Published in UT San Diego, August 12, 2013
How many technology companies with a market cap greater than $5 billion were started by a single person — in other words without a co-founder?
That’s right. The number is zero. (Bloomberg doesn’t count — it is finance.)
The “charismatic faces of the company” quickly come to mind — think Bill Gates, Larry Ellison, Steve Jobs, Mark Zuckerberg, Mark Andressen et al. All of them had a co-founder. You need at least one other person for myriad reasons from financial to psychological to technical.
A co-founder is different from employee No. 1. This is the person with whom you “create” the company — i.e. the one with whom the idea is germinated, agreed upon and initiated. True, the company will morph and pivot countless times, and your co-founder is part of that process.
Let’s talk money, stock and wealth. When you start your company, a co-founder will get between 10 percent to 30 percent of the company. In some cases, maybe even 50-50 — although in general I strongly oppose that split. You cannot be co-chief executives — never, ever, no way, no how. One person almost always brings more value. (As you can see, I do not feel strongly on this issue.)
In addition, I am advising both of you to have vesting agreements and a “prenup,” because this is a marriage, and many marriages end in divorce. And you do not want a lawyer giving away your mother’s antique rocking chair.
Read Zuckerberg v. Saverin, also read Zuckerberg v. Winklevoss. The law firms of Silicon Valley and New York are littered with “disagreements.”
Now finding the right co-founder ranks right up there with finding a spouse. Not so easy. Ironically, the Internet has begun to address the problem with websites devoted to helping you find this one magic person — sort of a Match.com for founders, (e.g. Founder2Be, FounderDating). However you find your true love, here are some things to consider.
Complementary skills: No baseball team needs four shortstops and zero outfielders. If you write code, you need a Wharton/Harvard dropout or an MBA and vice versa.
Mutual respect: Do you really like being around this person? You better, because you are going to be around him or her 24/7 for the first year.
Shared goals: One of you wants to cure cancer in Africa; the other wants a Gulfstream 6. Get in sync.
High degree of flexibility: This calls for fiercely embracing the infamous “rational man behavior” mantra. No neurotic co-founders.
The Startup Genome Project says that “balanced teams with one technical founder and one business founder raise 30 percent more money, have 2.9 times more user growth and are 19 percent less likely to scale prematurely.”
Lastly, when do you start to look for a co-founder? The answer: Before you have a firm idea. That’s right, because you are looking for a co-founder, not employee No. 1. You are looking for someone to be part of the getting pregnant, not someone to just deliver the baby or be the nanny.
Dig the well before you need the water. Avoid desperation and the leaping into the arms of the first person who says yes.
I love partners/co-founders. I have never done anything, from Hollywood to real estate to technology, without a partner. I know what I don’t know, and I proactively seek out the ying to my yang. The startup adventure is a tough road regardless, and it always better to have someone else in the car just in case you fall asleep at the wheel.