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They say choosing your spouse is the most important decision you willmake in your life. Similarly, choosing your co-founder(s) is the mostimportant decision you will make while building your startup, sinceone could argue that at least for some period of time, you’ll bespending more waking hours with your co-founder than yoursignificant other. Great partnerships are like marriages, they need a lotof common ground, strong mutual attraction and a willingness to workhard - especially through the inevitable issues. You first need to dispel the delusion that you don't need a co-founder.You do. You may have all the requisite skills, but even then, co-foundershelp spread the work and make better decisions. Sure, you can talk toyour brilliant self, but that's not as effective. The selection of co-founder(s) is one of the key determinants of long-term success in astartup. But if you have the wrong guy, that's a hard problem to getover with.
Knowing them beforehand
The idea is that by having gotten to know the person, you’ve alreadyhad a chance to see how they work, how they think and whether you’relikely to get along. This makes your college or workplace friend circle avery useful hunting ground for a potential business partner. ConsiderChad Hurley, Steve Chen and JawedKarim, for instance. Chen and Karimwere classmates at the University of Illinois, who then met Hurley atPayPal, where all three wereemployees. They then foundedYouTube, which received funding fromSequoia Capital, whose partner Roelof Botha, who also joined the YouTubeboard of directors, was the CFO of PayPal.You better be good friends with themas well, since you're going to spend alot of time working together. Also,there will be times in the startup lifetime that will test your relationshipwith your co-founder, so make sure you understand the stakes beforegoing in.
Someone you can trust
Mistrust can be a cancer for your startup. The good news is that youcan avoid it by choosing afounder you trust, and then workto foster deeper trust in yourrelationship over time. Keep inmind that it’s a never endingprocess.Play fair. You can’t expect othersto care as much about thebusiness when they don’t see themselves getting a fair share. This goeshand-in-hand with trust.
Great minds think alike
There should be aligned interest and commitment from your co-founder. You both have to (at some level) be committed to not onlybuilding a company, but the same company. If one of you wants tocreate a company you run forever (and reap profits) and the otherwants to take a shot at a high-flying startup that gets sold or goes publicsome day, you’ll have a problem. Of course, co-founders may influence each other’s decisions in thiscontext. Afterall, Larry Page’s "BackRub" might just have remained aresearch project on citation backlinks in research papers, with limitedcommercial value, unless Sergey Brin, a fellow Stanford Ph.D. studentand close friend, had not come to the rescue and worked with him tomake it what we today know as Google.
Choose your compliment
A co-founder should be strong in areas you are not. A great complimentto your skills is someone wholoves to do things you hate,someone who makes thesum of your parts greaterthan the whole. If SteveWozniak had remained thenerd who was simplysceptical of the idea of sellingcomputers, and had notbeen convinced by SteveJobs, the born-entrepreneur, to come up with a company so that theycould at least say that to their grandkids, neither would’ve conceivedApple Computers independently.Make sure at least one of the founders has the technical expertise. Thisis so you don't have to try and outsource the actual productdevelopment. Similarly, make sure at least one of you can sell. No greatidea is of any use to a startup that can’tmarket it properly. Effectively, you needto identify your “type”, and look for thecorresponding complementary skill inyour partner.
Practice, not just preach
You need a co-founder who can getthings done. If you have a great idea,and you want to bring it to life, findsomeone who is passionate about yourvision, and who is willing to work for it.Since startups involve lots and lots of work (some fun, some not so fun), partof the value of your co-founder should be that the work can bedistributed. If your co-founder is too “strategy” focused too early, you’llget buried because there’s too much to do.Passion is easy to spot. Years after the two had befriended each other inLakeside School, Seattle, where they used to tweak the school’sscheduling program to place themselves in classes with more femalestudents, and had faced several penalties for other naughty uses of their programming skills, one of them dropped out of WashingtonState University and called on the other (in Harvard then) to do thesame, for starting a venture together. Both understood each others’passion and immediately complied. They were Paul Allen and Bill gates,and thus we have, Microsoft.
