CoFounders: Hiring & Firing

It’s a well-established fact that most startups will rise and fall based on the quality of their teams. Most venture capitalists invest more on the strength of the team than on any other factor. Few things can cause a startup to implode faster than infighting among the founders or a dysfunctional team.

How many founders should a startup team have? Studies show that two founders are ideal. Famous founder duos include Hewlett-Packard, Gates-Allen (Microsoft), Lerner-Bosack (Cisco — and a wife and husband team at the time), and Jobs-Wozniak (Apple). With duos, one is usually good at business development and the other good at product development. There are many good examples of sole founders and triad founders, but precious few good examples of four or more founders. There is no magic number, but there is magic to building a great team around the founder or founders.

Things to Think About And Decide:

If you don’t already have a co-founder, think long and hard about whether you really need one.

Think about what experience and skills your co-founder(s) should have to compliment your experience and skills. It rarely works when both founders want to do the same type of work.

How will you create a positive culture that matches your outlook and personality? A culture can not be manufactured, it has to be an extension of the character of the leadership.

If your startup has more than one founder, decide who the “boss” is. A company needs a CEO. It rarely works for a company to have two CEO’s who have equal decision-making authority.

Things To Do:

Hire EVERYONE on contract for at least 90 days before hiring as W2 employee.

Have a buy-sell agreement among the founders.

Do not simply issue shares to the founders. Vest shares over 2-3 years for performance and measurable metrics that are commensurate with each founder’s contribution to the business.

Never-EVER issue stock 50/50 among founders.

Set clear milestones and expectations among all team members.

Have all founders and employees sign an IP Assignment Agreement

The three-way test: 1) can he do the job? 2) will he do the job? 3) can we stand to work with him as he does the job?