It’s a known fact that 90 percent of startups fail. But what’s the underlying cause? Next to running out of cash and not finding a market fit, who you’re rubbing shoulders with on your founding team can determine whether or not your company survives.
When done right, a solid founding team improves the chances of a startup’s success by 30 percent and triples customer growth rate. That’s because you have more than one specialized skill set in the room working collectively to see broader perspectives and complete a wider vision of your company.
Co-founders can contribute enormously towards the growth of a company, and it feels good to have someone to share the highs and the lows with. But how do you find the perfect-fit partner(s)?
Expert marketer and Co-founder of Bold Commerce, Jay Myers, shares his insights on what it takes to build a founding team that lasts. Bold is a software development company based in Winnipeg, Manitoba, that offers industry leading e-commerce solutions for the world’s most innovative entrepreneurs and brands, including Shopify.
The company started when Jay banded together with his friends Stefan Maynard, and Eric and Yvan Boisjoli. With over 20 years experience under his belt, Jay understands the importance of entrepreneurial harmony.
Hire people who aren’t like you
The first step to assembling a founding team is to search for people who address your weaknesses. In other words, don’t go looking for people who have the same skills you do. By filling in the gaps, you’re able to come out with a well-rounded team that can operate holistically.
Jay’s team got lucky in this respect. When they banded together to form Bold out of a basement, his friends and now co-founders all had something different to bring to the table.
“Two heads are always better than one in a startup,” said Jay. “The four of us had (and have) very unique skill sets that are both wildly different and complementary. My background is in business marketing, and I’ve been running online stores since ‘98, so I brought my domain experience in the e-commerce space. I came into the business through the lens of a merchant and had no shortage of ideas for apps.”
“Stef Maynard came into the picture as the design and brand genius, who also had experience getting his hands dirty in e-commerce. He could make UX/UI look and feel amazing, so naturally he led Bold’s design and brand.”
“Then, brothers Eric (CTO) and Yvan Boisjoli (CEO) filled in the even more technical side of our company with product design and engineering - they were the developers who could literally build any product.”
Very rarely do startups succeed when founding members all belong to the same discipline. Stacking your team with diverse specialists has proven to be the most effective way to get your company off the ground.
“The people on our founding team were more important than the business problem we were trying to solve.”
“We had these four core competencies in place right from the get-go,” said Jay. “If that weren’t the case, then we’d absolutely have to hire for them. There is no way we would have succeeded if we were just four business majors or four developers.”
However, knowing whether or not you need a co-founder depends on your own bandwidth, skills, and interest.
“Realistically, it’s not possible to do everything on your own at the rate you want it done. For us, we prioritized ourselves. The people on our founding team were more important than the business problem we were trying to solve. If we had to get one thing right, it was our team.”
Don’t discount the soft skills
Besides the technical abilities that make up a strong founding team, there are other common qualities shared among successful founders that can’t be overlooked.
Passion. Although passion often gets a bad rap, the last thing you want is to hire someone whose heart’s not in it. If they’re not bought into your idea and struggle to get behind your vision, chances are they’re not the right fit for you. The early stages of your company are the most crucial to nail down, so be picky.
Conviction. Commit to your ideas, especially under pressure. Be persuasive and petition hard for them, but also know when it’s time to yield. Find co-founders who are willing to go the full distance with you.
Versatility. Don’t just tolerate change. Embrace it for the better when it comes. Be prepared to tackle work that’s outside your job description. You want your co-founders to be people who you can go to in a pinch.
Jay’s advice on soft skills includes finding someone and being someone with thick skin. “When you start a company, you need to have healthy dialogue to talk through your ideas and strategies,” he said.
“The ability to challenge ideas and be unoffendable will take you very far. When you have a team with multiple founders, you need to have strong convictions–opinions that guide you and set you off in a direction–but you also need to be open to change. You’ll be hard pressed to find yourself in many situations where you all agree on everything.”
“We had these four core competencies in place right from the get-go, and if that weren’t the case, then we’d absolutely have to hire for them.”
Ideal state: industry experience, relevant skill, and opportunity
In a perfect world, industry experience coincides with relevant skills. If you’re the owner of a car dealership, you also have the skills of a mechanic. But realistically, founders struggle to find someone who has both. That’s why many founding teams are rounded to two, three, and four members.