Talk the talk
Have the hard discussions around equity, compensation andresponsibilities early. This stuff does not get easier over time – it getsharder.How should the division of shares be controlled? Who will make thedecisions? What happens if one of us leaves the company? Can any of us be fired? By whom? For what reasons? What are our personal goalsfor the startup? Will this be the primary activity for each of us? Whatpart of our plan are we each unwilling to change? Will any of us beinvesting cash in the company? If so, how is this treated? What will wepay ourselves? Who gets to change this in the future? Deferring these conversations is a great way to ensure problems later.
So what are you waiting for? Step out and start looking!
Two’s Company
Authored by
Shrey Goyal
, this article explores the importance of choosing the right co-founder for your dream venture, andenumerates the various points which you may have to consider before committing to a partnership for your company.
Page 2The Entrepreneur
h tlTe recentepisode offraud by he Chairman of Satyam and al thee sadsevral otherfraud perpetrte by otherentrepreneurs around theli eiTsword s a shame onthe name of entreprneurshp. hese iolateds ariepisodehavea tendency to mke othe entrepreneur's lfe tougher.hi a eltTey brnga bd nameto th ilk. They are usually folowed by ougherrnregulations, which have a tendency to restict freedom of busiesshf aeo rcoices orentrepreneurs. They mk cnduct ofbusiness moee ork rmlexpensive. Financirsto increase the ispemiu and generaly makeoee g oy. beentrepreneurs grvl mor toetat their mne Allecaus, someonernrh hgotgeedy ad unscupulous. Te pricetat genuineentrepreneurs payrt efo he fault ofthse scamsters is so huge that it ispworthy of a self discilined vigil within themcomunity itself. There is acase for them toatmvbecomecive policeen of themseles and blowh tythe wistlewhen heseeone of their cohortsbehaving funny.gengnIn my lon exprience fudin, raising fuds andvterating the entrepreneurs oer the pas thirty yars, Isnhave seen twotages when the bug of cheatigh hdsbites teentrepreneurs aret for differentpnehreasons - atthe initial hase and oce succss is established. When tettr o mteprojectis inthe iniial phase heeis a fcused pursuitof a liidibobjective– may be a small project- drven y a passion to succeed andi sehegambling everythngto increa te prospects of success. Thre is notidarmuch care gven to forms, rules an norms, perhps not affodable asl ar ewel,s typically entrepreneurs stat poor,are up against establishdaeh iplyrs who are muc more powerful. Someentrepreneurs mstakenlyhti to esc,believe tat heronly way succeed is topursu ome short utsntrewhich seem towork for sometime. Unfortuately the road tha getsntnaerepreneurs i Indi is oftenlitteredwithobstacles and temptingaodgy tohptachnces fr wrongoin and manfall prey tose temtions andmhcompulsions. This it seems has becoe the norm rather than tesexception. It is unfortunate because, thoe entrepreneurs of lessertissy alocompeitvene and objectivitdofl prey to this and comprmise sostemuch of their busines fuure. They nevr learn the right way of doingshodscpbeoubusines. Tey do nt unertand ometition and elive crrption toln. dpgklbe a egitimate part of busiess They donot evelo stron wor cutureahtn lmandledership witin their organizaio,filing the instead withcpiriinometent staff that wll lean to manpulate rather than work smartsflto ensure business success. Mot harmful o all they wil earn forvetahm nthemseles an ill rpution, wich ay betolerated, but everetrbcenrespected and henc will no eve e the hoic partners for fianciersnmandbusiessen.h shf The secondstagewhen entrepreneurs go off track is wenthe flu ocs p seisucess many timeowers them with aens of invinciblity. There isi relcy aseitheracoolngoff o a phas of compaenctht set in or aap p ,smegalomani that rods themto lay 'god'.In either case focus hiftsoauhed ttaway frm manging the bsiness wit th egethat ensuredis iniialcddrisucess, an business falters. Instea of corectngthatin the rightnr ees roumane,entrprenuresrt to short cuts that their newly acqiredasoc'powerstatus' offer them nd et down the path of wrngdoings whihnalloftenbrigs them tocolapse. Some of the wel known globallntlnt f phiahropists, such as Rockafelers we through this processooerso or ometamrphosis, rpotedly tarting fas botlegges,but wh themetmuredemed heselves before it was too late and earned a respectflblntplace in society and history y becoming phiahropists!ia otetThe nitilperiod f struggle ses th tone for he character andbehaviorgicees. Priiof entrepreneurs throuh the lfecyle of thir vntureAzim emj nletevekaothe