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Are cofounded startups doomed to fail? Noam Wasserman’s book, The Founder’s Dilemma, revealed that 65% of all startups would fail because of cofounder tension. Research done out of the University of Pennsylvania shows that ignoring other factors, solo founders are more than two times as likely to own an ongoing, for-profit venture than teams of three or more co-founders.
That said, many important reasons exist to build a company with a co-founder. Splitting responsibilities, brainstorming and collaborating, covering more territory faster, mitigating risk, and having moral support are valuable reasons to pursue or maintain a cofounder relationship.
So what can these cofounded companies do to strengthen their relationship success?
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1. Know thyself
Before you begin your cofounder search, it is vital to understand yourself first and foremost. What is your personality like? How do you show up, and in what capacity? What skill sets are you strong in? What vision do you have for the company? What values do you prize in a working environment and business relationship?
Taking free tests like 16 Personalities, Political Compass Test, and The Moral Sense Test can help you understand your professional and personal self more. From a skillset perspective, if you’re a strong advocate type, perhaps you need a strategist mindset to balance out the company’s planning. From a values standpoint, if you care about capital and impact, that could indicate you need someone with a value set that reflects or compliments your values.
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2. The key to finding the one
Use the answers above to help identify the type of person you need to bring into your startup. You can even have them take the above quizzes to see if you’re a good match! Additionally, according to Harj Taggar, partner at Y Combinator, one of the most important things to learn about a potential cofounder is how they handle stress.
“I actually think the single most important thing to know about someone before you start a company with them is how they handle stress. The second most important is how well they will help you handle stress. And the reason I say that is startups are very incredibly stressful, intense experiences, as I mentioned before. And a great co-founder should be able to support and help you through those (moments).
Y Combinator has since launched a Co-Founder Matching platform, enabling thousands of founders to match based on preferences for interests, skills, location, and more and start building your company.
3. Address the big-ticket items upfront
What does ownership look like? Who has the final say when making major business decisions, or what does decision-making look like? When problems occur — either in the company or between founders — how will those conflicts resolve? Having a plan of action around these inevitable issues established upfront can save lots of stress and conflict and even prevent failed co-founder relationships.
“Your relationship forms the core of the company, and how you manage it will set the values, operating principles, and normative behavior for your entire culture,” states Pete Flint, a 2-time unicorn founder and former CEO of Trulia. “A healthy Co-Founder relationship creates a strong culture where truth flows freely, people feel safe, conflict is resolved productively, and everyone is invested in each other’s success.”
Drawing up these resolutions into a cofounder agreement is crucial to ensuring you are aligned and have a defined approach and legal footing for moving forward.
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4. Handling communication and conflict
Even with the best of intentions, conflict is bound to arise. The single most significant factor in moving through conflict is ensuring you and your cofounder understand how to communicate with one another through these moments properly.
Known psychotherapist, bestselling author, TED Speaker, and podcast host Esther Perel says there are covert and overt reasons for cofounder conflict.
“Conflicts rooted in respect and recognition deal with our self-worth — and that’s why they sting.”
Acknowledging, validating, and empathizing quickly reestablishes respect and recognition during high-conflict times. This enables trust and connectivity, allowing co-founders to move into productive conversations that lead to resolutions.
5. Divide and conquer, but also keep it together
One of the benefits of having a cofounder is getting to divide the many tasks that need to be done in a startup. It’s easy to get siloed from your cofounder within those daily habits.
However, ensuring you both create pathways to connect, share updates, provide insights, and keep each other motivated daily is essential. One great way to do this is by having a daily check-in, allowing you both to stay focused, brainstorm, and keep motivated on the big picture.
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6. Out of office, quality time is key
Strengthen your relationship with your cofounder by building quality time outside the office to develop your trust and connection. Active listening and caring about a founder’s personal life are critical to making office workplace communication and performance positive.
The more you can build a friendship with your cofounder, the better off your working relationship will be.
“The best people to start companies with are always people that you’ve got some sort of personal experiences, where you kind of know the character and how they’re going to respond to those tough situations,” says Harj Taggar. “And that usually means there’s someone, maybe a close friend you’ve worked with, under stressful conditions.
If you don’t have a pre-established relationship or your friendship has been neglected due to work responsibilities, you must carve out time to build this foundation of trust.
7. Live, laugh, and build a company
Startups are about staying focused, following a plan, and pivoting when things go awry. The high stress of volatility of this environment can be cumbersome to the morale of individuals. As cofounders setting the tone for the company, it’s vital to ensure you both keep your mental and emotional health in check. Finding time to be inspired, laugh, and have an identity outside of being a founder, are all important ways to ensure that when you both show up to the office, you feel embodied, grounded, and fully present to start your workday.