How do you find a badass co-founder?

Finding a co-founder is damn hard
In the last couple months, I've been keeping an open eye out on finding a high-quality co-founder for the startup I'm doing as part of my EIR gig. Ultimately, the scarcest commodity in the entrepreneurial community is NOT venture capital money - there are billions out there - but rather very high quality people. In particular, the highest quality people out there turn into co-founders, so that's incredibly important.

In particular, a co-founder's able to help balance you out, especially on mood. So if you are both in a room, the startup is on the rocks, and you say, "god we're fucked!" then sometimes your co-founder will say, "well, why don't we do X." The same will happen vice-versa, which is great.

How many co-founders?
2-3 founders maximum. I think once you get beyond that, you're diluting the group of talent in place. Ultimately, there's a huge distinction between founders and employees, and you have to choose carefully. Beyond 3, the equity structure gets messed up too - you take a round or two of VC money and you own a very small piece of the company.

Of course there are exceptions like VMWare, which had 6 co-founders that all did well. But the norm seems closer to 2-3.

What defines a good co-founder?
Short answer is, I have no idea :)

Long answer is, I've done a lot of talking and thinking about the issue, and I think I know what is good for me (and maybe me only). Ultimately, you are looking for a guy with the following:

Complimentary in skills, but from the same cloth in attitude and culture

On the skills front, because I'm more of a business-y person, I'm looking for someone who is very technical. Also, because I'm more of an unstructured creative thinker, it might be useful to meet someone who is more structured and detail-oriented. A big piece of this is also a Mr. Inside versus Mr. Outside designation. Who's in charge of talking to customers, partners, and potential investors? That might be one guy, whereas the other is more focused on internal operations. This might hold true even as the company scales up.

The other side, which is about attitude and values, is much more difficult. If you are looking to found a company, and you have an idea that you're driving, that says a lot of things about you already. You're probably driven, have a vision for where you want things to go, and are self-motivated enough to get things off the ground. You may also be someone who can convince people to follow you, or give you money, or whatever.

My questions for values/culture
For me, I've been thinking about a series of questions related to culture and values. Here are a selection of them:

• Let's say you wanted to start a new company? How would you do that?
• Tell me about a major disagreement you had recently - describe what happened?
• How would you approach hiring people?
• What's your long-term goal with your career? Where do you want to be in 20 yrs?

... and etc. Lots of questions you'd ask an employee, of course.

I think you'd also ask a couple questions as you observe the guy:

• If you put them in a room with 5 peers, would they emerge with the 5 guys signed up to follow them?
• Would you feel comfortable introducing them to everyone you know?
• If you say something they disagree with, how long does it take before they push back? How hard do they push back?
• If you guys disagree on their side of the complimentary skills, what happens? What happens if it's on your side of the domain expertise?

Peoples' views on this are going to be different, but in general I'm going to be looking for the guy who can sign up the 5 guys in a room, who's great to introduce to everyone at all levels, who pushes back hard and immediately, and doesn't care if its on your side of the skillset or theirs. I think all of these things define a strong leader who's a peer, rather than an employee.

I'll write more on this topic later, as it's a critical one, but would appreciate comments in the meantime.

Comments

[Lee Semel]

I've been facing the same issues myself in looking for co-founders. It's difficult to find someone that both complements your skills, has the leadership and drive, and that you enjoy working with. Here in NY there are generally fewer people available to choose from (unless you're starting something to do with finance or advertising). I think you're right about no more than three -- one technical, one business-oriented and very outward facing, and one who's a great designer and/or product management person. Of course this depends on the specifics of the idea, and some people have combinations of these skills.

[Adam]

You're spot on that finding a co-founder is harder than finding investment capital. In addition to the questions you propose asking, I think you need to ask "Why do you want to start a company?". This is somewhat similar to the favorite VC question "Would you rather be rich or famous?", except in this case there isn't necessarily a right answer. The real goal is to ensure that your interests are aligned, and the source of one's motivation is extremely important especially when you're down in the dumps that you will inevitable find at some point in the startup process.

In the end, you really need to trust your co-founders and I think that's a difficult proposition when you haven't worked with someone before. For those people who have former co-workers who they got along with, I think it's much easier to take the plunge than with someone you've recently met.

[Dave]

great topic & post andrew.

probably the simple answer here is: don't choose a co-founder that you haven't worked with at a prior company... or that you haven't been "trying out" as a partner for at least 3 months.

starting a company is a *LOT* like getting married, and there's a ton of things you probably will just never learn about someone until you share a lot of time together.

if you don't know them prior to getting "hitched", then you've basically decided to make the burn-in on figuring that out a post-event solution... or problem.

failing having that direct experience, i guess you might be able to make a proxy decision by talking to someone who you trust who *has* worked with the person before, altho i'd still say you're now 1 degree removed from the understanding you need. if you choose this method, then i'd strongly recommend LinkedIn as a way to do some learning about the other person... and then a lot of followup discussions with connections you share in common.

- dave mcclure
http://500hats.typepad.com/

[sam]

the question i'm asking myself is whether to continue working on an idea on my own while seeking cofounders, only to have to persuade someone to work on 'my' idea later; or to simply look for cofounders without pre-conceived notions of what to work on.

i suspect that the people you want to work with would want to feel joint ownership of the idea. but to shelve a potentially powerful idea while 'just' networking and meeting people feels like a loss of valuable time.

[Rahim]

Andrew, you're bang on. As someone who has made both sensible and senseless past choices in this regard: finding the right co-founder is the most arduous task for an entrepreneur.
Another thing that I've always found difficult to grapple with is trust. If you don't know someone well, no matter how accomplished or ideally matched that person might be, how will you know if you can trust them? For me, like most decisions, it comes down to faith in my intuition. How about everyone else?

