When 2 or more people are combining ideas and resources to startup a new business, a lot of things come into play. Let me shed a little light on some of them.
First of all, we have to be clear on exactly what each partner wants to contribute. A lot of people push for 50-50% splits between founders but I do not see any basis for it.
If the idea is largely owned by one founder and he has the drive and hustle to push it through, the other co-founders have to prove they are as passionate, committed and dedicated to the startup as the main visionary. Without these qualifications, it is best to just go out and hire staff.
(Hiring staff is actually easier than it sounds, you do not have to give up stake in your company just because you think you cannot pay salaries!)
If the other co-founder is promising to finance the business, let’s be clear on that also: she is not a co-founder, she is an investor. You are still on your own as you will still have to run the whole thing by yourself.
If the other co-founder is peddling himself as an ideas man, let’s be clear. That is an advisory role, not co-founder. You are still on your own as you will still have to run the whole thing by yourself.
I once had a venture in which most of the team mates merely wanted the glamor and glitz that came with the work but not willing to invest in any decent volume of time to advance the work. So, let’s be clear, they were not co-founders, they were senior members of my fans club.
How on earth do you do equal splits with such people? A startup is not a band wagon, We must must be able to clearly and honestly answer the question: What exactly does co-founder X does in this startup? Is it worth having her on board?
I once read some really bad advice for fresh people just starting out in the entrepreneurial journey and they are advised to build a website and list all their friends as team members. This is completely bad advice because having undefined business relationships with people will cause all forms of problems as we progress. If the business fails, its fine. No one fights over failed courses, but if the business works, all the fake staff and co-founders you claimed you have will come knocking at your door, demanding for a piece of their company. The one you handed over to them on a platter of gold.
__________
Watching The World
- They say in hindsight, every one is a genius. When Facebook announced it was buying Whatsapp for $19 billion, we thought they were crazy. But 1 year later, it is all justified. See reports from TechCrunch: A Year Later, $19 Billion For WhatsApp Doesn’t Sound So Crazy and Mashable: Facebook’s blockbuster WhatsApp acquisition one year later
