On Great Co-Founder Relationships...

Welcome to Part 2 of my professional musings based on my experiences at SiteCompli, the company that I co-founded with Ross Goldenberg, grew over the past decade and recently sold. Thank you for all of the great feedback from Part 1, on the Value of Being a Great Mentee. 

Today I’d like to share some thoughts on successful co-founder relationships. After more than a decade of successful collaboration, Ross and I remain dear friends and look forward to our next venture together.  Compared to most partnerships, we’ve definitely “beaten the odds,” so it’s no surprise that we are frequently asked about the “secret” behind the longevity of our partnership. The curiosity is understandable as it is indeed unusual to have a partnership that remains so strong, after many years of close collaboration. It’s even more unusual given that not only were we co-founders, but we were also Co-CEO’s and every major decision at SiteCompli was mutually agreed upon from our inception in 2008, through our exit last year. 

It makes sense that finding a co-founder is such a popular pursuit. After all, starting a company is really hard and often lonely. Joining with someone else means another set of hands during that crucial “zero to one” period of conjuring a business from thin air. But I can tell you after many years of speaking with co-founders, that most of these relationships start strong but end up quite challenged. Further, unwinding a co-founder relationship can be as fraught as dissolving a marriage, so it shouldn’t be entered into casually. It’s difficult to understate the importance of selecting the right co-founder, setting that relationship up for success, and managing it well over the long term. 

I’m excited to distill hundreds of conversations I’ve had with would-be and experienced co-founders as well as my own co-founder challenges over the years, into some concrete recommendations:

> Choosing the right co-founder. I believe the first step in any co-founder relationship is an alignment on the “why” behind the partnership. More specifically, it’s important to suss out those people who view the co-founder relationship as simply a means to increase bandwidth (e.g. you can work 12 hours in a day, I can work 12 hours in a day, together, we’ve got 24 hours worth of bandwidth!). Suss those people out and AVOID THEM. This attitude puts a cap on the value you’ll get out of the relationship and greatly increases the risk that the relationship will self-destruct when one side views the relationship as primarily transactional. Instead, seek the co-founder who understands that a successful relationship, when focused on and nurtured, means that 1+1 = a lot more than 2, and is willing to work hard (on the relationship, not just the business) to make that outcome a reality. 

The best co-founders are characterized by differing styles/perspectives, mutual respect, complementary skills, and shared values. Let me unpack each of these in turn, using my relationship with Ross as an example.

• Different styles/perspectives, mutual respect. As many a SiteComplier will tell you, Ross and I could not be more different. Ross is a natural introvert who prefers independent work, I’m a natural extrovert who thrives on seeking outside perspectives. Ross is an “optimizer” who carefully and deliberately weighs all decisions to arrive at an optimal result, while I have a strong “bias for action” and prefer momentum. I could go on (and on and on). Bottom line, we could not possibly view or interact with the world more differently. I’ve lost count of the number of times I’ve excitedly burst into Ross’ office at SiteCompli (I chose to sit in the bullpen, to nobody’s surprise) with an idea, only to have Ross patiently and kindly tell me every reason why it won’t work. The key to this aspect of our relationship is that our differing worldviews have always been paired with a deep respect for each other’s opinions and perspectives. I respect the value of optimization, he respects the value of momentum. We both feel that the other is often right and believe that the best decisions are informed by our mutual viewpoints. Ultimately the ideas we argue and debate result in stronger outcomes.
• Complementary skills. Building a company is complex and over a full life-cycle, draws on a wide variety of disciplines. At SiteCompli, it took leadership across strategy, operations, negotiation, financial planning, relationship building and so much more to overcome challenges and unlock opportunities as we scaled. In each instance, it seemed like there was always a key challenge that drew upon one of our skill sets more than the other. Finding a co-founder who complements you more than they mirror you means you’ll be able to put your collective best foot forward no matter what challenge becomes central. 
• Shared values. As different as Ross and I are, there is no daylight between us when it comes to our values and I urge you to find the co-founder who shares your values completely. While the vast majority of business challenges can be worked through, if you and your co-founder don’t see eye to eye on what’s right and what’s wrong, on the need to treat people with dignity and respect, or other such fundamental questions, your partnership is destined for failure. 

