How do you find a badass co-founder? Parts 1 and 2

from:
http://andrewchen.typepad.com/andrew_chens_blog/2007/03/how_do_you_find.html
http://andrewchen.typepad.com/andrew_chens_blog/2007/04/how_do_you_find.html
How do you find a badass co-founder?

Finding a co-founder is damn hard
In the last couple months, I’ve been keeping an open eye out on finding a high-quality co-founder for the startup I’m doing as part of my EIR gig. Ultimately, the scarcest commodity in the entrepreneurial community is NOT venture capital money – there are billions out there – but rather very high quality people. In particular, the highest quality people out there turn into co-founders, so that’s incredibly important.

In particular, a co-founder’s able to help balance you out, especially on mood. So if you are both in a room, the startup is on the rocks, and you say, “god we’re fucked!” then sometimes your co-founder will say, “well, why don’t we do X.” The same will happen vice-versa, which is great.

How many co-founders?
2-3 founders maximum. I think once you get beyond that, you’re diluting the group of talent in place. Ultimately, there’s a huge distinction between founders and employees, and you have to choose carefully. Beyond 3, the equity structure gets messed up too – you take a round or two of VC money and you own a very small piece of the company.

Of course there are exceptions like VMWare, which had 6 co-founders that all did well. But the norm seems closer to 2-3.

What defines a good co-founder?
Short answer is, I have no idea

Long answer is, I’ve done a lot of talking and thinking about the issue, and I think I know what is good for me (and maybe me only). Ultimately, you are looking for a guy with the following:

Complimentary in skills, but from the same cloth in attitude and culture

On the skills front, because I’m more of a business-y person, I’m looking for someone who is very technical. Also, because I’m more of an unstructured creative thinker, it might be useful to meet someone who is more structured and detail-oriented. A big piece of this is also a Mr. Inside versus Mr. Outside designation. Who’s in charge of talking to customers, partners, and potential investors? That might be one guy, whereas the other is more focused on internal operations. This might hold true even as the company scales up.

The other side, which is about attitude and values, is much more difficult. If you are looking to found a company, and you have an idea that you’re driving, that says a lot of things about you already. You’re probably driven, have a vision for where you want things to go, and are self-motivated enough to get things off the ground. You may also be someone who can convince people to follow you, or give you money, or whatever.

My questions for values/culture
For me, I’ve been thinking about a series of questions related to culture and values. Here are a selection of them:

• Let’s say you wanted to start a new company? How would you do that?
• Tell me about a major disagreement you had recently – describe what happened?
• How would you approach hiring people?
• What’s your long-term goal with your career? Where do you want to be in 20 yrs?

… and etc. Lots of questions you’d ask an employee, of course.

I think you’d also ask a couple questions as you observe the guy:

• If you put them in a room with 5 peers, would they emerge with the 5 guys signed up to follow them?
• Would you feel comfortable introducing them to everyone you know?
• If you say something they disagree with, how long does it take before they push back? How hard do they push back?
• If you guys disagree on their side of the complimentary skills, what happens? What happens if it’s on your side of the domain expertise?

Peoples’ views on this are going to be different, but in general I’m going to be looking for the guy who can sign up the 5 guys in a room, who’s great to introduce to everyone at all levels, who pushes back hard and immediately, and doesn’t care if its on your side of the skillset or theirs. I think all of these things define a strong leader who’s a peer, rather than an employee.

I’ll write more on this topic later, as it’s a critical one, but would appreciate comments in the meantime.

How do you find a badass co-founder, Part 2

I had previously written about How do you find a badass co-founder? If you haven’t read the article, or don’t remember at all, I encourage you to back up and spend 5 minutes to read it.

Today, I wanted to extend those comments further, now that I’ve put in more thought to the subject.

So I want to return my description before of a good co-founder:

Complimentary in skills, but cut from the same cloth in attitude and culture

Now interestingly enough, this sort of assumes that YOU are a good founder. In fact, you may not be, and when I define it in a relative way like above, it doesn’t mean much. So let’s return to some of the same factors that make people good founders.

