StartUp Dilemma 8 – What’s the Magic Number of Founders?

16 Jan

Entrepreneurship is a bit like marriage – you get married (willingly that is) either because you really like a person and would like to spend the rest of your life with him/ her; OR (seen less often in the western world, but very common in India) because you feel that this is the right time to get married (for whatever reason – biological clock and the need to guarantee perpetuity of race/ the desire to not live alone/ the pressure society is putting on you to find your soul mate/…).

Entrepreneurship also, very often hits either because you have an idea/ (or many ideas) that you really think will allow you to rule the world; or, because you want to start ‘something” on your own (“something” is undefined – and you are open to trying many of those). (Click here to read an earlier post on the right age to be an entrepreneur, and some segments of those!).

To take the corollary further, choosing co-founders is also a bit like marriage – you basically either know someone really well already, and are used to doing things with them – so they become a natural part of whatever you embark upon. Or, you kind of mount a hunt for someone who has what you need – it could be the code/ the BD contacts or skills/ the Ops knowledge/ the charisma/ and ofcourse the money!

So this questions often gets asked – how many co-founders should I have? Should I have any at all? How many is too much? And, how do I go about looking for founders.

Founder fin

Sometimes, (rarely though) this meeting happens a bit by chance – like it did for us. Debjani had a skeleton of an idea, her boss said – go for it; she knew Shoma of old, and said – OK, you want to try working from home/ in your pyjamas for a few days an hour, Shoma said yes; they figured they needed someone who India better, asked a neighbour if she would join, Asha said – not me, ask my friend (me); I was at a loose end and just getting bored with parenthood, agreed to meet Debjani and Shoma for a coffee (was in a hurry as had left 2 year old at home), listened to “idea” for 5 mins, figured there was no downside, wrote their numbers on the back of a tissue paper; Debjani figured now that we had 2 in India she needed one in the U.S. – asked her old friend Kyung if he would join – he was at a loose end too, said yes – EmPower was born!

And, for obvious reasons, while it turned out well for us, that is so not what you should bank on (co-founders falling into your lap pretty much).

So, start from the top – solo? (Obvious advantages – you are sole master, can control your destiny – have no one to blame, and ofcourse, get to take all your winnings home…) Actually, there are both pros and cons to being a solo founder, but in balance, it is better to have a team than not.

I can recall one successful Indian entrepreneur in the analytics field who did it alone (actually roped in his wife later) – but he got many advisors and early angel investors – and kept adding to his core management team who were all equity holders that helped him build his company – he’s done it really well. But he I think is a minority. (Though, to be fair, some examples of successful companies with one founder are Dell, del.icio.us, Facebook, plentyoffish)

Two? Sure, gives you a shoulder to lean/ cry on, a sounding board, and added expertise (in general, one is client facing, and the other is the techie/ content person). But, what if you have completely divergent views on a critical topic?

Hence, as a tie breaker – Three? Looks like VCs prefer 3. An old, but interesting article shows empirical evidence for the magic number to be —- yeah yeah it’s stat so it has to be weird —– 2.09 :). Also, this article on the “unicorn club” – i.e., those with Billion dollar valuations in recent years, seems to show that 3 is the magic number…

I agree – 2 to 3 is a good number. But, in our case, 4 worked well mainly because we were a cross border organisation – the market was primarily in the U.S., and development in India. So, both geographies needed the shoulders to cry on/ lean on – and sometimes bitch to, (about the other 2 πŸ™‚ ).

Ofcourse, the more founders you add, the more “noise” from fighting interpersonal battles emerges, and ofcourse, your share of the pie keeps getting diluted.

On this point, what do u do when u feel one is not pulling weight, or if you have a clash. Most startup failures are attributable to founder clash. Zuckerberg’s arguably ruthless treatment of his “co-founders” has been made famous in the movie The Social Network (watch this clip at 1.23-ish). Most people suggest a parting of ways is the best – if not the most pleasant option. Speaking for myself, we couldn’t do it ever. Not that we had major clashes, but there were times when one of us suggested that they just couldn’t work with someone else – and the others would step in, and say – “Hey, we started as a team, we will finish as a team, come what may”. Maybe not wise, in retrospect; but certainly easier to live with our own consciences – clearly, we are no Zuckerbergs πŸ™‚

On the search for a good co-founder, this article is a good read, and has a few good examples. A further few interesting tips on hiring non-technical co-founders can be read in this article

Finally, I think there is no magic number honestly, it is what you feel the need for/ can make happen. If you feel you need skills in areas you cannot provide, and can find the “right” people for it, for sure, go ahead and look. What is important is that they should have complementary skills, and the right chemistry.

Even the “unicorn club” analysis shows that Ninety percent of co-founding teams comprise people who have years of history together, either from school or work; 60 percent have co-founders who worked together; and 46 percent who went to school together. But, teams that worked together have driven more value per company than those who went to school together.!

I think the defining opinion on this topic can be found in the following article.

So, don’t spend too much time over thinking this problem – it IS an important one, just like marriage, but, do what feels right to you – the money will follow πŸ™‚

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