> Plan Well. I urge co-founders to create a written partnership agreement from the get-go. Don’t put off this extremely important exercise. If all goes well,  over time, the agreement will evolve and require input from an attorney, but that shouldn’t stop you from aligning on a “v1” at the inception of the partnership. The agreement should explore and plan for a variety of what-ifs and worst-case scenarios (e.g. titles/roles/responsibilities, salary, dissolution of the partnership should things go sideways, etc). I often tell entrepreneurs that just the process of working through this discussion reveals any key areas where there is a lack of alignment/values between co-founders and can save you from headaches down the road. In fact, if the process of putting together such a document doesn’t lead you to discover something new about your counterpart, you haven’t delved deep enough into the process. Are you the type of person who shies away from difficult interpersonal conversations? Remember, if you can’t have this type of difficult discussion during the “honeymoon phase” of the business,  imagine how hard it will be to deal with these issues down the road, sans agreement, in the heat of a crisis.

On that note, I’d like to say a word about equity. While there may be good reasons for two co-founders of equal seniority to start a company and not have 50/50 ownership, I haven’t heard many of them. Unfortunately,  I have seen countless examples where a partner who has less of a share ends up feeling very resentful. It is inevitable that such resentment ultimately poisons the partnership. According to Harvard Business Review, the percentage of founders who say they are unhappy with their equity split increases by 2.5x as their startups mature. While there are some instances where a non 50/50 partnership makes sense (e.g. joining after the business has been materially de-risked in some way, putting in more initial capital than the other, having less role/responsibility than the other, etc), in most of the circumstances that I’ve seen, it doesn’t. 

Even the argument that unequal equity splits are necessary to make “final decisions” between co-founders is unpersuasive. Rather, committed co-founders who respect each other and share each other’s values should be able to make decisions without the need for one to outvote the other. Clarification of roles and responsibilities should be made in the operating agreement so there is no need to resort to equity voting.  

With regard to my partnership with Ross, I came up with the initial concept for  SiteCompli, but Ross left his full-time job before I did. Both are reasons that I’ve seen entrepreneurs use to justify a non 50/50 equity split. But we worked hard to come up with ways to maintain equal ownership, and I believe that spirit of equality delivered a sustained, positive impact throughout the relationship. When looking back on the body of work we’ve completed together, the origin of the initial idea or a few month difference in start-date is a trivial detail compared to the negative impact that a difference in ownership would have caused. 

> Be a great co-founder. Great co-founders understand that the co-founder relationship itself is an invaluable asset that must be worked on, cultivated, and improved every day. People often ask if Ross and I ever experienced conflict between us. To which I laugh and reply “every damn day!” The trick is viewing instances of debate, disagreement, and conflict as golden opportunities to improve the relationship. In fact, I’ll go even further and say that the purpose of a fight should not be to “win the argument,” but rather to improve the relationship.

For those people who avoid conflict or shy away from difficult discussions, it can be especially challenging to get the partnership right and to unlock its full potential. Notably, even relationships between conflict-avoiding co-founders can appear stronger than they are, because issues simmer below the surface and then boil over.  Your venture will be in a much stronger position if both co-founders can agree early on in their relationship that respectful debate and dissent can improve the partnership and strengthen a company’s chances of success. At SiteCompli, the relationship that Ross and I had - characterized by different views and styles but punctuated by regular, respectful, productive conflict and direct conversation about the state of the relationship -  paved the way for a broader, high-performance company culture.

Co-founder relationships have been a defining aspect of my professional life. At the start, I experienced relationships that didn’t work and ultimately led to extreme amounts of distraction and wasted energy. Along the way, I learned from mentoring other co-founders and understanding the commonalities between the challenges they’ve faced. Ultimately, I had the opportunity to put those learnings into a partnership that truly “fired on all cylinders” and one in which two co-founders with different perspectives, skills, and styles could deliver more than the sum of their parts. 

Great co-founder relationships don’t just happen! They take patience, thoughtfulness, and development over a long period of time and a shared commitment to working on the relationship itself. 

Do you have any secrets to co-founder success you’d like to share? Painful lessons learned? Would love to hear about them (or better, discuss them). Please share comments or a DM.

Stay safe everyone!

Jason