I had an unconventional journey to becoming an entrepreneur. Having emigrated from Poland a decade ago, I started out working construction in Manhattan. A decade later, I’ve transcended from scaffold operator to a CEO of two successful companies, public speaker and author living full-time in Miami. From my many years of experience, with both failure and success, I’ve had a few key insights on forming a successful business, which often involves building a team and finding a co-founder or business partner.
Here is your cheat sheet for finding the ideal co-founder.
Rule #1 Of Entrepreneurship: Try Not To Trade Equity For Services.
The first and most important rule? Equity should not be traded for services. Don’t hand out pieces of your business to outsiders in exchange for scheduling of your tweets or help with graphic design. Pay for services – if you can - and hold off on distributing equity if you can. Platforms such as Fiverr.com or Freelancer.com will help keep the cost low.
The share of your company should be among co-founders who are invested in your business, not outside consultants or freelancers. As far as employees are concerned, offer them smaller stock options so that their career goals are aligned with your business success.
How much equity should you offer to a CTO co-founder? Well, that depends on several things. Check out this opinion round-up from top influencers on Quora.
Don't Be Romantic About Making Money And Have A Clear Monetization Plan.
How are you going to make money? 80 percent of your time should be spent on cash-flow generating practices. Be clear about your financial goals. What is going to be your partner's role? How will your co-founder contribute to the ROI of your business? If it’s business development, hold them accountable for revenue. It’s imperative that you figure out your monetization plan from the very beginning.
Control Costs - At All Cost: Implement A Rigid Fiscal Discipline.
It’s important that your partner is someone that will not only help you generate high growth and revenue, but also control and share in your costs. Is your co-founder going to be on the same page as you? When on a plane together, are they going to insist on flying first class? The startup life is not for everyone.
Scope Out Your Needs: Assess Your Strengths And Weaknesses.
Do you actually need a co-founder? Not everyone does. Assess your strengths and weaknesses. Hiring a team, and distributing small vested equity, could be as efficient and a less complicated option, versus choosing a co-founder. What is going to be your co-founder’s responsibilities? Make sure you’re both not doing the same thing, and your partner will bring the value that you lack.
Work Ethics Ahead Of Talent: Beware Of Lazy Geniuses, Look For Grinders.
An early stage business is all about the grind. Is your co-founder a hard worker? Stay clear of the “lazy genius.” This person might be really smart, but it takes more than a good idea to move a business further. Someone who is lazy will infect your work culture. Remember, don’t romanticize the money making process.
You need someone who will put work ethics first. Results are everything. Your business’s co-founders will set the stage for the entire culture of your organization. Choose a co-founder who loves the grind and wins big.
A Sunday Evening Test: Would You Spend Your Sunday With That Person?
A business is a bit like a marriage. Make sure that you know each other. Will you be able to spend hours upon hours, day after day after day, collaborating with this person? Are you willing to spend the next 3-5 years of your life with your co-founder? Really consider this and think it through.
Date Before You Marry: Test-Drive Before You Give Out Equity.
Date before you marry. Go on a lot of dates, and meet a lot of people. Attract, don’t push. Go out and communicate with people who might share the same interest and value. Good energy will attract the right people to you. If you think you’ve found a suitable fit, test drive first. Work together on a project before committing to starting a business with a person you don’t know that well. You can use platforms such as FounderDating.com to expand your network and reach.
Write A Prenup. What Happens If It Doesn't Work Out?
What’s going to happen if things don’t work out? It’s extremely important to have a professional contract written up. Specify responsibilities and expectations. Have an exit clause for both parties. What happens if your partner gets a divorce? Might their spouse claim any rights to your business? Can you fire your co-founder if they don’t meet certain deadlines and expectations? How is decision making done?
Your contract should cover every detail you can think of. If things go sour, you will be happy that you protected your finances and intellectual property. You’ll also avoid high legal fees in case of a lawsuit.
Cash Flow Is Your Lifeblood: Focus On Top-Level Revenue.
Remember that your number one objective is to make money.
Your second objective is also to make money.
If you’re not making money (or producing a very substantial user growth, if you are a tech company), your business is not in the best shape. Choose a partner who understands this objective well. Figure out how you would handle a downturn in your business. Are you both liable financially if you incur debt? How do you share revenue? How much do you both take in salary, and how much do you invest back in the business?
Love For The Game: Startup Life Is Hard.
Choose a partner who loves entrepreneurship and has a passion for building a company the same way you do. This isn’t the regular 9-5 paycheck life. Be wary of a partner that has a full time job, unless you’re in the very early stages of your business. Make sure that your co-founder can work full-time on your business.
Having a successful startup means loving the grind, taking risks, and never giving up.
What other factors do you look for when choosing a business partner?