Posted on

The cofounder dilemma – or when the biggest reason for success is also the biggest for failure

MANHATTANOver the last 2.5 years I have had the chance to closely observe over 70 startup teams for more than 6 months each (some a lot more) to find out which of them succeed (by their own definition) and which of them fail.

The thing that struck me 2 nights ago at the TIE dinner was a question that was asked by one of the solo founders – why do investors insist on having co founders if one of the biggest reasons for companies closing is “founder issues”?

If you look at the data from multiple sources about the biggest reason for failure in technology startups, I am struck by how high “co founder issues” comes up in the reasons for a startup folding.

After “no market need” and “ran out of cash” – which by the way is another way of saying there was no market need, the biggest reason was team and co founder issues.

Initially that struck me as odd. I mean, as investors, we keep telling entrepreneurs that we don’t fund solo entrepreneurs. Or that we invest in teams. Or that we like a well rounded hacker, hustler and hipster teams. Most investors have a bias against solo founders. We are prone to say – if you can get one person to join you as a co founder, why should an investor join you?

I have one theory around why we do what we do and say what we say. I am going to say it is a theory for now since I have not validated this and certainly can’t speak for all investors.

The reason is that the biggest reasons for failure (poor co founding teams) is also the biggest indicator of success.

Historically, great technology companies have 2 co founders.

Most investors pattern-match.

So, they tend to talk to 20 folks and form an “informed opinion”. If you look at startups in the technology space historically, the 2 co founders insight has borne out more often than not – Microsoft, Apple, Yahoo, Google, etc.

So, as investors we assume that data (that 2 cofounders is better) trump judgement (that sometimes a solo founder can be just as good – DELL, Amazon, eBay, etc.

So, the question is – why we do insist on having a 2 founder (or more) team than a solo founder?

The answer is fairly simple – investors, like entrepreneurs have biases, or a deviation in our judgement.

If you are a pattern-matching investor, with not much operating experience, then you will go by “best practices”. Then you find other ways to rationalize those decisions. For example – you will quote how startups are very hard and during the hard times you need someone (your co founder to keep your spirits up), or that you need folks with complementary skills to form a company, etc.

Those are largely true and maybe not rationalizations at all, based on the experience of many investors, but I have found that early stage (angel investors) tend to have these biases formed and opinions they have been “handed down” from seasoned investors, who have their own biases.

So, what does this mean if you are a solo founder and still need a “cofounder” since your investors are telling you they invest in teams.

Ideally, you should look for people you want to work with and have worked with before. Note, I did not say “you know well” – that’s necessary, but insufficient. If you worked with them that’s the ticket.

If you don’t have that person and keep getting feedback from investors you are trying to get on board that they don’t fund solo founder companies, what they are really telling you is that there’s other problems that make them not want to invest.

The problem might be that dont know the market, dont understand your product, or any number of other reasons.

That’s the real problem to solve as a solo founder, before you solve “let me get a cofounder” problem.

Posted on

How to hire like a hacker

In my past several years of running Themeefy, I have gone through many hiring cycles. Over time I have learnt that there is a particular strategy or set of things, that work really well — especially if you are an early to secondary stage start-up, and want to attract good talent, without necessarily paying a lot.

  1. Be clear on who you want — Do you want a CSS / HTML guy ? Do you want a server-side developer ? Or do you want someone who can do pretty much everything little bit? It’s important to clearly outline this in your mind, because people come with different skill sets and everyone has a different bent of mind. Server-side programmers, even if they can write CSS very well, should ideally not be used for that role — they might miss out Ux aspects that are crucial. Similarly, front-end developers might be capable of writing server-side code, but might miss scalability or other issues. Of course there are exceptions to this.

    Also, if you know the exact skill set you want, or the exact role this person will play in your team, you will look at the right places to hire. For example, while hiring UI people, you should be browsing Dribble, but while hiring server-side, GitHub is a much better place.

  2. Write a cool job advert. Be creative — Often, highlighting the non-monetary benefits of joining your start-up, can attract top talent. For example, in a recent hiring cycle, I started my job advert by saying “work for 5 hours a day and do cool stuff for the rest”. I didn’t lie. I just figured that days of high pressure work, nearing a release date, are often balanced out by relatively low pressure days when we are in design phase or doing beta testing etc. It all averages out to 5 or 6 hours of work a day, which can be a great perk for talented people. You also stand a chance of hiring folks who like to spend time in developing their own skills, ultimately benefitting your startup.
  3. Give measurable tests — Hiring is a risky business with a high probability of a wrong decision. This is because it has so many aspects and in a start-up we are always pressed for time and resources. Often, multiple rounds of interviews or tests are not possible, candidates are remote or are too busy in their existing jobs. The best way to cut through this is to send a set of small projects — for example a single page UI to a client-side developer, or a small DB problem to a server-side person. A set of goal oriented tests often makes it easy to see whether the person has the ability to achieve a task without much guidance and in a small time frame — a crucial skill for a startup.
  4. Build a pipeline — The fastest way to get people on board, is to have a pipeline of resumes / people that you interviewed in earlier cycles and have had a conversation with. People acquire more skills over time. . They might have been a “near-fit” back then and you found a better person. But six months or a year later, they might be the right person.
  5. Be open — Don’t have strict notions of work. Be open to work from home, remote work, flexi hours. Be cognizant of the fact that you are hiring people, not coding machines. Talent can come in unexpected packages and as long as you feel a person might be able to do the job, it doesn’t matter how they do it.
  6. Look for attitude — Because when the ship hits rough seas, it’s the attitude that matters more than the skill. No matter how good resumes look, or how amazing a GitHub profile is, it’s the gut feel you get when you see the test results of a person, or interact with the person on email or phone to which you should pay attention.
  7. Be a “closer” — When you are taking time to hire, or decide not to hire someone, make sure you send out an email to the person — especially if you have had several rounds of interviews or discussions with them. It is the right thing to do, and it makes sure your pipeline is open for the future. And as an entrepreneur it’s important that you work towards building a healthy industry culture.
  8. Rules are meant to be broken — There is no one-size-fits-all in start-ups. And definitely not in hiring. If you have rules like salary structures, leave policies, timings — junk them. They are barriers to hiring. Employees get confused and the focus becomes more on what am I getting, rather than on what is the culture I am getting into. Emphasize just one thing during hiring — that it’s a goal-oriented, trust-based and merit-based place. That’s all that matters and that’s how your start-up should be. Customise your offers based on your candidate and your current ground-reality.

Well, that’s it — my algorithm for hiring. You are free to fork and tweak this to your needs. Happy hiring ☺