As a mentor at Virgin Startup, I’ve often been asked the following question:
“In your opinion, what are the most important characteristics of a potential co-founder.”
My answer? There are 7 key traits your co-founder must present if you want to set up a great team. To build your startup and make it successful they need to be:
- Hard skilled
- Not scared of failure
- Fast learner
- Lateral thinker
- Aligned on the vision
- Obsessed with perfection
I’ve learned the hard way how necessary these traits are. This is in part thanks to my experience as a co-founder of Altar.io (and a startup before that) – but also thanks to my experience as a mentor. I feel they are essential to your co-founder’s character.
Before we dig into the 7 steps I would like to take a moment to highlight a few guidelines. This will be especially helpful to any first time Founders reading this.
Look for Intellectually & Personally Humble People
You are probably thinking “why isn’t this part of the 7 step list?” I wouldn’t blame you for questioning, but let me explain.
I truly believe this trait is crucial not only when looking for a co-founder (business partner). Instead, this trait should be present in all the people we trust. Moreover, it’s like a precondition: without this essential personality, the other traits do not work at all.
One should have a consciousness of the limits of one’s knowledge. This includes sensitivity to circumstances in which one’s native egocentrism is likely to function self-deceptively.
The apostle Paul says, “Knowledge puffs up, but love builds up” (1 Corinthians 8:1), meaning that knowledge with love leads to humility and a sense of obligation.
This characteristic allows people to have all the other traits presented later in the article.
Don’t be in a Rush, Don’t Run. Looking for a Co-founder is Not a Summer Date
Picture this: you’re excited because of the great two months in front of you. You’re in front of Ipanema beach with a chill Caipirinha enjoying the sunset and Kygo’s playlist in the background… You meet a good-looking girl/boy showing her/his dancing skills on the patio and yes, you were exactly looking for a very expert dancer to spend the summer with.
Bingo! You start dating her/him, everything is running properly, but the summer has an end by nature and both of you will come back to real life soon. Did you already plan for that? Of course not, great times make you forget any future problems.
When a business idea seems to make sense in your mind, you’re exactly in the same situation as the guy/girl at Ipanema: everything is exciting, you’re probably feeling like Zuck Junior.
Your Best Friend Is Not automatically The Best Co-founder
If you want to pursue a business relationship with a friend, make sure he has the right skill set and personality. If he doesn’t, let him continue to be your best friend and don’t mix friendship and business as it might harm both.
Also, if you’re specifically looking for tech co-founders, one of my co-founders, Daniel De Castro Ruivo, highlighted perfectly the choice you have in your hands when building a tech business. I truly suggest you read his article “CTO, Developers, Agency? What’s the Best Way to Build Your Startup?”.
Finally, here we are the 7 traits you need to consider when looking for a co-founder:
1. Hard Skilled
People must be great at what they do. The easiest way to find and validate if someone is extremely good is to look for “proven-experience.”
By “proven experience” I mean the particular set of skills that are essential to create and grow a healthy business. It could be 4 exited startup and/or 3 IPOs. Of course, few such people exist out there but it could also be related to previous experiences in top high-tech firms, or simpler activities successfully carried out in the past:
- A developer could have developed a game from scratch when he was 17 (bear in mind that tech-wise, specific complex sets of skills depend on the type of business);
- A marketer could have grown his blog about NBA players from 0 to 50k visitors per month while at Uni;
- A CEO could have gathered experience as the leader of a successful student association.
You can build any type of house that you want (liberty, post-modern, wooden, etc.) but you need concrete for the foundation.
If hard skills are missing, the house can be as fancy as you want – but it will not endure the first strong gust of wind.
2. Not Scared of Failure
There are tons of great professionals out there who are scared of failure. But then again what does it mean to fail?
Some think that failing means hours and days, days and nights of hard-working can translate into a product that does not attract any customer. That’s learning, not failing.
Startups (entrepreneurship in general) are all about learning; making a startup mocks the behaviour of a living organism: when you’re ill, your body understands there’s a problem and so recreates newer cells. If you find out that your market needs something slightly different you iterate, you adapt. And Startups are great at that! You can A/B test almost anything.
Co-founders should behave the same way: Research. Plan. Execute. Test. If something turns to reveal unsuccessful, then iterate until the right solution will be found. It may sound a bit “techie”, but try to imagine your lives as startuppers as if you were software within the agile approach. Always iterating, always adapting.
What if a co-founder makes an unsuccessful decision? Not a problem, as a Fast Learner (as we will meet in point 3), he gathers the insight and next time will try a different approach with the benefit of previous learning.
P.S. I believe that accepting failure well is an innate characteristic. Either a person has it or doesn’t. If he/she doesn’t, they should go for a regular job!
