I put together this information as a handout for a breakout session at Block by Block 2012 on “Choosing the right partner.” Worth sharing more widely.
A few resources on deciding whether to take on a partner, and how to choose one. Not specific to news startups, but highly transferable thinking points:
Excellent multi-part package from Inc. magazine: “Finding the Perfect Business Partner” http://www.inc.com/guides/leadership_strat/23041.html
Deciding whether to partner: “Do you even need a partner in the first place? Maybe not. A potential mate should bring something substantial to the table — like deep pockets or industry connections. Be sure to choose someone who complements, rather than mirrors, your own skills.”
Vetting a partner: “Do a little dating,” suggests Peter Wylie, a Washington, D.C., psychologist. “Take on a challenge together, like meeting a deadline.” Dennis Jaffe, a San Francisco-based consultant, suggests drawing up “a statement of expectations–a charter, a constitution that can be referred to.” And not with any lawyers around: “Draw it up yourself, in your own words.”
When your partner is your spouse: “Plan no-business weekends. Go on actual dates. Make rules.”
How to Fire Your Co-Founder “Keeping on a co-founder who is no longer adding value can really stifle progress and hurt your team’s morale. There are also ownership consequences with delaying the decision: your co-founder’s shares will continue to vest. Dragging your feet can further dilute the rest of your team.”
“The ideal founding team is two individuals, with a history of working together, of similar age and financial standing, with mutual respect. One is good at building products and the other is good at selling them.”
Mark Suster, “The Co-Founder Mythology” – a strong point of view about not doing 50/50 deals
“Most senior employees who join are given 2% if they join early. Maybe they get up to 10% if they joined REALLY early and were senior. Who gets 30%? Nobody. That’s who. So trust me when I tell you that you can hire incredibly talented people for 30% of your company. Or 20%. Let’s be honest – even 10%.”
Founder Space, collection of blogs, category of “Company Formation”
“Just like you don’t want to be unable to make decisions, you also don’t want to be stuck, long-term, in a private business entity with someone you can’t get along with. So you also want to provide a mechanism for separating the people if they aren’t getting along without necessarily abandoning the business. One of the more popular methods to deal with this is a “buy-sell” agreement, under which a founder proposes a price at which she is willing to buy the other founders’ stock or, if they prefer, sell hers to them. But there are a lot of possibilities.”
Steve Blank, The Startup Team – lessons learned from teaching students how to start new businesses:
“… And finding product/market fit in that chaos requires a team with a combination of skills.
What skills? Well it depends on the industry you’re in, but generallygreat technology skills (hacking/hardware/science) great hustling skills (to search for the business model, customers and market,) great user facing design (if you’re a web/mobile app,) and by having long term vision and product sense. Most people are good at one or maybe two of these, but it’s extremely rare to find someone who can wear all the hats.
It’s this combination of skills is why most startups are founded by a team, not just one person.”
Nina Kaufman, author of “The Entrepreneurs Prenup: How to Choose a Business Partner Who Won’t [BLEEP] You.” Interview with Small Biz Lady:
There are three main reasons why you’d want to bring someone else into your business. First, entrepreneurship can be a lonely ride. When you share with someone else, you get the benefit of having a cheerleader, cattle prod, an extra set of eyes–all wrapped up into one. Second, there’s no way that one person can know and do everything well but a business needs to grow and succeed. By bringing someone else into the business, you expand the range of skill sets, opportunities, and possible sources for financing. Finally, where else would you get someone to work for free, if not for “sweat equity”? But it’s not a decision you want to make lightly. Sometimes, if you can get what you need by hiring an employee or consultant, you’re better off.
7 Tips on How to Choose a Business Partner: Having No Partner is Better Than Dealing With a Bad Business Partner:
“Approach finding a business partner as you would a combination spouse/day care provider. A partnership is a long-term covenant between two (or more) people. You will spend a lot of time planning major business events with your partner and need to be able to get along with him/her.”
From La Piana Consulting.(which specializes in non-profit partnerships and restructuring). Key Success Factors for collaboration between organizations:
2. Joint Decision Making
3. Start with Simple Collaborations
4. Board Engagement (for nonprofits)
5. Good Facilitation and Process
6. Sustainable Structure
7. Leadership, Willingness, Capacity and Culture
Why Partnerships Fail
1. People tend to hold onto their individual cultures and fail to create a new culture