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At what point is a co-founder role no longer appropriate?

I have seen various posts on FounderDating that indicate that when someone is seeking a co-founder, that they may already be too far along for that to be appropriate.

Is there a rule of thumb?

I am a solopreneur within an entity that I've used for various purposes for the past 10 years. But the venture that I am working on right now is new. I have been able to launch my MVP and I do have paying customers, but can't get to the next level without help.


13 Replies

Joe Albano, PhD
2
1
Joe Albano, PhD Advisor
Using the business of entrepreneurialism to turn ideas into products and products into sustainable businesses.
Like so much of the English language, the term "co-founder" has come to mean so much to so many that it seems to mean nothing to anyone.

It seems like you already have the have the answer in your question. You say "I have been able to launch my MVP and I do have paying customers, but can't get to the next level without help." So what kind of help do you want? Do you want an advisor? An Employee? A business partner (some may call that person a co-founder, others may not)?

Once you decide what kind of help you want, you can decide what you have to offer: cash, equity, credit (e.g., some form of note, perhapsconvertible). Armed with these decisions, you can enter into negotiations and find a person where your desires and their desires overlap enough to negotiate the differences.

Hope that helps!
Chicke Fitzgerald
0
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Chicke Fitzgerald Entrepreneur • Advisor
Game Changing Strategist, Advisor & Technologist | Board Candidate | Zigging where others Zag
Joe - In the context of our discussion, the term co-founder is used to describe someone to go on the journey, but also to help define the route and to choose the vehicle(s) used to get to the destination. In my mind it is very different from just needing "help" and bringing on employees to execute.

It is also more than just trying to avoid cash out of pocket and more about finding someone that wants to build a company, but that doesn't necessarily have the "idea" or the wherewithal to build their own idea.

To bring on a technical co-founder is to say, yes we have an MVP, but if you believe that we need to switch platforms or toolsets or add a new dimension to the product or a different approach for implementation -- I am listening and if you have a valid, well thought out recommendation, and if you are willing to risk with me, I'm willing to pivot.

The same thing is true of a business development focused co-founder. This would be someone who is willing to take a look at the previous approach deployed and tweak and hone, plus introduce new ideas and execute on them in exchange for equity and profit share.

It is about belief in the vision and risk versus reward, versus someone just wanting a job or wanting to sell me services by the hour.


Joe Albano, PhD
0
1
Joe Albano, PhD Advisor
Using the business of entrepreneurialism to turn ideas into products and products into sustainable businesses.
Chicke -

So now you have defined the relationship that you desire ... my point is that the term "co-founder" may be too limiting in that it leads to concerns like "they may already be too far along for that [finding a co-founder?] to be appropriate".

Define what you need and find a partner that wants the same thing.
Mike Moyer
3
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Mike Moyer Entrepreneur • Advisor
Managing Director at Lake Shark Ventures, LLC
A co-founder is anyone who is not receiving compensation for their contributions of time, money, ideas, relationships, or anything else.

You can call them a co-founder or an employee or a partner or whatever else you want. It doesn't matter. Their rights and privileges are not defined by their title, they're defined by what they put at-risk.

I'm assuming part of your question relates to whether the person is eligible to get equity in your company. Anyone who puts contributions at risk should get equity. Their % share of the equity should be based on their % of what's put at risk.

This is called the Slicing Pie model and I've written a book about it. You may have a copy if you email me through SlicingPie.com
Alan Sack
2
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Alan Sack Entrepreneur
Founding member of SACK IP Law p.c., Intellectual Property Law and related Matters.
In my opinion, the title of co-founder is really not appropriate, when the entity has moved along and the new person being brought in is in reality an employee or a minority partner.
Joe Albano, PhD
0
0
Joe Albano, PhD Advisor
Using the business of entrepreneurialism to turn ideas into products and products into sustainable businesses.
Alan - I think that the point is that titles are never important unless the title itself fills some important function (but that's a different post). The distinction between partner and employee (even an employee working for equity) IS important.

The problem is that "partner" and "employee" are also labels and, like all labels, come with their own set of assumptions, baggage, and inaccuracies. We (Logika - my professional practice) recommend that EVERY business relationship be based on what we call the "while we're still friends" conversation. Understanding what you expect from each other and what's at risk are two of the six dimensions that we have identified as critical components to that conversation.

There is a great desire for entrepreneurs to seek the template. Unfortunately startups don't lend themselves well to standard models, so conversations are often more useful.
Alan Sack
0
0
Alan Sack Entrepreneur
Founding member of SACK IP Law p.c., Intellectual Property Law and related Matters.
Joe, thanks of your comments and insights. I think that you are 100% correct. I also recommend when they have the "while we are still friends" conversation that the parties to the new entity formalize their relationship with a written agreement.
Chicke Fitzgerald
1
0
Chicke Fitzgerald Entrepreneur • Advisor
Game Changing Strategist, Advisor & Technologist | Board Candidate | Zigging where others Zag
And inevitably, the written agreement must address the "we are no longer friends" possibilities of what happens when things don't go well. And so it goes.

I was never a fan of pre-nuptials, so perhaps this is why to date I have not taken in a partner in this business. I'm right on the cusp of profitability, so perhaps I'll just keep going solo.
Joe Albano, PhD
1
0
Joe Albano, PhD Advisor
Using the business of entrepreneurialism to turn ideas into products and products into sustainable businesses.
A well drafted "while we're still friends" agreement can provide guidance for "when we disagree" which can greatly diminish the likelihood that "we're no longer friends".

In my experience, everybusiness partnership (every business relationships) is stronger when expectations are clear. Avoiding relationships because there may be some point in the future when they no longer work for all parties will, ultimately, impeded an organization's ability to scale.

There are, in general, three kinds of entrepreneurs:
  1. Freelancers - seek to own the job they do.
  2. Lifestyle seekers - seek to produce sufficient income to support their desired way of life.
  3. Enterprise builders - seek to build enduring enterprises that have intrinsic value.
Types 1 and 2 can operate perfectly well as single-person entities (with or without a few employees). Type 3 almost always requires some form of partnership.

There are very few type 3 entrepreneurs relative to the total number of self-proclaimed entrepreneurs.None of these types in inherently better or worse than the others.What is valuable (arguably, critical) is to know what kind of entrepreneur you are and act accordingly.
Alan Sack
0
0
Alan Sack Entrepreneur
Founding member of SACK IP Law p.c., Intellectual Property Law and related Matters.
Cheke, every Entrepreneur is different. Knowing what your goals are for your enterprise goes a long way in choosing whether to go solo, take on a partner or employees. Some are lone wolves, others work very well with others. Know thy self and you will be happier in your situation.
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