3. Fast Learner
Now if you fail you learn – if you often fail in small tests, you learn fast and you improve fast too. Hence to be a fast learner you need to try very often, fail very often too. Also attending mentorship events and talking to expert people is a must in particular if you are a first-time founder. But when executing, you will be alone with your co-founder(s) sitting in your office making the main decisions, and believe me, some of them will have to be made quickly.
You will embrace different situations where it seems you don’t have a clue how to solve certain problems. A fast learner gets excited and focuses himself on researching and analysing the environment in order to get the most accurate reasoning to back up the answer. Moreover, it’s good practice that all the co-founders have insight on the overall business (technology, marketing, sales, etc.); “fast learner” founders are able to add significant value to the main decisions even if the topic is not their primary subject. And if someone takes the wrong decision don’t worry! Just reread point 2.
4. Lateral Thinker
A Trendsetter. Not a Trend-follower. You want someone in your team who is a trendsetter – just like you. Someone who is so good that he does not rely on others’ common sense but always evaluates and eventually exploits opportunities that are fruitful for each specific situation.
Back in 1908, Henry Ford started selling the Model T when everyone merely wanted faster horses. Steve Jobs created a smartphone with one single button when everyone was still addicted to Blackberry’s keyboard.
You want a co-founder that thinks like a customer. Every customer wanted (and still wants) faster ways of transportation and the easiest and most powerful smartphones. As Michael Templeman says in his article How to Be a Trendsetter, “We are all consumers. We all know what we need, like and think is cool. One way to be a trendsetter is to think like a consumer. What products or services would you love to see?”
5. Aligned Vision
Talk, talk, talk. And then talk some more. All the discussions will lead to success if there is an endpoint. If you reach it, as a banker would say – good fundamentals.
Then there are millions of viable routes to achieve that endpoint, but the different routes are all connected by one single point: your vision.
James Clear’s interpretation clearly wraps up the “failure of vision” problem: “A Failure of Vision is a WHY problem. It happens because of your vision or goal for what you want to become doesn’t align with the actions you are taking”. An example? Secrets, a famous startup from Silicon Valley failed because “it does not represent the vision I had when starting the company”, David Bittow said.
Vision is key: if you truly believe in something, all of your actions naturally aim at that.
6. Obsessed With Perfection
Your teammate should be obsessed with the product/service perfection as much as you are. His and your main daily focus is the product that you’re building.
What do I mean when I say obsessed with perfection? I mean a commitment to making an innovative, disruptive, product that is better than your competitors’ (otherwise why are you doing it?).
Customers are increasingly sceptical about being a client of a lousy service: if you do something, be sure that all the aspects (UX, UI, Speed, Customer Service, Marketing) are well thought out beforehand and executed flawlessly.
Justine Musk (Elon Musk’s former wife) said, “If you’re not obsessed, then stop what you’re doing and find whatever does make you obsessed”.
Building startups is about communication. You may expect good communication from marketers, product experts and salespeople. But maybe you forget about this skill when looking for a technical co-founder, because, even if there’s a poor communication “he’s a guru in what is doing”.
Good communication among co-founders is one of the main conditions for startups to live long enough to succeed.
Beyond business purposes, communication is responsible for harmony among co-founders and creates the right environment for follow-on hires to thrive. Disclosing personal thoughts, worries, satisfactions helps to strengthen the relationship, and that turns to be useful in high-stress periods.
In the end, your co-founder is your partner – its important to connect on a personal level.
Equity with Vesting
To bypass any uncertainty when looking for your co-founder (You simply can’t know if a person is perfect for such a key role), there is one best practice I truly prefer: equity with a Vesting Period that has a minimum cliff.
The “Vesting Period” is a period of time in which a person accrues the pre-agreed equity stake if he accomplishes a certain goal (the goal could just be being fully committed within the company). At the end of this period, the co-founder will be fully vested, meaning he will own the totality of the equity initially granted.
The minimum cliff means that the vesting schedule is not enforceable until a certain period of time from whenever it was initially agreed.
Let me state a simple example:
31st December 2019 – You have found your CTO and you’re planning to assign him 40% of your company. This 40% has a vesting period of 4 years and a minimum cliff of 3 months. That means that he will be assigned 10% each year and the vesting schedule will start on the 1st of April 2020.
If he stays in the Company, he will be assigned the:
- First 10% on 1/4/2021
- Second 10% on 1/4/2022
- Third 10% on 1/4/2023
- Final 10% on 1/4/2024.
At the end of the 4 years, he will own the totality of the equity initially granted.
Of course, you can have fun stimulating your financial creativity to set up these kinds of contracts but bear in mind that the legal aspects of vesting vary from country to country.
This article does not intend to be the recipe for a successful team because, well, there is no recipe.
A lot of people’s soft-skills (essential as well) will be shown in a more hidden way over a longer period.
This article solely aims to warn you about the compulsory characteristics that should be matched every time teamwork is required. And, you know, great teams carry out great executions.