SmartAB™ Wisdom #13: Get A Haircut At Your Local Barber — Not An Advice On Finding A Co-Founder…
David Chilton is a super nice guy. I met him several times in the past and had a truly enjoyable chat over a cup of coffee. He is approachable, and a good listener, too. Most of all, he shows a great deal of humility — which is both: inspiring and heart-warming.
As a prospective investor, David is not shy to admit that he knows nothing about some areas that are not his core expertise. For example, he knows publishing very well and one should listen attentively to his advice.
He also understands Financial Planning, and according to amazon: “David Chilton’s popular “The Wealthy Barber” is a good starting point for anyone who wants to construct a personal financial plan. Chilton’s common-sense approach has obviously hit home since his book first appeared; with more than 1.5 million copies sold to date, “The Wealthy Barber” is the best-selling book ever of any kind in Canada”.
However, this book was published in… 1989. And if you ever wondered where was the VC industry at such time — it’s a true eye-opener. “By the end of the 1980s, venture capital returns were relatively low, particularly in comparison with their emerging leveraged buyout cousins, due in part to the competition for hot startups, excess supply of IPOs and the inexperience of many venture capital fund managers.
Growth in the venture capital industry remained limited throughout the 1980s and the first half of the 1990s, increasing from $3 billion in 1983 to just over $4 billion more than a decade later in 1994”.
No doubt, a lot has changed since 1989. And the $4 billion invested by the VCs then, is a far cry from the $612 billion invested in 2021. But I digress… So, get a haircut, not advice on finding a Co-Founder from David Chilton’s Wealthy Barber…”
In my post: “SmartAB™ Wisdom #10: Follow This Simple Recommendation & Win — It’s Easier Than You Think” I recommended bringing a Co-CEO onboard and among other arguments, I mentioned the following:
· Running companies with Co-CEOs brings many benefits. It lowers the anxieties of a single CEO and allows for productive utilization of both: Experts and Generalists
· In similarity, running the BODs and Advisory Boards with Co-Chairs may help all the corporations, large and small — to enhance their ESG brand
· And especially at larger companies, such mandated changes can significantly lower the Gender and Race Gaps, and boost competencies at many levels…
And although many disagree with me and are not recommending bringing Co-CEO onboard — most of the detractors overwhelmingly agree that having a Co-Founder in a startup is a good thing to do….
Co-CEOs In A Pre-Seed Startup
According to YCombinator, the startups need a Co-Founder for the following reasons:
“Productivity
· Higher quality & quantity of work (remember speed?)
· Accountability
· The ability to build stuff
Moral support
· Startups are hard
Empirical evidence supports this:
· Microsoft — Paul Allen in addition to Bill Gates
· Apple — Steve Wozniak, Ronald Wayne in addition to Steve Jobs
· Facebook/Meta — Zuckerberg had 4 co-founders!
Only 4 out of YC’s Top 100 companies were started by a solo founder.
· Clear pattern among the solo founders: they were able to make progress on their own, build their own prototype, etc.”
If you are paying attention at all to such issues, you must have realized by now that thousands of incubators, accelerators, venture studios, etc. are all promoting “Speed Dating” services — to help you find the right Co-Founder …
And they will all present you with a lot of smiling faces of successful matches and happy couples who utilized their speed dating services. The problem is that running a business brings a lot of tough issues to deal with, issues that go above and beyond discussing what your favourite movie is…
So, What About Post Seed Startups?
What if you already raised your Seed Money and still didn’t identify the best “speed dating” venue? Now, you have to hire and fire people, meet tight deadlines, work under constant pressure, and chase a mighty dollar — to the point that leaves you often exhausted and deflated. Hardly a “sexy” side that you may want to portray over a glass of Chardonnay…
And realizing that a good Co-Founder may stick around for the next 7–10 years, leave the “form” behind the process of finding the right candidate with much more… substances.
My recommendation: bring an advisor onboard and work with him/her for 3–6 months before deciding if you have the right Co-Founder standing in front of you…
Still not convinced? According to Crunchbase:
“Many factors go into a successful startup, such as market need, financing, a viable business model, and marketing. However, finding the right team –specifically, the right co-founder or cofounders — is a crucial first step.
Out of those that have failed, 23% of startups said that not having the right team contributed to their startup failure. Having two founders on the team, rather than one, significantly increases a startup’s odds of success.
According to Startup Genome, startups with two founders will raise 30% more startup capital, grow their customers three times as fast, and will be less likely to scale too quickly.
It is clear that two fully invested founders are greater than the sum of their parts. Finding a co-founder can be challenging. However, there are many resources founders can use to find someone with the skill sets necessary to run a business.
Startups will be more successful when they have two balanced partners. Many founders make the mistake of finding a co-founder who is exactly like them, rather than finding someone with complementary skills. Ideally, startups should mix skill sets.
