G134 Co-founder & Early Team Member Recruitment Strategy

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George Morgan
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Table of contents

1 Co-founder & Early Team Member Recruitment Strategy
2 Overview

3 Additional Resources

Information

Co-founder & Early Team Member Recruitment Strategy

2020-11-23: by Mike Suprovici

Overview

A conflict between founders is one of the most common reasons for startup failure. Hence, partnering with the right co-founder is critical. In this guide, we will cover everything you need to recruit co-founders.

Preparation

Before you begin the process of finding a co-founder, we recommend that you have a clear sense of the following items, which are described in detail in the guide:

Values
Company vision and objectives
The expertise needed for your business
Well defined on-boarding process for recruiting and retention

Process

Finding the right co-founder is similar to getting married. You must share the same values with your co-founders. Prior to beginning your search for a co-founder we recommend that you evaluate yourself. Consider asking:

Values

What areas are my greatest strengths?

Business examples include: sales, marketing, product management, engineering, etc.

Personal examples include: leadership, listening, friendship, patience, drive, etc.

What am I superior in?

Most people are outstanding at 1-2 things max. Pose this question to your friends and co-workers. Alternatively, find the one item that you are best at from ‘What areas are my greatest strengths’.

What am I bad at?

Be brutally honest here. Failing to do so will only hurt your prospects in identifying a great co-founder.

What traits do I value the most in people around me?

High-level items include integrity, trust, intelligence etc. We recommend that you think deeper, however. For example, one might admire how in times of severe stress their co-worker is able to keep it together and execute.

What drives me crazy about people?

Be very personal here. For example, do you have a hard time getting along with people with different political views from you? It will be impossible to avoid these types of issues because you and your co-founder will be together 24/7.

How did I make my best decisions?

Think back to a decision you made that had a terrific outcome. What process did you follow to reach that decision?

What characteristics do my friends have in common?

You are the average of the five people you spend the most time with.

To complete your self-assessment we recommend that you take a Myers-Briggs test to determine your psychological preferences for how you perceive the world and make decisions.

Company Vision and Objectives

Prior to evaluating if there is alignment between you and a potential co-founder, you must have a clear understanding of your vision and objectives for the business. Maintaining an unshakable faith in your vision despite the inevitable setbacks that your startup will face is what will enable you to persevere.

We recommend that you have uncompromising answers to the following questions:

Why are you building this company?

You might be building this company because you must solve this problem and the alternatives are poor. Or perhaps you are building this company because of an opportunity. Maybe you’re starting this company to support a certain lifestyle.

What does success look like for your company?

Perhaps you define success for your company ambitiously like curing cancer, putting a person on Mars, or eliminating car traffic. Or perhaps you are building a business that affords you and your team a certain lifestyle. Maybe you want to build a legendary company. You will need a different type of partner to build Tesla then you will need to start a bike shop.

What are your company’s values and philosophy?

Slack believes that having a diverse team is critical to achieving their mission. Treehouse strongly believes in work-life balance and therefore they have 4 day work weeks. Uber looks for people with qualities such as grit, resourcefulness and a ‘do whatever it takes to win attitude’ like their founder Travis Kalanick.

Having clear and uncompromising answers to these questions will help you create a framework to screen potential co-founders and employees.

The Expertise Needed for Your Business

We recommend that you complete the business model canvas to understand the needs of your business. To determine a role for your co-founder, start by looking at the Key Activities box since it defines what you need to do to build and deliver your product to users. Then look at the Key Resources box where you will list what is required to execute those activities. The delta reveals the expertise you need to find in your co-founder.

Onboarding Process for Recruiting

After identifying the core activities and needs for your business, you are ready to develop a process for recruiting and retaining a co-founder. A cofounder sets the vision and direction of the business, sharing between 30 – 49% of the total equity. Generally, co-founders will have known each other for years and have worked together on a series of projects.

Recruiting

In this section, we will provide you a step by step guide for recruiting a co-founder.

