Who is your wingman?
It’s an old cliché but it’s true.
TEAM – “Together Each Achieves More”
Nowhere is this more true and relevant than for Start-ups.
Starting a business is the most challenging of all commercial endeavors and it’s just so much harder, slower and higher risk to go it alone.
Assuming you have zeroed in on the problems you solve, developed your idea/solution, conducted proper research, evaluated your business plan, had some market validation and completed the myriad of others things one must do in the planning stages of a new venture then your next step should be to decide whether you want to have a shot at entrepreneurship alone or find yourself a Co-Founder(s).
My view is simple – Be smart and find the right Co-Founder(s).
Business is just like life – it is good to have a companion by your side who understands you and shares your vision and passion. Going alone might mean a greater stake in the company and greater decision-making power but having a Co-Founder has it’s own advantages. After all, the founding team of a startup must have expertise in all the areas of a business and that is only truly possible with a team. Some successful new ventures have only 1 Founder but they are in the minority and 1 Founder ventures are more likely to fail. Doesn’t mean to can’t go it alone and build a team of able employees only but your chances of expedited success are greatly reduced.
Why do you need a Co-Founder for Your Startup?
Support
Starting a business is incredibly challenging. Commercialising, scaling and driving it through to success and subsequent potential trade sale or IPO is a whole other ball game.
Nothing can prepare you for the level of energy, effort and resilience required to be a successful Founder of a Start-up in todays increasingly dynamic marketplace. One of the key reasons Start-ups fail is the Founders lack of resilience emotionally and financially. It’s a tough and relentless grind and a helping hand can make the difference between winning and losing. It's no place for the faint hearted and giving up is generally less likely if you have someone else helping.
Even if you stay as the sole Founder, your going to need to surround yourself with support and its highly likely that the venture if successful will grow beyond one Founders capability.
According to Noam Waaserman, a long-time Harvard Business School Professor and author of the bestseller The Founders Dilemma’s,
“Founders motivated by control will make decisions that enable them to lead the business at the expense of increasing its value”
Startups require far more time and effort than taking a job working for someone else. Whilst it’s fair to say most people these days are working harder and longer hours than ever before, those in the start up arena are ‘always on’ and have a 24/7 mentality. Even when they are on holidays, in the shopping mall, laying in bed at night or even relaxing by the pool, you can rest assured their mind is drifting in an out of the business and what they need to do next week. It’s an all encompassing and immersive experience as a Founder. Your sense of obligation and responsibility as a Founder of a start up far exceeds that of those who are working in jobs and have little at risk beyond loss of employment. Founders often stand to lose a lot more if things don’t go to plan and the opportunity cost of a failed start up is immense.
Nothing in the corporate life compares to putting everything on the line for your brave new venture. Nothing !
When lack of capital, no/limited salary, cash flow constraints, relentless challenges and the ever present threat of competition is real, it is nice to have a partner in your corner who shares your vision and on whom you can lean on, especially in tougher times. It’s also useful if this person(s) are financially invested and sharing the associated pain that comes with no income against a backdrop of uncertainty. This why we have seen the emergence of the ‘Side Hustle” and it’s been a driver of both parents returning to work to ensure the household has adequate income whilst one of the family is trying to start their own venture. More on the ‘Side Hustle’ in future posts.
Support of Investors
What are investors trying to achieve?
Simple answer:
ROI - Return On Investment. They are looking at the upside and risk and making decisions based on their specific appetites for both. Having multiple Founders helps them address both return and risk.
Upside – Investors will generally feel that having 2 heads around the business is better than 1. Workload and ideas need to be shared and this is generally more likely to produce better and faster results. There is always exceptions but the well known perception among VC's and private investors is that multiple Founder ventures usually exceed the performance of the ‘1 man/women show’
Risk- 2 is usually better than 1 when it comes to risk. For the above reasons and others such as illness, lost of interest, founder fatigue, capacity, skills specialisation etc, it’s always lower risk if the challenges and sometimes burdens of being a Founder are shared.
Put simply: Investors generally are more likely to support companies which are run by a Founder teams than those who run solo.
Better Decision-making
You can’t possibly have all the best ideas and options when it comes to concepts and decisions. Co-Founders and advisors can be great sounding boards to scrutinise, challenge and fine tune your ideas and decisions. This can be highly valuable and can also help mitigate risks. Savvy Investors already know this and many wont invest unless they see you have the right networks, skills, advisors and support around you.
Differing opinions, multiple sources of ideas, different perspectives, alternate skills sets, healthy debate and the occasional robust dispute can help form strong foundations for sensible decision making in your venture. 2 Founders are more likely to have a bit more objectivity than highly emotionally invested Founders that will use descriptions like ‘my baby’ when referring to their exciting new business.
As long as all parties are willing to compromise, remain united and aligned around the vision and objectives then leadership diversity within a multiple founder venture can improve success probability. This combination will usually expedite the journey which is essential these days where ventures generally have less ‘run way’ to build their business and market share due to competition. On the subject of 'Run Way', in the classic movie Top Gun (still a favourite of mine) 'Maverick' had a wingman who went by the nickname 'Goose'. They were a great team until 'Goose' unfortunately exited stage left. Maverick lost his way after that and his performance and life unravelled. Whilst I don't advocate finding a Co- Founder who is a Goose, things will usually fly faster when there is 2 onboard working together as a team
Division of Responsibility
There are just too many responsibilities in a startup. Running a company from scratch is complex and you will be wearing many hats. The sheer volume and diversity of workload for one person will be onerous, often underestimated and can compromise speed, quality and progress. A Co-founder helps absorb stress, workload and allows for smarter alignment and allocation of skills and tasks. Right person for the right job. As a result, Founders end up having a better work-life balance and can share the good and bad times. This is critical for the business and the individual owners.
Complementary Skills
Ideally your Co Founder(s) bring different and specialist skills to the table. Diverse backgrounds and skill sets can be a real asset for a Start up. The ‘end to end’ cross functional demands of a business mean 1 person can’t possibly cover that much ground without eventually putting the venture at risk in terms capacity, quality and capability.
You might come from a Sales and Marketing background and thus be well-versed with modernised Marketing strategy but you may be out of your depth around finance, technology, legal, operations etc. Growing the business is different from running it. Trying to do everything can compromise the venture, your health and your relationships so having partners and eventually teams that cover off the business critical skills sets at each step of the venture is very important.
Risk Mitigation
We all know the high risk of new venturing. The odds are not great and the journey is tumultuous on every level. However, with high risk often comes high reward so for those brave enough to ‘have a go’, the pain is forgotten when the benefits are received. Pain and reward is also best shared with the right Co-Founder(s).
With the huge risks involved, you would want someone to shoulder them with you. People forget that a Co-founder does not share only the profits, but the losses too. Co-Founder relationships can flourish when there is complimentary personalities, skills, expectations, management styles and work ethic. Great partnerships are those when a Co-Founder steps up when the other falls or needs to step away for a period. You must have each others back when things get tough and also when things are flying. Success can also create risk and potential problems for single Founder ventures. Having someone run the operation whilst another keeps an eye on the horizon can be a nice balance especially when things are going well. The Titanic was going full steam ahead and set to break several records and we all know what happened next.
Start up success is unrivalled in terms of the potential personal and financial reward. Sharing this with someone only makes it all feel better.
Stay tuned for my next article on how to identify and engage the right Co Founder for your venture.
Author
Doug Hawkins
Business Transformation & New Venture Specialist.