“If you only have industry experience in the room, but no skill, it’s like a committee that sits around and talks about ideas, but never does anything,” said Jay. “And if you have all skill and no industry experience, you’ve got great workers, but you’re missing someone with the industry knowledge to know where to swing the axe.”
“Both are valuable and the ideal state is when you don’t need to choose one over the other. But it’s certainly easier to hire for skill than it is to hire for industry experience. When industry experience or domain authority overlap with skill and opportunity, that’s where founding teams can really start something special.”
Core values anchor your team and encourage you to get along better
Cultural fit is never going to be seamless, but what’s more important is aligning on values.
“Fortunately for us, we locked into this early on,” said Jay. “It could very well be because we tried other businesses before that failed and learned from our mistakes. So we knew going into building Bold exactly what we needed from a foundational front.”
“We spent the first six months being very intentional about the values of our company and now, we live by them - they’re called Bold’s Builders Code. We asked ourselves what we wanted to achieve in the world, how do we want to scale, does it matter if we hire locally or remotely, and all those questions that got us to see our bigger picture.”
“Co-founders need to figure out as early as possible whether they want to build a lifestyle business, one that affords you a great life later, or a gazelle company, a startup that’s focused on high-growth and aggressive sales. There’s no wrong choice, but knowing which one right off the bat is going to determine how you run your business.”
Hash out clear objectives and stay in your lane
Once you’ve determined what the roles are on your team, it’s time to divy up the work. With any company, regardless of what your wheelhouse may be, there needs to be hard objectives.
“We were fortunate because our skill sets varied so much. This made it clear which area each of us would be responsible for managing,” said Jay.
“One of the biggest sources of stress among a startup with multiple founders is the feeling that one person is doing more than the other. When you don’t have clear OKRs (objectives and key results), there’s almost always going to be some twinge of resentment among the team because naturally, you’ll be thinking “why am I doing more than them”? And that line of thinking, although natural, is something you need to actively fight against. That’s the kind of attitude that will collapse your company.”
“I encourage co-founders from day one or every quarter to sit down with their team to hash out clear objectives together. Propose goals, have a conversation about them, and scrap the ones you’re not all aligned with.”
“One of the biggest sources of stress among a startup with multiple founders is the feeling that one person is doing more than the other.”
Equity should be based on the value you bring to the table
Most founders go into business with each other and split equity 50/50, regardless of who came up with the idea first, who’s executing which strategies, and the amount of weight pulled on a day-to-day basis. Jay cautioned against this emphatically.
“In theory, it sounds like a fair way to divide ownership, but it’ll actually end up costing you. That’s because equity should be based on the value you bring to the table. Fair is not the same as equal.”
“We didn’t have that insight initially with Bold though,” said Jay. “In our case, we did as all the other startups did and followed suit with a 25% cut between the four of us. The reality is it’s common for founders to hit stints where they’re less motivated or aren’t maximizing their time and skills, so the percentage you originally agreed upon no longer reflects the work you’re putting in.”
“And thankfully some people are able to work through it, but it doesn’t work for everyone. Tension can collapse a company.”
“Equity should be based on the value you bring to the table. Fair is not the same as equal.”
“That’s why I encourage founders to start at 0%. Put in the work that you can contribute, set milestones towards that, and earn every percent along the way with the opportunity and motivation to unlock more.”
Equal equity splits can also put co-founders in a deadlock when it comes to decision-making power. If no one can agree, then who breaks the tie? Someone that has the larger share, even if it’s just a 1% difference, can resolve these situations.
- Identify the core competencies required for your company and hire co-founders who fill in those gaps
- Round out your team with complementary soft skills
- Evaluate industry experience and skill equally
- Establish core values as a team
- Divvy up the work according to expertise, own what you’re responsible for, and trust each other’s judgments
- Divide equity by each co-founder’s contribution. Start with 0% and earn your way up.
Hiring additional employees gets easier once you’ve put these practices into play and have built a founding team to last.
With over 90,000 merchants using their technology, Bold Commerce helps businesses stay ahead of the curve by delivering commerce-enabled experiences to help companies scale faster and meet shoppers’ expectations. Learn more about Bold Commerce.