Editor’s note: Derek Andersen is the founder of Startup Grind, a 45-city community in 20-countries, uniting the global startup world together through educating, inspiring, and connecting entrepreneurs.
A few weeks ago I had the opportunity to interview Upfront Ventures‘ (previously GRP Partners) Mark Suster in Los Angeles. While the firm has been in operation since 1996, they recently announced a new $200 million fund. Mark is one of those VCs that is easy for most entrepreneurs to relate to because of his founder background, selling his last company to Salesforce and others before that.
Hire A Co-Founder
One of his essays that is particularly insightful is The Co-Founder Mythology. In it Mark paints a different perspective on the co-founder relationship then most have dreamed up. For every Sergey and Larry that starts in the garage and grinds to IPO, there are dozens more that never make it. Often co-founders barely know each other. Maybe they met at a hackathon, a networking event, or maybe they were fraternity brothers. But as time goes on people change.
“You started a journey and you think you’re similar, and when things are going incredibly well it is no big deal,” Mark said during our full interview at Cross Campus in Santa Monica. “When you hit tough times is where you find out what your partner is really made of. And if you’re 50/50 founders and you don’t have the same risk tolerance, someone wants an exit, or the other person doesn’t. Or someone gets a dog, gets a wife, has a kid, loses interest, starts drinking too much. Someone loses confidence. Someone gets depressed. Even people who have known each other since high school get like this, and it just becomes unresolvable if you’re joint co-founders.”
But these aren’t the sexy stories that make for legendary startup tales. “Nobody ever talks about that because people don’t want to talk publicly about these failures, and I’d say it’s more often the rule than the exception. So what I like to tell people is, if you’re confident then hire your cofounders. Or be the cofounder that gets hired. But hire your cofounders if you’re confident.”
So why are we as entrepreneurs so eager to sign people up to long-term relationships after only a few meetings or limited stress testing? Mark says, “I really believe that most entrepreneurs – people who want to do it – they are only willing to do it if they have two other people lined up on the cliff ready to jump at the same time as them. And it’s so much lonelier to be the one person who did it. But here’s the weird thing. If you can do a business plan, and good PowerPoint slides, and get a few people excited, hire a couple guys who are willing to do front-end design, and maybe some back-end of your product, raise a little angel money – just like the basics. Then people will come join you for significantly less than 50%. And I never tell people to be ungenerous. You can give them 5%, 3%, 12%, 25%, 40%, 46%, I could name more numbers, but you could offer anything. It’s not about the number. It’s about the prenup.”
II have experienced this first hand in my own entrepreneurial career. When I quit my product manager job at Electronic Arts four years ago, the transition was all that much easier because one of my best friends was also quitting his job. We were in it together. Shared risk, shared glory. Changing the world together like the entrepreneurs of legend! But after some family issues arose he didn’t quit, leaving me with the weight of a new product and company that suddenly felt much more than twice as heavy. To make things worse our product idea had been his and he was the domain expert. Things quickly fell apart. Here I was with a wife, a 6-week old baby, but no job or product or direction, but it turned out to be a huge blessing.
I took some part time term consulting jobs and kicked off a few of my ideas, hiring people along the way to build with me. One of those people that I met was Joel Fernandes, a talented Portuguese designer and engineer. At first I hired him for several projects. Then he was a single digit equity stake holder. Then a double digit stake holder. Finally 2-years after first meeting him he became my full fledged co-founder and partner. Last summer we sold our first company together and he is the co-founder/CTO of Startup Grind. He didn’t start it with me, but he is my co-founder. Joel’s perspective and input is critical for every major decision. It is a partnership in every sense of the word. While we dream of the perfect co-founder relationship that falls from the sky, the reality is, more than not it doesn’t work that way.
Give Because It Feels Good
In my experience, being an entrepreneur can be a very self-centered occupation and if you’re not careful, everything in your life (professional and personal) can quickly revolve around YOU. “I need that engineer, I need funding, I need press coverage, I need that relationship, I need traction, me, me, me!” A remarkable thing I found when I moved to Palo Alto in 2005 was the unmatched willingness of people to help. I’ve lived 8-years outside the US and I’ve learned that some cultures are naturally really good at this while others aren’t. People like Brad Feld in Boulder have willed it into their local fabric.
Mark explained that entrepreneurs who go out of their way to be thoughtful and authentic will stand out. “It’s the special things. It is the people who make a little bit more effort. I’m just saying, in life, not related to me, just be thoughtful. The thing about influence is, when you help other people, they mentally think, “That’s someone I owe.” They don’t think it externally, they just know. And I hate owing people.”
Mark referred to Robert Cialdini, a famous author and psychologist who taught about how important reciprocity is to human nature. “If I show up at your office and I got you this nice bottle of wine, a special edition from Napa, and I say, “I got this for you because you wrote this blog post that really inspired me and I want you to have it.” It shouldn’t be, but now you feel obligated to me. I’m giving you a very simple example, but if someone went out of their way to do something thoughtful for me – a handwritten note for instance. I always e-mail back when I get a handwritten note. 100%. I put it right next to my keyboard and I say, that person took the time to write me a handwritten note, I’m going to send a thank you. Send me an e-mail not so much. Not that they don’t have good intentions. I just get too many e-mails. Handwritten note I always say thank you.”
Not only will you stand out but you’ll also find you’re more fulfilled. “It feels good to give, it feels better to give than to receive and I am not just being cheesy. When you do something nice for someone and you expect nothing in return, it feels good,” Mark concludes.
I would challenge entrepreneurs to find someone today to ask, “What can I do to help you?” You may not be able to help that person right now, but in one week, three weeks, or a month you may be able to fill that void and help solve their problem. In my startup career and in my life I’ve found that when I pull myself out of my situation to help solve someone else solve theirs, magically my problems become a lot less daunting.
And maybe that person will like you so much and be so impressed by you that someday they’ll want to be hired as your co-founder.