Five Co-Founder Scenarios, Five Different Results

Feb 14 2014, 9:10am CST | by

Five Co-Founder Scenarios, Five Different Results

By Pablo Villalba, founder, 8fit.com.

I started Teambox, my collaboration software company, as a sole founder. Because of this, I have been able to keep a relatively high percentage of the company (over a quarter even after our $7 million funding round). That’s huge financially. But even with that, I don’t feel real ownership of the cap table.

I have since realized that it’s not all about equity — so I decided to start my fitness app 8fit with co-founders because I want to work closely with people who feel real ownership of the business.

When I built my first few companies, I tried several different approaches to the co-founder question, all of which failed. Here are the five scenarios I went through so you can learn from my mistakes:

1. No Alignment

In my first company, there were three founders, who all had equal parts. We had clear divisions of responsibilities, but also very different visions of what the company should be. One imagined it as a little incubator with lots of mini companies, while I saw it as a consulting firm.

Eventually, only one SaaS project took off, which I decided to lead. As it built some revenue I had to buy off my partners’ equity to reclaim full ownership. The revenue got to covering a salary and — after stagnating for some months — I decided to sell it for just a few thousand dollars.

Lesson learned: If the visions of the founders don’t match, you’ll feel like you’re working alone.

2. No Ownership

Next I tried to launch something more ambitious: we’d manufacture quadracopters to deploy power lines across the country in a clean and efficient way. It involved heavy research and development, legislation, and selling to large energy companies. I brought in partners from each industry and we invested a tens of thousands in the project. I had barely one-eighth of the company, and we hadn’t even looked for outside investors.

As difficulties arose, nobody had a real sense of ownership over the project – it felt like a part-time job to all of us. Because of my inexperience and our funding, legal and technical problems, we simply let the project die.

Lesson learned: Building a company takes all of your creative energy. Look for enough ownership to make you feel a part of it.

3. No Added Value

I was still dying to build a real SaaS company, so I jumped into the first opportunity I found: 49-51 percent partnership with someone who would work for and fund it equally.

I put my life into the project, putting 10-hour days into my first attempts at coding. My co-founder followed it from a distance while keeping his day job and never contributed anything beyond a few forecast spreadsheets. Eventually the project got traction, and I moved to full-time status to raise funds and work on the company. To me, his decision to stay at his job already meant that he was completely out. Soon after that, we closed the company down and I moved on.

Lesson learned: Choose co-founders by the value they add to the company, not just the funding./>/>

4. No Co-Founders At All

Teambox will always be a single-founder company.

My real partners were the early investors and employees who joined us. They got great returns, I kept a high percentage of ownership, and everything worked out well. It’s been a great, fair and financially appealing experience.

However, it’s hard to align people who have different interests. Sometimes I felt alone, or that I missed a certain point of view.

Lesson learned: For support in the early days, employees can often be as good as co-founders.

5. No Investor Majority

It is my personal dream to help others lose weight and get fit, so for 8fit, my goal is to surround myself with people who think of this mission as their own. I want partners who are better than I am. I want to build a billion-dollar company with a small team and high revenue per employee, or fail trying to get there.

I want a close connection to our customers and for the company’s spirit to be embodied by the founders.

Lesson learned: There is no right answer. Funding and co-founders can go hand in hand.

Wrapping Up

Your early choices will make up the DNA of your company. Co-founders can be amazing support, but they’re not indispensable. Avoid working with someone who doesn’t fit your vision just because you need their skills — it will backfire.

Look for cultural fit, talent, involvement and ownership, and don’t worry too much about which form it takes. Happy founding!

Pablo Villalba is the founder of 8fit.com. Previously, he was the founder of @Teambox_app/@RedboothHQ ($7M raised, millions in revenue).

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

Source: Forbes Business

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Women in majority in Brazil universities yet earn less
Rio de Janeiro, Nov 1 (IANS/EFE) Women are in majority at Brazilian universities but still earn less than men in the job market, according to a study.
 
 
US praises Cuba's contribution in fight against Ebola
New York, Nov 1 (IANS/EFE) US Ambassador to the UN, Samantha Power, praised Cuba's contribution to the fight against Ebola in West Africa, and said that her country is very grateful.
 
 
UN warns of worsening food crisis in Somalia
United Nations, Nov 1 (IANS) A UN food agency Friday warned that poor rains in Somalia may worsen the country's food crisis, a spokesperson said.
 
 
Canada suspends issuance of visas to Ebola-hit African countries
Ottawa, Nov 1 (IANS) Canada has suspended issuance of visas to residents of West African countries with "widespread and persistent-intense transmission" of Ebola virus disease, a media report said Friday.
 
 
 

Latest from the Network

Federer, Murray ousted from Paris Masters
Paris, Nov 1 (IANS) World No.2 Roger Federer was stunned at the BNP Paribas Masters quarterfinals here by Canada's sole representative in ATP rankings top 10, Milos Raonic while Briton Andy Murray too exited the tennis...
Read more on Sport Balla
 
iPhones Could Be Coming To Iran
Apple has made a name for themselves as a company that has the power to take over developing countries and countries that do not have a large tech presence. Their most recent target, though, is one that few people were...
Read more on Apple Balla
 
Apple’s CEO Tim Cook Comes Out As Gay
Apple’s CEO Tim Cook has long been rumored to be gay, although he has avoided talking about it publicly. That is, until he penned a column for Bloomberg’s Businessweek that was published October 30.Apple has recently...
Read more on Apple Balla
 
Apple Goes Thermonuclear On Samsung
Over the past few years, Apple has been finding itself in court over and over again, in addition to dealing with their largest competitor outside of courts. So far, Apple has already won two major court cases with...
Read more on Apple Balla
 
Catalonia unruffled by Spanish challenge to independence vote
Madrid, Nov 1 (IANS/EFE) Artur Mas, leader of the regional administration in Catalonia, said that he plans to press ahead with a symbolic vote on independence despite a fresh legal challenge from the Spanish government...
Read more on Politics Balla
 
Trent Reznor Joins Apple
The $3 billion purchase of Beats by Apple left a lot of people scratching their heads, but one question that still remains is how the people on the board of Beats are going to fit in at Apple and how they will like it....
Read more on Apple Balla
 
Starbucks Both Praises and Shuns Apple Pay
Apple Pay has the potential to be a massive success in the world of mobile payments, although there are plenty of retailers that are resisting it, slowing down the success that Apple could be having. In a strange move,...
Read more on Apple Balla
 
Women in majority in Brazil universities yet earn less
Rio de Janeiro, Nov 1 (IANS/EFE) Women are in majority at Brazilian universities but still earn less than men in the job market, according to a study. The study, prepared by the Brazilian Geography and Statistics...
Read more on Politics Balla
 
Cast Coming Together For Steve Jobs Biopic
The Steve Jobs biographical picture starring Ashton Kutcher might have not been very well received, but there is another movie being produced that has some big names behind it. This film will be based off of the Walter...
Read more on Apple Balla
 
Schalke beat Augsburg 1-0 in German Bundesliga
Berlin, Nov 1 (IANS) Schalke's Dutch striker Klaas Jan Huntelaar secured his side the third win on home soil with a 1-0 win over Augsburg to open the 10th round of the German Bundesliga. Schalke earned their fourth...
Read more on Sport Balla