1. Start with your vision
If it’s compelling enough, your vision — your own reason for starting your venture and the impact you seek to have on the world — is often the deciding factor for a co-founder considering joining forces. Having a clear and succinct vision is important not only because you’ll have to pitch it repeatedly to your network and potential candidates, but also because it serves as a great focal point for your product and business planning — and is therefore worth investing time in articulating well.
Examples of compelling vision statements:
- Shopify: To make commerce better for everyone.
- Tesla: To accelerate the world’s transition to sustainable energy.
- Amazon: Our vision is to be Earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.
- Warby Parker: We believe that buying glasses should be easy and fun. It should leave you happy and good-looking, with money in your pocket. We also believe that everyone has the right to see.
2. Analyze what your business needs are
The next step is to clarify your startup’s need for skills and expertise, and there are a few ways of doing that.
- Consider your need for balance: One of the findings of The Startup Genome Project, which analyzed data from thousands of successful startups, was that having a balanced team is a prerequisite for success. In its terminology, a balanced team has both strong technical and business expertise in the founding group.
- Ensure you have critical competencies: To further expand on the theme of founders’ skills, it is helpful to consider the concept of the “dream team,” which has been around in Silicon Valley for some time. The dream team concept identifies three distinct competencies that are critical for bringing a new venture to life.
- The Hacker: The capability to build product
- The Designer: The capability to talk to customers and recognize their needs
- The Hustler: The capability to raise funding for the venture, either through revenue or investment capital
As much as the capabilities mentioned have been given tongue-in-cheek names, it is essential for you to recognize which would be best for you to focus on — and which ones you’d need a co-founder to handle.
- Consider the demands of your business model: The last step in recognizing your business need is a suggestion from startup guru Steve Blank: Use your business model to recognize in more detail the activities and talent required to run your business. This will help establish both the roles and the high-level skills your business requires.
For instance, if you are starting a consumer business, growth marketing, branding and potentially e-commerce will show up clearly in your business model. However, if you are building a business based on deep technology and science, it may be that you need a finance-oriented co-founder with a track record of raising venture capital to help fund the runway you’ll need to succeed.
3. Understand what you bring to the table
Once you understand your business needs, the next step is to understand your own role and aspirations: What do you like doing? What are you really great at? How do you like to work? What kind of work environment and situations do you excel in? What kind of situations drain your energy?
Founders who are very deliberate in this endeavour invest in a recognized personality test for themselves and any other senior members of the founding team — and share the results. It helps each of them understand what strengths they bring to the team, any skills gaps they have (when compared to your business needs), as well as traits and working styles. It allows founders to hire for the right gaps and decreases the risk of clashing working styles and personalities.
A less rigorous but nevertheless effective way of establishing your own role and preferences in the venture, is to consider people you have worked or studied with in the past. There are two parts to such an approach.
1. Look through your resumé, and for every work or study role, ask yourself:
- Who was my favourite co-worker or fellow student? In each case, why were they my favourite?
- Who was my least favourite co-worker or fellow student, and why?
Once you’re done with this list, evaluate the patterns you see in your preferences.
2. Reach out to some of your former colleagues and ask them to help you better understand:
- What work you did well
- When you appeared to be at your most energized
- What you did less well when you worked together
Please note that some people may be uncomfortable with answering these questions, so it may be worthwhile to send an email in advance, explaining why this is important to you, that their answers will be kept confidential and how much you’d value their insight and honest feedback. Some may still ask for time to think it through.
After you have completed these steps, you should be able to clearly articulate your strengths and what kind of work you like to do. You should also be able to describe what kind of work environment you prefer, and the typical traits of people you work well with and those you would like to see in a co-founder.
4. Create a co-founder profile
Knowing your business needs, as well as your own strengths and preferences, helps clarify the most obvious gaps you need a co-founder to fill, in addition to the personality traits you prefer in your peers. All those insights should go into a co-founder profile description. The profile should be no more than half a page — the brevity will force you to focus on the highest priorities. As clearly as possible, the profile should contain the following information:
- Main role and responsibilities
- Ideal work experience
- Minimum required skill set
- Top traits and working style
One note about skill set: All founders are learning on the job, as that goes with the territory. It may be particularly true for chief technology officers and technical founders who often need to learn several new programming languages on the fly, so a demonstrated willingness and ability to learn quickly is essential. However, the expectation remains that co-founders should have the skills to be productive from day one, so your search should focus on candidates who have immediately valuable and mission-critical skills.
5. Consider equity as pay
One of the key traits to look for in a co-founder is a willingness to be paid in equity, especially if your venture is a pre-revenue startup. Not all potential candidates are in a position to do that, which makes recruiting a co-founder challenging.
Exactly how much equity they will receive is a matter of negotiation. There are a few factors that come into play as the equity piece is being considered — these are time, control and dilution. See below for more details.
How much time is already invested in the venture? What assets and relationships have already been built? If it is still relatively early in the startup’s life, could a co-founder be offered an equal share, at least after proving their worth? If you’re a little further along, would you consider offering the co-founder an equal share if they were willing to put hard cash into the business to compensate for the work you have already done?
Many founders, especially first-time entrepreneurs, worry about giving up too much control of their shares. But co-founder candidates will have the same concern, so at some point you’ll have to be willing to take a leap of faith and relinquish some control to the co-founder. One thing to note is that these issues will come out as you work through the shareholder agreement, but it will be very expensive to work all of them out with your lawyer in the room. We recommend talking to other founders and startup teams about how they solved these issues prior to meeting with their lawyer. In the end, you’ll want a solution that is balanced and fair for both parties.
