In more than 20 years in business I have had several partners. With some I built things I am proud of; with others we parted ways sooner than we would have liked. If you ask me what all of this taught me, the answer is simple: choosing a co-founder is the single most important decision in a startup, more important than the idea, the name or even the first money you raise.
And yet most founders I know pick their partner almost by accident: a university friend, the buddy they discussed the idea with over a beer, the person who is “good with the technical stuff”. Starting with a friend is not a mistake. Starting without asking each other the hard questions is. Here is how I would ask them today.
1. Look for complementary skills, not a mirror
Two people who know exactly the same things are not a team, they are a duplicate. In an online startup you broadly need someone who builds the product and someone who sells it: technical and commercial, product and distribution. If you are both developers, you will write beautiful code that nobody buys. If you are both salespeople, you will promise things nobody can deliver.
Complementary does not mean opposite in everything, though. To work well together you need a minimum of shared language. The commercial partner should understand roughly what building software takes, and the technical one has to accept that a paying customer is right more often than a spec.
2. The same vision, the same ambition
This is where most partnerships break, and usually not in year one but in year three or four, when the company starts to work. One wants a profitable, quiet business in Romania. The other wants to conquer the global market, raise money from investors and go to the United States. Both options are perfectly legitimate. But they cannot live in the same company.
Ask each other openly, before you sign anything: where do we want to be in five years? Do we want to sell the company or keep it? Will we take investors, with everything that comes with them? Are we building for the local market or, from day one, a product that can sell anywhere? If the answers are far apart, better to find out now, over coffee, than four years from now, at a lawyer’s office.
3. Risk appetite and attitude to money
In 2009, when I had to sell the majority stake in my online businesses to avoid bankruptcy, I learned how differently people react under pressure. Some sleep soundly with the credit line maxed out; others stop sleeping altogether. Neither attitude is wrong, but partners need to know where the other one stands.
Talk in concrete terms: how much does each of you put in, money or work? How long can each of you live without a salary? What do we do if we run out of cash in month eight? Do we personally guarantee a bank loan or not? Someone with a family to support and a mortgage will make different decisions from a 25-year-old still living with his parents. That is normal. It just has to be said out loud.
4. Time invested matters as much as money
One of the most common sources of resentment is unequal effort. Two people start 50/50; one quits his job and works 14 hours a day, the other “helps in the evenings and at weekends”. A year later the first feels he is pulling the cart alone, and the second cannot understand the reproachful looks, since the idea was his in the first place.
Agree from the start who works full-time and from when. If one of you cannot leave a job yet, fine, but the equity split should reflect it, or there should be a clear date by which that person joins full-time.
5. Vesting and the shareholders’ agreement
In the American ecosystem vesting is standard: founders earn their shares gradually, usually over four years with a one-year cliff. If you leave after six months, you do not walk away with half the company. In Romania the concept is still rarely used, but it can be replicated through clauses in a shareholders’ agreement and through the way shares in the company are transferred.
A good shareholders’ agreement should cover at least the following:
- who plays which role and who decides in each area (product, money, people);
- how big decisions are made: simple majority, unanimity or veto rights on certain topics;
- vesting for each founder and what happens to the shares of someone who leaves;
- right of first refusal: if one partner wants to sell, the others get to buy first;
- tag-along and drag-along clauses, for when a buyer shows up;
- how the company is valued when a partner exits;
- what happens in a deadlock.
I know, it sounds cold. Nobody wants to discuss divorce at the engagement party. But right now, while you get along, is exactly when you can write fair rules. Three years from now, with money on the table and bruised egos, you will not be able to.
6. Rules for decisions and for deadlocks
A 50/50 partnership looks nice on paper and is dangerous in practice. When you cannot agree on something important, who decides? If the answer is “we’ll see”, you have already set up a deadlock. Solutions exist: one founder gets the casting vote in certain areas, you appoint a mediator or an advisory board, or you write an exit mechanism into the agreement.
The best known is the “shotgun” clause (sometimes called “Russian roulette”): one partner names a price for the other’s shares, and the other chooses either to sell at that price or to buy at the same price. It is brutal but fair, because it forces you to name a price you would also accept from the other side of the table.
7. Test the partnership before you marry
The best way to find out how someone works is to work with them. Before founding a company, do a small project together, with a deadline and real stakes. You will quickly see how the other person handles stress, how they deliver bad news, whether they keep promises and how they behave with money. Three months on a shared project tell you more than three years of friendship.
8. How to part ways gracefully
Sometimes, however well you prepared, your paths split. People change, markets change, ambitions change. That is not failure, it is life. Failure is splitting up in a way that destroys both the company and the relationship.
A few rules I try to follow:
- talk openly and early, not after a year of piled-up frustration;
- separate the person from the problem: you can have different visions without the other being a bad person;
- use the rules you wrote when you got along; do not invent new ones now;
- put the company, the team and the customers first, not your ego;
- do not badmouth your former partner in public: the market is small and people remember.
A clean separation leaves you with a former partner who recommends you. A messy one leaves you with an enemy and, quite often, a company that is no longer worth anything to anyone.
My conclusion after all these years: you choose a co-founder with your head, not just your heart. Friendship is a good start, but it is no substitute for clear rules. How did you choose your business partners, and what would you do differently if you started again?