Hey everybody welcome back to the Product Market Fit Newsletter 🚀
My name is Guillermo Flor and I write this weekly newsletter to help founders, growth professionals and product people to grow & fund their companies.
It’s been a crazy month, and I haven’t had a lot of time to dedicate to the NL. So I thought I would make this post short and hopefully valuable.
1. Why you could use a cofounder
It’s not that you need a cofounder, but you can benefit greatly from having one.
This is how:
Productivity: A co-founder allows you to divide tasks and can bring complementary skills.
Moral Support: Startups are intense, and having a co-founder provides emotional balance during the highs and lows.
Pattern Matching to Success: Most successful companies (Apple, Google, Facebook) had co-founders.
What to Look for in a Co-Founder:
How They Handle Stress: The most important factor is how they deal with pressure, as startups are stressful.
Goals and Values: Ensure your goals align, especially regarding company vision, risk tolerance, and long-term commitment.
Complementary Skills: Look for someone with skills that complement yours (e.g., sales vs. technical). However, trust and mutual respect matter more than having the perfect skill match.
How many cofounders to find
2. Where to Find a Co-Founder:
Start with People You Know: Friends, colleagues, or former classmates are ideal because you likely know their character.
Work on Projects Together: Start with small, non-committal projects to test compatibility.
Extend Your Network: If your immediate contacts aren’t suitable, ask for introductions to people who might be interested.
Attend Relevant Meetups or Hackathons: Find people with similar interests in your field.
I found this Cofounder Tinder out there as well:
https://www.coffeespace.com/
3. Testing the Co-Founder Relationship:
Work together on an MVP or prototype for a set period, such as 1–3 months, and assess how well you collaborate.
At the end of the trial period, have an honest conversation about whether to continue as co-founders.
Equity
Equity Split:
Equity as Motivation: Equity should incentivize co-founders to commit fully over the long term. Since startups require years of dedication, equity helps maintain motivation through challenging times.
Avoid Pure Negotiation-Based Splits: Don’t simply split equity based on initial negotiations. Instead, consider what will maximize each co-founder’s long-term motivation and ownership in the company.
Vesting with a Cliff as a Safety Mechanism: Use a four-year vesting schedule with a one-year cliff to protect the company. This ensures that if a co-founder leaves within the first year, they don’t retain any equity, allowing for course correction.
Be Generous with Equity: Given that vesting provides protection, lean toward being more generous. This generosity fosters a sense of true ownership, prompting co-founders to go the extra mile and view themselves as owners, not employees.
Default to Equal Splits When Possible: In general, equal splits (like 50/50) are a good rule of thumb. However, unique contributions or situations may warrant adjustments.
Assess Long-Term Value: If a co-founder isn’t seen as essential long-term, reconsider offering them a significant equity stake.
Decide the CEO Role: Have an open conversation about who should be the CEO. Investors want clarity on leadership, and it’s crucial to avoid friction over this.
Incorporation and Vesting: Once committed, formalize the agreement through legal incorporation and establish a vesting schedule for equity.
Final Steps:
Incorporate once you’ve decided to fully commit to building the company together. Vesting ensures that equity is distributed over time, motivating both founders to stay engaged long term.
This framework emphasizes finding the right balance of skills, values, and mutual support to ensure a successful co-founder partnership.
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