Along with control, many founders worry about dilution. Using equity to build the founding team is a balancing act between baking the largest cake possible and retaining a desirable slice. When it comes to bringing on co-founders, it is clear that the focus is on baking the largest cake possible: new co-founders who bring both new and mission-critical expertise, as well as executive capabilities, to the table may make the difference between success and failure.
If what you are both aiming to build is something that requires VC funding, that will lead to further dilution — but again, it’s with the intention of growing a much larger business than it would be without the funding.
If you are an ambitious founder seeking the talent and resources of others, you need to be prepared that your share will diminish over time as you pursue your vision. Yet this does not mean a negative result. Consider the example of Dharmesh Shah, co-founder and CTO of HubSpot. As outlined in Forbes, Shah has been diluted to the point that he only owns 3.4% of HubSpot’s shares; however, with the increase in share price, this still makes him a billionaire.
Completing the previous steps means you now have the three main assets that will help you identify your co-founder:
- Your vision
- Your strengths and work preferences
- Your co-founder profile
All three pieces should be written down in one or two succinct paragraphs. Before you start your search in full, we would like to introduce you to a practical model for how to consider potential candidates: the Bullseye framework (a model in long use, and recently described in the book, Traction).
6. Use the Bullseye framework
When screening potential co-founder candidates, it is helpful to consider your co-founder profile as the bull’s eye in this model: it describes the ideal qualities you are looking for in a candidate. The layers surrounding the bull’s eye represent candidates with some but not all of the qualities in your co-founder profile. (Side note: The Bullseye framework is similarly helpful when evaluating potential customers and investors.) In real life, the ideal target may not be available, so you’ll end up with a list of potential co-founder candidates who meet most but not all of the qualities in your profile and therefore place in the second or third layer outside the bull’s eye, and that’s okay. The other thing about considering candidates who don’t hit the bull’s eye is that you may find someone who brings something unexpected to the table — such as connections to customers, talent or investors, or something you hadn’t even thought about — but could prove essential as you think about the business going forward.
Two other points to consider when evaluating candidates:
1. Leadership: A co-founder is by definition a senior leader in the startup team, so in addition to their functional skills, they need to fit the profile of a business leader. They should demonstrate a strong interest in all strategic aspects of the venture, as well as have people leadership skills.
2. Coding ability: If the person you are looking for is expected to write code, it may be difficult to evaluate their ability to do so if you are not a software engineer yourself, because their resume can’t demonstrate essential information. The fact that they have spent years in software development roles is not a sufficient qualification in and of itself, as most developers can write code that is 95 percent complete. Very few are capable of writing 100 percent complete code (meaning functional applications). In other words, the Bullseye framework doesn’t apply in this context. So how do you assess whether someone can write code to the level you need?
- Evaluate their portfolio: Enlist the help of a friend who knows software development and have them review source code the candidate has written. Developers differ in style, and it is important that the candidate writes in a logical and accessible style, so that as you grow, it is as easy as possible for new members of the dev team to understand and make changes to it. Aside from style, test that the code actually works, and have them describe how they worked with libraries and effectively solved integration problems. In evaluating their portfolio, also try to understand who else was involved in the project and how they collaborated both in terms of solving problems together and organizing work between themselves.
- Look at GitHub and Stack Overflow: Both GitHub and Stack Overflow tell you how well the candidate engages with the developer community in general and can give you a good indication of their quality of work. By looking at someone’s GitHub account, for instance, you can see their contributions to other people’s work, which is important because as a co-founder, they would be expected to help more junior developers problem-solve.
- Give a test: If evaluating their portfolio is difficult, you can have them take a test that allows them to demonstrate their development skills. There are several sites, like DevSkiller and CodinGame, that both create and evaluate tests of this nature.
- Learn from others: Hiring a technical co-founder is a challenge many have encountered before you. Look online for practical tips on how to prepare for and be successful in this process, such as in this article in Forbes on hiring a software developer.
As you go through the process of hiring a co-founder, bear in mind that great candidates always have options, and in the same way you are evaluating them, they will be evaluating you and how well the opportunity aligns with what they’re looking for.
Your search for a co-founder starts in your network, and it may be helpful for you to think of it as a word-of-mouth marketing campaign.
Identify contacts in your network who are connected to companies and cultures you admire, and arrange to have conversations about your plans in general and your need for a co-founder in particular. Use the three communication pieces — your vision, strengths and co-founder profile — actively in your conversations. Ideally, you’ll present a compelling story they can recall when they have other conversations in their networks.
After these meetings, always send a follow-up email that includes the three communication pieces. Your ask of your network is for recommendations of places to look for a co-founder: the companies, events, online forums and communities where you would be most likely to find a candidate. You also want them to recommend others who could either be potential candidates or well-connected in the broader ecosystem.
If someone in your network offers to share your co-founder profile on social media or a relevant online forum, that may be worth it, even if it results in a number of less-qualified candidates coming your way.
Before starting to network, it’s a good idea to publish your co-founder profile on your website, as that has proven effective in catching candidates who are actively looking for employment.
This process of reaching out and activating your network will take some time. It will likely lead to many dead ends, simply because finding a co-founder is demanding — so mustering a certain amount of persistence is essential.
This guide was researched and written by Jon E. Worren.