5 Things I've Learned by Co-Founding a Successful Business
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Some of the world's most famous and successful companies, like Apple, were started by two or more co-founders. Others, like Disney, were started by just one person. Here, then, is the billion-dollar question: Is one choice better than the other?
Recently I’ve been thinking a lot about how I started Tailored Ink with Dan Foley, my business partner. We’re both writers, we both majored in English and we each have qualities the other lacks. On paper, it made perfect sense for me to approach him to be my partner. Fortunately for both of us, we hit it off and haven’t looked back.
But, as with any long-term relationship, making things work takes a lot of practice and compromise. It takes a while to get used to someone else, and when you’re starting a business with a partner, you’re practically married.
So, here are five things I’ve learned co-founding a successful business with Dan:
1. You have an accountability partner.
When I was a student, I can honestly say, I didn’t enjoy teamwork or group projects. I was, and still am, an introvert. I focus best when I’m alone, and recharge by enjoying my “inner life” (as Susan Cain would put it). But ever since starting our company, I’ve changed my mind about teamwork. Dan and I are a great team, and we complement each other’s strengths and weaknesses very well. In fact, co-founding a company worked so well that I’m about to start two more companies with different co-founders.
Why am I so satisfied with having a business partner? Because Dan keeps me accountable. Any responsibility that requires a regular commitment is much easier when you have a partner in crime. Consider the example of a gym membership. Motivating yourself to go alone can be incredibly difficult. But when you meet up weekly with a friend who pushes you to do your best, it’s suddenly much easier.
The same thing applies to business. Accountability works wonders. In fact, it’s been shown that having two founders, rather than one, significantly increases a startup’s odds of success. Not only do two founders raise, on average, 30 percent more in investments, they also grow customers three times as fast.
2. Splitting equity is complicated.Unsurprisingly, the most common complaint otherwise happy co-founders have is over equity. Determining a fair equity split can be awkward and messy.
Tons of co-founders have been interviewed about this, and many of them warn against a 50/50 split. The reason for such a warning is the same issue that bothers many older business owners: “co-CEOs.” Egos are very real and easily bruised.
But there is a fair and objective way to split equity (there’s even a calculator for it). Personally, I think one of the most sensible ways to split equity is to list out the major roles that need to be filled, (including who came up with the original idea and brought everyone together), calculate a weighted value to each assigned role and then add up the numbers.
Why don’t more co-founders decide on their equity split in such a logical, objective manner? Because it can be an incredibly awkward and touchy subject. Just finding a single dependable co-founder who believes in your vision is hard enough; that's why so many co-founders just agree to a 50/50 split before they even begin to investigate what they’ll actually be doing.
That might be the easy solution, but it isn’t the fair one. And, in the long run, the fair solution is what holds partnerships together.
3. You have someone to cover you.
One of the privileges of having a dependable business partner? You don’t have to completely sacrifice your work-life balance.
You can work a bit less because there are two people hustling instead of one, which is why we’ve been able to try out four-day workweeks. Your partner can cover you when you can’t make a crucial client meeting. He or she will spot your mistakes and let you know about them. You can divide and conquer and grow the company faster than if you were finding clients on your own.
Doing it all on your own, by comparison, can be incredibly intimidating and burn you out so much faster. Most "solopreneurs" admit that they work like dogs, sacrifice many of their friendships (and romances) and still feel miserable. There’s even an article out there titled “Being an entrepreneur is more about sacrifice than freedom or riches.”
But that doesn’t have to be you. Most solopreneurs who have failed had no business trying to run their own business alone and just weren’t very self-aware. I’m one of those people, which is exactly why I wanted a co-founder.
4. You have to coordinate a lot more.
When you start a business with another human being, you learn to compromise. It really is like any other long-term relationship that takes practice and dedication. (My girlfriend constantly jokes that I should just marry Dan.)
What happens when you have to compromise on a daily basis? You have to coordinate a lot more meetings, make a lot more last-minute phone calls and sometimes drag yourself to the closest restaurant still open after midnight for an impromptu strategy session. Things just get done at a slower pace when you have a co-founder.
But that isn’t necessarily a bad thing. After all, 80 percent of all new businesses fail within the first 18 months. And an overwhelming number of them fail, not because the solopreneur couldn’t find clients or because the co-founders couldn’t get along, but because the company scaled too quickly.
What’s the best way to prevent your startup from scaling too quickly? You guessed it -- get a co-founder.
5. Two heads are better than one.
Common wisdom dictates that you shouldn’t start a company with a close friend or family member. When so much is on the line and the pressure is constantly on, the chances of things going south (along with your relationship) are very high.
But you know what Dan and I did have going for us? The fact that there were exactly two of us. Many of the most successful companies in history had exactly two founders. So, not only are two heads better than one, two founders are probably better than three or more.
When there are too many people at the table or in the boardroom, it can be a recipe for disaster. I see this play out all the time on a much smaller scale during client kickoff calls. As an example, imagine getting just one client to pick one of hundreds of potential website designs. Next, try convincing five people to pick the same one.
Now, imagine trying to get four co-founders to pick out the same website design for your new company.
Do you have a co-founder in mind?
Thinking back, I realize that Dan and I were very lucky. We pretty much decided to start a business together on little more than a hunch, and we barely knew each other. Any number of things could have gone terribly, horribly wrong. But they didn’t, and I think I know why.
I’ll go back to my sailing analogy from another Entrepreneur post. You can steer your ship into stormy waters by yourself, surviving entirely on your own wit and determination. Or you can have a trusted sailor by your side, helping bail the water and man the helm when you’re tired.
Ask yourself -- which option is more appealing?