eary 80s, is rpud to hae dclined to 'tae cre' fsome corrupthyroat ltaf officials in is hdogenated il plant in Karnatak in heeary sges oeiehis entreprneurial lfe. As a result, the officials closed the plant on falscharges of flouting of excise rules. Azim Premji did not buckle down; letthe plant remain shut, while fighting the case legally. It took reportedly 3years for him to come out victorious, thanks also to the support of theemployees of the plant who were also suffering, and reopen the plant.While it was painful, the episode surely sent a clear message to all thatAzim Premji is not to be messed around and I seriously doubt if he hasever been harassed on that front ever after. More importantly, it is stillremembered and recounted as a legend in principle basedentrepreneurial behavior. The way I look at it, Mr Premji invested thesuffering caused by that incident, including massive financial losses increating a credibility capital, from which he is still reaping benefits. Thisearly strength in his resume ensured businessmenand financiers around the world respect Mr Premjias a trusted business partner, aiding himconsiderably in his ventures to date.While there are connotations of ethics and moralityassociated with the notion of integrity, I amfocusing on the competitive advantages of integrityas a corner stone of entrepreneurial behavior. Oncean entrepreneur earns the credibility as a person of integrity, doing business becomes that mucheasier. Partners will seek to do business with such an entrepreneur whothey can trust, and might be even willing to pay a premium for thatfeeling of comfort. Financiers will vie with each other to provide funds,as they know their money is relatively safe with such an entrepreneur.Once the entrepreneur sets the limits on acceptable behavior based onprinciples of integrity, he and his team in the organization know thatthey can not resort to short cuts and need to be genuinely competitiveto succeed in business. This makes them seek real competitiveadvantages and conduct business to succeed against not only otherroutine businesses, but also some that may 'enjoy' advantages due topracticing business without integrity. This is not easy and I am not askingthe entrepreneur to be a monk.Let us take a live example from the field of road contract business. Let usassume there is one contractor (called Mr I) who behaves withcompletely integrity and there are others whose integrity quotient letssay varies from awful to 'godawful'. The challenge that Mr I faces whenhe bids for a contract are that he needs to take into account thepossibility that the bidding process is perverted to favor the othersbecause they may ply bribes, or for someone in the bidding organizationto let these corrupting bidders know the lowest bid amount, so they canquote a marginally lower prices and win the contract, etc. Can Mr I canovercome this challenge while maintaining integrity? Yes. There aremany things he can do, including, finding technological solutions torender road building less expensive and hence can quote so low thatothers without that technology may find it unattractive to bid at thoseprices. He could resort to the new provisions of Right To Information(RTI) to shed the required extent of transparency in the bidding process.He could build high quality roads on a pro-bono basis to demonstratethe longevity and riding comfort, and hence win the support of theusers, who could be used to campaign for him. Incidentally these areideas I picked up from several good contractors' real life experiences.Let us not kid ourselves. It is tough to be straight. But who said being anentrepreneur is a cake walk? But setting your behavior right from thebeginning, though might make it tougher, straightens a lot of stuff forthe lifetime of clean, successful business. Giving into pressures ortemptations to cut corners usually sets entrepreneurs on a slippery slidethat look so inviting and harmless at the beginning and then keepsgetting harmful over time to what Ramalinga Raju calls the 'riding thetiger, without knowing how to get out without being eaten'phenomena.
Integrity - A Corner Stone of Entrepreneurship
By
Mr. R. Ravimohan, MD and Region Head of Standard & Poor’s South and South East Asia division
, and also the appointedchairman of the CRISIL Board of Directors. In wake of the recent Satyam scandal that has caught the entire corporate world in aflurry of uncertainty, Mr. Ravimohan discusses about the moral issue that every entrepreneur today needs to address.
Mr. R Ravimohan (Left)
Page 3The Entrepreneur
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