As Thanksgiving approaches I find myself reflecting on the year, evaluating decisions both good and bad, and most importantly taking a moment to think about what am I thankful for in life.
In 2012, I am truly thankful for my co-founder, Amos Elliston.
I met Amos when I was applying for a product management position at Shopzilla (aka BizRate). He was one of five people to interview me. I got the job, and we had an opportunity to work together for two years. Amos left Shopzilla before I did, and he went on to help build Geni and Yammer. I left shortly after to build GumGum. Five years later we finally reunited to co-found Pocket Change, a universal loyalty currency.
In the short year we have been working together, we’ve raised $7 million, recruited a top tier team of 20, and built a product that reaches over 10 million users across 300+ mobile apps. Amos and I are experienced entrepreneurs, but I wholeheartedly believe the key to our success has actually been our partnership. It’s not good. It’s great. And that produces orders of magnitude more value.
Finding a great co-founder is the single most important decision you will make in your company’s history, and it also happens to be the first. It has taken me 10 years of entrepreneurship and a lot of heartbreak to find the right co-founder. Looking back through past co-founder experiences, good and bad, I have found these seven things to be true:
Work at a dying Internet company
Most entrepreneurs look to their social circle to find co-founders. I’m not a fan of this approach, as it’s very likely you will find a co-founder with overlapping skills. That’s why they are in your social circle! Some people would advise reaching out to schools or clubs to find a co-founder. This is just one of those pieces of advice that you should check off your list but never actually works. The reason being it’s hard to convince someone you don’t know with no social vetting to partner with you.
In the end I was lucky to be broke and in debt from a magazine I founded during college. I was forced to take a job, and I ended up at Shopzilla where I met Amos. In hindsight it’s actually a great strategy for meeting co-founders. Go find an Internet company that just sold or that is dying and work there for a year. You will not only learn the inner workings of an Internet company but you will meet the people you will work with for the rest of your life.
Find your “yang”
Finding a co-founder with complementary skills is critical. I’m the product leader and Amos is the engineering leader. It’s sexy these days to have two engineering leaders but the reality is a more complimentary team will always move faster because there is more to building a business than just the product.
Trust your co-founder
If you don’t trust your co-founder there is no point in continuing. Whether it’s ethics or domain expertise, you need to have confidence in their decision making. As a non-engineer, if I were to question Amos’s decision to use Ruby vs. Java, it would not only slow down our product development but it would send a message to the team the leadership is disjointed.
Discuss your risk tolerance
Entrepreneurs by definition have a high risk tolerance. But risk has a wide spectrum and not all co-founders are on the same wavelength. Is the goal to create $10M, $100M or a $1B in market value? Discuss this question with your prospective co-founder because each tier has a significantly different risk profile. Whether it’s hard questions, like moving the company from Los Angeles to San Francisco (which we did) or how much capital to raise, decisions can be made faster if you have the same risk tolerance.
Grab a beer together
Amos is happily married and has a beautiful daughter, and I’m single, and I like to party. Our personal lives couldn’t be more different, but we have very similar style and interests. You don’t need to be best friends, and I actually would advise against that, but you need to enjoy each other’s company so much so that you look forward to grabbing a beer together.
Execute a partnership agreement
It’s good to want to grab a beer with your co-founder, and it’s even better to trust him. But shit happens, and it’s important to be prepared. From day one, Amos and I executed a simple partnership agreement that outlined our deal terms, but more importantly instituted four year vesting for both our shares. Please do this because in a past company, one of my co-founders and I were held hostage by a third co-founder who voluntarily abandoned us and then insisted on keeping his equal share. When you raise institutional money VCs are going to force you to do this anyway, so just do it from day one. There is always a chance a co-founder may leave.
Share equity equally
I remember a conversation over lunch where Amos was the first to bring up equity and I immediately shot back that we are going to be 50/50 partners. He was a bit surprised by my swift response, but there was never a question in my mind. If you don’t want to share equity equally amongst your co-founders, then you don’t have the right partners. My friend Mark Suster challenged me on this decision and actually has a great post about the topic. He is 100 percent right if you have a co-founder that is anything but great, but I challenge you to find your yang.