Building Codiga: Being a solo founder
Note: This post is part of a series about building Codiga.
A common misconception is that you need to have a co-founder. Some accelerators (such as Y Combinator) are known for rejecting solo founders. I believe that it's better to go solo unless you know your co-founder very well for years, and you have worked together. The French expression “mieux vaut etre seul que mal accompagne” (in Spanish “Mejor solo que mal acompañado”) applies here: better go solo than with bad company.
In his book, Good to Great (one of my favorite business books), Jim Collins explains that before great companies decide on what to work, they first decide who will work in the company. The author takes the metaphor of a bus: your company is like a bus, and deciding where the bus should go, you should first decide who is on the bus. It means making sure you bring the right people on board, but also you kick people who are not a fit.
This is one of the best advice from this book. I have seen so many startups with the wrong people in managing roles. The CEO or CTO are too afraid to act and replace them, which impacts the company culture (great performers leave) and product (buggy/useless/bloated features are shipped).
The best way to prevent bad people in your company is to prevent hiring them in the first place. It might feel like common sense, but many “leaders” do not follow such principle.
Taking the wrong co-founder
A co-founder is like your life partner. You have to be certain you want to stay with this person for years. Otherwise, your partnership is a ticket to go straight to hell. All co-founders must have strong work ethics, be aligned with the mission and vision of the company. This is extremely rare to meet someone with the same vision as you. This is WAY harder to have the same vision, evolve, and grow together for 10+ years. It requires a growth mindset, a willingness to learn together, and quite frankly, a good sense of humility.
Many wannabe founders do not understand what it takes to start a company. Starting a company requires a ton of sacrifices. You must do some shitty work at odds hours. Many people (rightfully) prefer to enjoy the luxury of their daily job. I have seen many people wanting to start a company to call themselves founders without putting the real work in. The glamorous stories (think all the TikTok and other Twitter threads) that show young people becoming famous and rich founders attract countless people. Many of these stories are fake and, even if true, do not explain the pain and suffering that happen behind the scene.
If you do not know your co-founder for years, there is a high chance of a disconnect in the company's mission or vision. Slowly, both co-founders will see different irreconcilable trajectories for the same company. And even if the roles are clearly assigned and one founder is not the pilot of the ship: nobody wants to see their ship go in the wrong direction, and they will fight for their vision to prevail.
I have seen a ton of founders leaving the company they co-founded after a few weeks or months. Some because they were not serious about building a company in the first place. Others because they were simply unfit for the job. It is very common for co-founders to leave the ship early, sometimes before even jumping on the ship! For example, Ben Reeves, co-founder of blockchain.info was supposed to be a cofounder of Coinbase and left because of a disagreement with the main founder Brian Amstrong.
It is not only common, but this is good to split very early in the story of the company. If two persons are not working very hard or are not aligned on the future of the company, it is better to split ways and ensure that all founders/employees are aligned on a common mission/vision. It also brings clarity about who is in charge and avoid wasting time. If you feel you are not aligned with your co-founder, talk, resolve the issue and clarify your expectation. And if you are not comfortable with the answer, do not hesitate to exit and avoid wasting your time.
How to limit co-founder issues
When you marry, you generally sign a prenuptial agreement. When you start a company with other people, you define beforehand what will happen if things go wrong.
Clearly define, at least:
Control: never do an exact equal share of control. Never, EVER split the ownership 50%/50%. One person should always have more control than the other. Even a 51%/49% ownership split is fine. I have done a 50/50 business in the past, the separation has been extremely painful, and I will never make this mistake ever again.
Roles: clearly define who is CEO, CTO, COO, etc. And stick to it. The CEO is the one doing decisions and the rest should follow his lead.
If possible, also discuss what will happen to the equity if one leaves. This is a hard conversation to have since you are projecting yourself to stay with this person forever, but discussing this beforehand can save you plenty of arguments and lawyer fees down the line (reminder: a startup lawyer is around $1000 per hour – a simple disagreement may cost $10k to $20k to settle).
How to attract talent in the beginning?
Allowing a co-founder is often seen as a way to attract talent. Engineers may be interested in being a co-founder of the new hot startup and becoming multi-millionaire.
But if you limit the number of co-founders, how do you attract great talent at the start? The quick answer is: you do not need to make them co-founder. Co-founder is a vanity title everybody wants but very few deserve. Still, hardworking people deserve to be rewarded for their hard work.
Your first great hire (e.g., often an engineer in a tech-startup) can be called a founding engineer, have a very generous salary with equity and bonus (1% to 2% of equity at the beginning is what you want). As you make progress, keep refreshing the equity to avoid being diluted and retain them. Similarly, you will also continue to increase their salary as they grow. This way, they may not have the shiny title but have recognition, money, and equity. You keep control of the company and prevent any drama with potential co-founders.