[Matt Winn]

Andrew:

Great post and speaks to need for understanding personalities - as either an entrepreneur or investor. We've had success at Chrysalis with a tool called Predictive Index. I wrote about it here: http://punctuative.com/2007/03/05/personality-typing-in-venture-capital/

Best,
Matt

[Lee Semel]

I think that you can ask all the questions you want, but it's just as important to actually do some work with the person to learn how it they respond to work situations, and what your chemistry is like in working together. What people say they're like, and what they're actually like in a project situation, are often different. I've had people with can talk and sell themselves really well, fizzle out when we tried to work on a small project. And I've worked with others, who didn't seem that great up front, maybe because they weren't that great at selling themselves, really shine once they start to do real work toward a concrete goal. You need people who are smart, get things done, that you enjoy working with, and have similar values and attitudes, and it's tough to judge these qualities without actually working together.

[Sundeep Ahuja]

You know people like Andy Chen who can make the right introductions :)

[Craig Hubley]

To "actually do some work with the person to learn how it they respond to work situations, and what your chemistry is like in working together" does seem critical to me also. There are many lower-risk ways to get to know people well in their workplace/creative mode. Most entrepreneurs spend time as consultants or contractors between ventures, you won't find too many of them in 9-to-5 jobs, so hiring them to do relatively small jobs, even reports or demonstrations (ideally some involving the management of other people), is one way to get a good sense of their ways.

However the ultimate test of a co-founder is their ability to command respect of others, as you suggest - "who can sign up the 5 guys in a room" particularly the technical people. This is a lot more important than being a hotshot coder since most coders are bad managers and these days a requirements, specification and project management guru can offshore a project that used to require local coders for 1/4 the price or less. The days of just two guys in a room pounding out the next big thing are fast ending in favour of those who SPECIFY the next big thing and examine the next day what the elves offshore whipped up overnight. That company can scale and run 24x7 to outpace competitors. Open source projects have this edge - but proprietary code has it also in some big companies.

(linked URL is a yahoogroup about such "open projects")

Ability to identify with and enable people working in lower-paid jobs is so critical I think I'd avoid working with anyone who had no ability at this. While the boardroom is important, everyone there is well paid to get over each other's quirks, and they usually do. It's much harder to motivate the call center staff making $6/hour than lawyers making $600/hour.

Pushback/backbone counts for a lot too. A silent failure is so deadly to a startup that an investor would be wise to pull out the second time one occurs. People who make commitments have to both communicate their success AND their problems, else the whole project bogs down in an endless series of minor followups and nagging questions: 'is this done yet?' 'are you having any problems?' 'you know we can scale this back if you are having a problem, since it's so critical to meet the deadline, right?' etc.

Delegation skills matter the most. Look for someone familiar with wiki who just does not care who gets the final edit. Someone who'd give away credit to anyone to get the job done faster: A 'throughput' mindset not a 'credit' mindset. Which to me is the difference between leaders and employees.

When the co-founders face their investors, I think they present themselves as a portfolio of human capital. In my theory, that means they have three specific and different ways to demonstrate their skills and suitability to work as a team. They're individual (the talents they bring to the table and which go away with them), instructional (their ability to produce rigorous artifacts like a patent, business plan, code and operations plan) and of course social (ability to form relationships that are critical to success, which is modelled by their own relationship to each other). The plan must be clear on how finance and infrastructure and (if it's an edge) energy and natural capital are going to be used. That's six "styles" of capital altogether that have to hang together as a coherent value presentation.

Emotional harmony is key - differences must be openly shared but the founders have to show their ability to resolve any degree of conflict. It helps if they don't rehearse the pitch, but construct it by adding onto what each other says - it can be like improv comedy, which is very good training. 'Don't block!'

If the co-founders are like parents, then employees are like children, and all the same logic applies as in a good or bad marriage. Watch Dr. Phil for clues for what not to do, and when to take it into the back room.

[Shanti Braford (a dude)]

Sam said, "or to simply look for cofounders without pre-conceived notions of what to work on."

That's a great question.

What is your take, Andrew?

I personally would prefer not to join up with someone who already had an idea set in stone as to what they wanted to do; even if my interests converged a bit.

Instead it seems like the best way is to get to know someone and serendipitously decide to start a startup one day, because you both had the same idea. (I believe YouTube started this way... though they worked together at PayPal too)

[Ronny AW]

Andrew, your posts are great reading, just the thing I want to read about, and straight to the point. I think you have most of the qualities *I* look for in a co-founder.

As a reply to Craig Hubley's comment, mostly to help him and others with the same misconception, outsourcing the software development in a technology startup is a recipe for disaster. Ignore me at your own peril, but please post your stock ticker here should you ever go public, so we can short it...
If you are a technology startup, your main advantage over your competitors is your technology. You outsource accounting and stuff like that, but you don't outsource the main part of the company. Imagine a garage doing the administration and accounting themselves, but outsourcing all the repairs to another garage - they might as well cease to exist.
And if you think you can find the best hackers by just hiring some outsourcing company, think again! Virtually no hackers would ever work for an outsourcing company. From such an establishment you will get average coders doing average jobs, no inventions and no innovation. Trust me, I have had both hackers and average "coders" working for me, so I know what I'm talking about.
I am probably the type of combined business and tech guy you should be looking for, but you won't find me because I'm too busy working on my own ideas...
I recommend reading some Paul Graham. http://www.paulgraham.com/start.html
You do make a lot of good points in the rest of your comment though, which I have read with great interest.