Evolving Co-founder Relationships

Big Red Car here. Ahh, the last days of a nice cool summer. Bit of rain possible today and nice and cool in the meantime.

The Boss was talking to several of his brilliant CEOs and they got on the subject of how the relationship among co-founders evolves during the first few years of a startup. A very interesting and timely topic — co-founder relationships.

The nature of co-founders

Many startups are a combination of complementary skills held by a few individuals who are often brought together as CEO, CTO, CMO and CFO skill sets.

CEO = Chief Executive Officer, the leader of the enterprise and often the driving visionary of the team — first among equals and often the team builder who assembled the team in the first place

CTO = Chief Technical Officer, the driver of the underlying technology whether in the product itself or the web based delivery system

CMO = Chief Marketing Officer, the font of expertise which brings the product to market

CFO = Chief Financial Officer, the expertise in fundraising, financial modeling and accounting

The  CFO position is becoming a bit more rare in the co-founder mix as this expertise is often initially held by one of the other founders or outsourced.

An investor is investing in a team rather than a single individual. While this gives some comfort to investors it is really a bit of a self-delusion as the CEO type is typically a skill that cannot be replaced as easily as some of the others. It is difficult to find another visionary. Founder continuity is a critical consideration in making an investment commitment.

Most startup investments are jockey, horse, course type investments. You have to have a damn good jockey regardless of the strength of the horse or the course.

Pressure points

In the course of operating a team or partnership of co-founders, certain pressures will build.

1. Somebody doesn’t like someone else. Sure they can work together but there is something that irritates one or the other.

2. Folks react to and are able to embrace or tolerate stress in different ways. Stress always get a first class seat in any startup. It is part of the ethos.

3. Co-founders are subject to a bit of jealousy particularly when the CEO begins to emerge as the leader of the otherwise co-equal co-founders.

4. Co-founders have different views of the world based on their own specific situation — trust fund babies, married v single — which can create pressure on the working relationship.

5. Every team has someone who works harder than someone else which under the pressure of a startup can cause friction and rug burns.

6. In the early phases of a startup certain skills are critical — such as the ability to code and create a kick ass web site — which will recede in importance as the startup begins to gain traction. It is difficult to evolve working relationships in the same manner.

The list can go on for a lot longer but you get the picture. These are all natural parts of the evolving team. Do not think you are immune.

The solution

The solution is two fold:

1. Make sure that everyone is committed to doing something that is bigger than just themselves. This requires a well crafted Vision, Mission, Strategy, Tactics, Objectives, Values and Culture. At first the most important thing is the Vision. Everyone has to buy into the Vision. That is the glue which will hold everything together.

A skillful founder/CEO attempts to get everyone’s fingerprints on the Vision. Again, the glue that will hold everything together when the inevitable pressures come calling.

2. Communication — constant, detailed, thoughtful, sensitive, two-way — is the other critical ingredient. Every so often you have to sit down and chat about what you are collectively doing and why. This could be a discussion about relative roles as an example. There is nothing better to align the efforts of the co-founding team than a frequent recital of what everyone brings to the team. Not everybody can be involved in the glamorous undertaking of raising money and schmoozing with the investors.

In reality, communication is the antidote for smoking out problems and for solving them.

When not handled correctly the little problems become big problems and result in things like palace revolts, co-founder departure, CEO replacement and other horribles. So co-founder relationships are very important. Remember the Big Red Car looks at most things from the perspective of a CEO so the idea of a CEO losing his job is a big thing to be avoided.

In the weeks ahead, the Big Red Car will address some more of these implications.

But, hey, what the Hell do I really know anyway? I’m just a Big Red Car. Be good to yourself and remember 9-11.