Sourcing

Based on the Core Activities and Needs analysis you completed in the previous section develop a list of expertise for a co-founder
Create a spreadsheet to track your interactions with various prospects. Include the following columns: Name, Expertise, Date, Relationship, Comments.
Scout your close personal network to determine if anyone fits the expertise you require for your business. Add potential prospects to the spreadsheet.
Search LinkedIn for local 2nd-degree connections who may be a good fit. Add those to whom you have a strong mutual connection to your spreadsheet.
Contact professors, previous managers, personal advisors, and co-workers. Find out if they know someone who is a good fit for your company.
Go to Startup events on topics matching the expertise you seek in a co-founder. Arrive early and stay late. You’re going there for the networking rather than the talks. We recommend you click here to learn more about how to network effectively.
If you are building a software company and are either a designer or an engineer we recommend that you regularly attend hackathons.

Prospecting

Rank your prospects by potential match. 1 = outstanding match, 2 = potential match, need more info, 3 = probably not a good match.
Create an email template to use for setting up initial meetings. You need to constantly test and refine this message. Here is a sample:

Hi Dave,

We met at the last Palo Alto iOS Developer MeetUp. You mentioned that you recently added the HealthKit framework to MyHealthApp. I’d love to get your advice on integrating HealthKit.

Are you available to grab coffee next week or the week after?

Create an email template to use when asking for introductions. Here is a sample:

Hi Jen,

Hope you are well. I noticed that you are connected to Amy on LinkedIn. Do you know her well enough to make an intro? I’m in the process of designing a new website and I’d love to get her advice on a navigation issue we’ve encountered.

Set up coffee meetings with your #3 prospects first so that you can practice.
Meet with #3 prospects. The meeting should be brief. Ask open-ended questions about the problem. If you feel the prospect has the potential to be a good match try to set up a follow-up meeting or call.
Repeat steps 4. & 5. with your #2 & #1 prospects
After meeting a prospect 5+ times invite them to a hackathon or to work on a small joint project.
Repeat 7 until both you and the prospect mutually agree to evaluate a founding relationship.

Evaluation

Choose a business objective that you can achieve in 60 days.
Clearly define the project. Every project should have 4 components:
1. Overview: This describes the project and the purpose. An example is: “Develop an MVP and reach 50% day 10 retention with 40 beta testers.”
2. Deliverables: This describes the expected deliverables that the candidate is expected to produce in a specific way that allows for creative contributions. An example is: “Please have 40 new beta testers with an iPhone 6s download our MVP by Monday, February 16th, 2016.”
3. Timing: This describes the timetable to complete the project. An example is: “The goal is to have you deliver our MVP by 5:00 PM on Wednesday, March 15th, 2016, to discuss with our Advisors.”
4. Communication: This describes the communication procedures to complete and deliver the project. An example is: “Please do not hesitate to call me with questions or ideas, and let’s plan to speak daily at 5:00 PM.”
Mutually commit to achieving the deliverables within 60 days.
As you work through the objective ask yourself:

Do I have a company without this person?
Can this person keep giving? In other words will this person scale?
Do they match my values?
Do they share the company vision and objectives?
How does this person fight, and how do they resolve conflicts?
How does this person work? Do they work as hard as you do?
How do they deal with stress?

After the milestone-based project is successfully completed by the candidate and you enjoy working together, a next step is to complete a final offer, which may be delivered in multiple parts.

Offer

Determine the equity split. Download the Co-Founder Equity Split Spreadsheet. Read How to Split Equity with Cofounders, A Guide to Startup Employee Equity and The only wrong answer is 50/50: Calculating the fo-founder equity split.
Include a vesting schedule. This means that the co-founder will earn the shares over time and protects you and the company if that co-founder leaves the company or doesn’t pull their weight. The standard vesting period is four years, with monthly vesting of shares. Unvested Shares should be subject to repurchase by the company if the co-founder leaves the company.
Protect your intellectual property. You can address this issue by relying on patents, trademarks, copyrights, and trade secrets to protect your valuable IP. Another step you can take is requiring all co-founders and any third-party developers to assign their rights in IP to the company. Doing this will help prevent trouble if a co-founder leaves the company and takes a crucial patent with them.
Work to clearly understand the legal agreements so that you can answer any questions that will come up.
Present the offer to the prospect.