The minimum bar for anybody
In general, there are a couple things I look for within people, regardless of whether or not they are technical or business-y or whatever. Here’s a quick list of attributes:

• Super smart
• Hungry and scrappy (cheap!!!)
• Honest and direct (no passive aggressive people allowed)
• Doesn’t want to be famous (this creates incentive misalignment)
• Assertive and is a natural leader

If you don’t have these in spades, I’m generally uninterested. Obviously these are completely arbitrary, and you’ll want to come up with your own list, but these are some of my prioritizations.

Founders versus executives
Ultimately, there’s a central conflict of what you want out of a founder, whether they are business-y or technical in nature. In general, you want people who are great at execution early on, and who are very hands on with their business. These are great entrepreneurs. The problem is that as time goes on, even when you start raising money, you start to need a different skillset. Usually these skills are more soft skills, and people-oriented in nature. Some folks suck at this, and can’t scale. Here’s what you want in a technical person, when you first start out:

Super hacker

• Really scrappy, fast coder
• Super smart
• Only needs pizza and coke to survive

But at the same time, as the company grows, then you need the same person to grow up into something else:

CTO

• Really scrappy leader of people
• Super smart, and also super communicative
• Only needs pizza and coke to survive

It may be clear to some people that these skillsets often are inversely correlated. Oftentimes, the failure to evolve one skillset into the other leads to founders getting shuffled aside. The truth of it is, as the company grows (even to a state where VCs need to be pitched), people skills become very important, and being assertive and having leadership becomes very important.

What about the business guys?
I’m not letting the business folks off the hook either. Early on, having business guys are very awkward IMHO. You don’t really need Sales or Finance functions, since the early focus is on Marketing and Product. Thus, you’re looking for someone early on who can be a product jack-of-all-trades:

Super product guy

• Defines product, market, and customers
• Jack-all-trades on finance/legal/incorporation and other random bits
• Great at outbound work (customers/investors/etc)
• Might throw in some time on product design and code
• Great at selling ice to Eskimos

Another way to say this is that early on, the job of the business guy is to support the technical guy and help him figure out what to build. Anything other than that is often superfluous. But after a while, you need something else:

CEO

• Leads through company vision
• Puts together team of great executives
• Great at outbound work (customers/investors/etc)
• Hands over all product to product teams
• Great at selling ice to Eskimos

This is also very hard for the early startup CEO, because they are often the initial product manager while the company is a one-product (or in fact, one-feature) company. But once you get past that point, the power becomes much more indirect, and it’s very hard for some people to let go.

Is he Mr. Right? or Mr. Right now?
It’s often very very tempting to just gather your friends and have a bunch of people have at it. The problem is, you end up with one or two strong people, followed by a hanger-on. That’s not what you want.

That’s not to say that working with friends is a bad idea – in fact, you really want someone you can trust, but make sure the skills are there too.

Instead of trying to finding someone who just happens to code well, but could never scale, I think it behooves any strong founder to look at the team they’re building around them and ask, is this a A team, or am I putting together a B or C team just because that’s all I have access to? And if it’s the latter, it probably makes sense to reset, go meet a bunch of people, and start over. Remember:

Giving an incompetent friend/acquaintance 50% of the company and then working them out later is NOT an option.

Questions to ask
So when you’re evaluating your co-founder, I’d ask the following questions of yourself:

• Who are your other choices? (If none, go find some)
• Given a list of X people, where do they sit in terms of skill level? (Hopefully at the top)
• Where are the holes in their skills? (Hopefully they are well-understood)
• How well will they scale as the company gets bigger?
• Would you trust them with direct reports? Would you trust them as CEO?
• Who’s someone you want to impress? Would you let them do a 1:1 with your co-founder?
• Could you imagine reporting to them?

I’d ask these questions carefully, and figure out if they make sense for the people you’re selecting.

Next time, I’ll expand more on the topic of interviewing potential co-founders, and/or add some specifics on where to meet these guys (if you haven’t already).