For instance, companies shouldn’t have two people that are both tech-focused and don’t understand the business or marketing elements of running a startup. Make sure that if one co-founder is tech-focused, the other has the business acumen to complement the other”
And if your only concern is that Co-CEO structures may lead to difficulty in making a binding decision, especially when both parties strongly disagree — think again. You can use SmartAB™ as your ADR! According to Wikipedia:
ADR
“Alternative Dispute Resolution (ADR), or external dispute resolution (EDR), typically denotes a wide range of dispute resolution processes and techniques that parties can use to settle disputes, with the help of a third party. They are used for disagreeing parties who cannot come to an agreement short of litigation. However, ADR is also increasingly being adopted as a tool to help settle disputes alongside the court system itself.”
Mediation
Mediation is a structured, interactive process where an impartial third party assists disputing parties in resolving conflict through the use of specialized communication and negotiation techniques. All participants in mediation are encouraged to actively participate in the process.
Mediation is a “party-centered” process in that it is focused primarily upon the needs, rights, and interests of the parties. The mediator uses a wide variety of techniques to guide the process in a constructive direction and to help the parties find their optimal solution.
A mediator is facilitative in that she/he manages the interaction between parties and facilitates open communication. Mediation is also evaluative in that the mediator analyzes issues and relevant norms (“reality-testing”), while refraining from providing prescriptive advice to the parties (e.g., “You should do…”).
Mediation, as used in law, is a form of alternative dispute resolution resolving disputes between two or more parties with concrete effects. Typically, a third party, the mediator, assists the parties to negotiate a settlement. Disputants may mediate disputes in a variety of domains, such as commercial, legal, diplomatic, workplace, community, and family matters.
The term mediation broadly refers to any instance in which a third party helps others reach an agreement. More specifically, mediation has a structure, timetable, and dynamics that “ordinary” negotiation lacks.
The process is private and confidential, possibly enforced by law. Participation is typically voluntary. The mediator acts as a neutral third party and facilitates rather than directs the process. Mediation is becoming a more peaceful and internationally accepted solution to end the conflict. Mediation can be used to resolve disputes of any magnitude.
Arbitration
Arbitration, a form of alternative dispute resolution (ADR), is a way to resolve disputes outside the judiciary courts. The dispute will be decided by one or more persons (the ‘arbitrators’, ‘arbiters’ or ‘arbitral tribunal’), which renders the ‘arbitration award’. An arbitration decision or award is legally binding on both sides and enforceable in the courts, unless all parties stipulate that the arbitration process and decision are non-binding.
Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions. In certain countries such as the United States, arbitration is also frequently employed in consumer and employment matters, where arbitration may be mandated by the terms of employment or commercial contracts and may include a waiver of the right to bring a class action claim. Mandatory consumer and employment arbitration should be distinguished from consensual arbitration, particularly commercial arbitration.
Your SmartAB™ can offer a quick solution in a form of well-established ADR mechanisms that proved themselves over centuries. Make your Advisor an Arbitrator/Mediator to solve such disputes and start focusing on what really matters.
You will be spending a lot of time together — probably more time than with your spouse… So, start building a great company and let the outside advisor mediate and accelerate your growth…
For More Information
Please see my additional posts on Linkedin, Twitter, Medium, and CGE’s website.
AI Boogeyman
You can also find additional info in my book on amazon: “AI Boogeyman — Dispelling Fake News About Job Losses”, and on our YouTube Studio channel… Thank you.
SmartAB™ — A Radically Innovative Advisory Board Service
After the 1999 market crash, many of the brilliant business plans didn’t work anymore. Similarly, the 2022 economic downturn caught many startup CEOs by surprise. So, how can open-minded companies benefit from the KEE (Knowledge, Experience, and Expertise) offered by entrepreneurs who succeeded to overcome the dotcom pain?
Well, I have reached the stage in my life where the ability to share my past experiences with younger CEOs is important to me. Until now, tapping experienced advisors wasn’t easy. It was too costly for many early-stage startups that are low on cash. And equity-only compensations were often not attractive enough to draw in the rainmakers.
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Since at this point, I don’t know you and you don’t know me, the best way for us to earn each other’s trust is to invite you to subscribe to SmartAB™. After all, trust can’t be promised, it must be earned. Let me better understand where you are now and where you want to be in the future — and I will bring the right KEE to help you get there…
Canada Green ESCO Inc. helped hundreds of entrepreneurial companies to succeed. And now as a Moonshot Factory, we also deploy our own startups. To date, we finalized the plans to launch 4 such ventures, already. And when the launch happens, we will offer paid subscribers to SmartAB™ an EQUITY STAKE in such Moonshots — at no additional cost. Some subscribers will be even invited to join as Co-Founders…
Thank you. The benefits of SmartAB™ subscriptions are summarized in the table below:
Disclaimer: The opinions are my own. If you require professional guidance about taxation, accounting, or legal issues — please contact qualified lawyers and certified accountants. Thank you.
