions.
So whether you are evaluating a potential partnership, or you’ve been working together for a while and want to make sure it stays that way, these are the topics you want to cover – plus one question per topic explored in more depth:
Values and Motivation
- Why do you want to start a company?
- What’s your motivation for taking the associated risk?
- What is your vision for the company?
- What do you value most in a partnership and positive working environment?
Some people refer to the company vision as the north star metric. On an operational scale, the north star metric is your ultimate measure of success. It might be a specific financial goal, the achievement of a customer problem solved, or the continuous five-star customer feedback.
When speaking about the north star metric for your company with your co-founder, however, you should ask about their vision of the company in 2/5/10 years time. Do you want to grow steady and slow, or explosive and risky? Do you want to get rich, or make an impact (please note that they are not mutually exclusive, but require compromise/prioritisation at times)? What impact is it exactly you want to make?
The north star in this context is the reason you get out of bed in the morning, the motivation to convince partners, stakeholders, investors, and employees to join your mission, the guiding idea that ensures you are going in the same direction. At any point in time, your common north star should help you answer the question of “Where are we going from here?”
Commitment and Expectations
- Will this be the primary activity for all of us?
- How much time is everyone willing and able to commit now? In 6 months? In 2 years?
- How do we measure contribution?
- Are we willing and able to invest money? How much? At what terms?
- Do we want to take on external capital?
- Under what circumstances would we be okay with selling the company?
- What is our ideal exit scenario, if exit is an option at all?
- What happens if one of us wants to leave the company?
While everyone’s working style is different, you should make sure that your approach to work and getting things done is at least compatible. What many co-founders do not talk about, however, is how they measure inputs. There are always times when one team member puts in more effort than the other. Overall, however, there should be a balance, especially if you hold equal equity – otherwise frustrations are likely to arise.
So how do you know if you’re in the balance? The crux is whether you are measuring in time spend or agreed output. Both have their advantages and disadvantages. Most co-founders probably think along the lines of “Spend every second you can on the startup and get as much done as possible”. While that could be a recipe for getting done more than expected, it could also lead to extreme burnout, or might not be applicable for people with family responsibilities. As there is no right or wrong, it is simply important to talk about it and set clear expectations.
- What do you need to work effectively?
- How do you handle stress?
- How can we support each other in handling stressful situations?
- How do you handle conflict?
- What do we do when conflict arises?
- How should we give feedback to each other?
There is conflict in every relationship. If anyone tells you otherwise, they are either lying or really good at bottling up their feelings (ready to explode eventually). The comparison of a co-founder to a spouse has been done one too many times, but when it comes to conflict, it truly is a similar situation. There is no easy way out, and you better resolve it sooner rather than later. While there is a “honeymoon” phase for the first few months of working together as co-founders, conflict is doomed to arise. As different people handle conflicts in different ways, it’s good to understand your own and your partner’s way of dealing. Based on that you can prepare a conflict strategy in advance when everyone is level-headed, non-emotional, and ready to cooperate. Having a strategy in place can help you to pull the emergency brake and follow an agreed-upon protocol to hopefully get back on track – or reach out for external support when required.
Power and Ownership Distribution
- Who will be the CEO of the company?
- How much equity is each of us holding?
- Would we consider alternative ownership structure such as the purpose economy?
- What will the vesting agreement look like?
- How are we approaching employee shares?
- How are we making decisions?
Making decisions has a lot to do with alignment, trust, and – you might have guessed it – open communication, assuming that you are holding equal stance and power in the startup.
What do you do when you disagree about a decision? Who do you ask? What is the framework or set of questions you use to determine which decision you will go for?
What decisions can you make on your own, which ones need team approval/agreement? What do you do when one of you has to make an important decision on the spot? Do you trust that they do the right thing, or do you agree to stall the process and first discuss to ensure you’ve covered all perspectives and scenarios? Especially when going into important meetings, make sure to prepare before, go through possible decisions and scenarios, and align on those.
Resources and Constrains
- Are we going unpaid for now?
- For how long can we go unpaid?
- When do we start paying ourselves? And how much?
Now, this is a tough one. It’s already hard enough to find someone with complementary skills, willing to take the risk to found a company, excited about the same space, AND financially equipped to work for free until enough revenue is coming in. It is very likely that different co-founders will have different personal runways. As with everything in your co-founder relationship, open and honest communication is key. Speak about your financial needs early on, and set expectations from the start. If one of you has a family and dependent children, they might not be able to work unpaid for as long as the bachelor/ette. Talk about what that means in terms of time and money commitment, and under what circumstances everyone could work full-time on the idea. You’ll save yourself a lot of disappointment and frustration in the long-term.
And that’s what all these questions are truly about: setting expectations, and avoiding disappointment and frustration in the long-term.
Once a year, the High-Tech SeedLab opens applications for early-stage, high-tech startups (usually teams) with a focus on sustainability and women in tech. The next round of applications is likely to open in autumn 2021.
You have a great idea you would want to work on with support from the High-Tech SeedLab? Start reaching out to potential co-founders, test your relationship, and have the difficult conversations to increase your chances to participate in our next round.
This program is financed by the European Social Fund (ESF), as well as the State of Berlin.