The following answers are provided by the Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.
Changing the world is a team effort. Nowhere is this more important than at the top. The perfect cofounder must compliment your skill set, be someone you can trust in the trenches, and share your unrelenting drive toward constant improvement.
Seem like a tall order? It is.
That’s why we’ve called upon our friends at the YEC to share their secrets on how they found the perfect partner for their startups. This week, we asked them, “What one tip do you have for founders who want to bring a new partner into an existing business?” Their responses are below.
12 Tips for Finding The Perfect Partner
1. Go to a Startup Weekend
I met my current business partner during a Startup Weekend competition. We had 54 hours of highly stressful, complicated tasks to complete for our team. It was the best way to see how we work under pressure, how we interact with others and how effective we can be in a short time. If you have a potential business partner, see if she will compete with you in a Startup Weekend, and you will know right away if she would be a good team member.
2. Prepare for Marriage
It’s imperative that you realize your potential partnership is equivalent to a marriage. For a considerable amount of time, you’ll likely be spending more time with your business partner than with your life partner (if you have one). The issues that seem small at the beginning will become exponentially greater when you realize your company is near an inflection point or an all-out collapse and you’re both highly stressed out and volatile. Spend the necessary time to really get to know each other (yes, you might be the crazy one!) to make sure that it’s a good fit for both parties. If it’s not, you could end up married to your new arch nemesis.
3. Define the Roles Clearly
Many people will haggle over how much equity to give up with little thought to how committed or busy the new partner might be with other parts of his life. The one tip I would suggest is to make sure your vision and commitment are aligned so that the role of the new partner is clearly defined.
4. Vest Your Equity Over Time
It is very difficult to find the right business partner. You need to have a similar work ethic and time line for the investment, your chemistry has to mix well, and your talents have to be complementary. Instead of giving the new partner all of his shares at once, consider having their shares vest over time so you have a fair solution if these factors do not line up as well as you expect, which is often the case.
5. Negotiate Safe Exit Options
No one likes messy endings. Make it an easy out for the new partner you may bring in. He is just as anxious and nervous about the arrangement working well. But instead of just thinking about yourself, consider the other person’s reservations. Make it easy for him to say “yes” to get the ball rolling, but also make it easy for him to say “I’m done” when you both discover the relationship cannot last.
6. Make Sure Your Skills Are Complementary
Make sure your partner’s skill set complements yours, but is not identical. Having two bean counters run an operation is not a recipe for success, and if two creative types make a go of it, the accounting and other more mundane aspects of the business could suffer or even be ignored.
7. Talk to Someone Who Has Done It Before
There are many people who have success stories and an even larger amount who have failed due to partnerships. All the cliches of spending more time with this person than your significant other are true, but the best advice I give is to sit down with a few people who have done it themselves (ones that went well and not so well) to hear it firsthand.
8. Check for Cultural Fit
Make sure you bring in a skill that you don’t have already have with a person who really fits in. In the early days of a company, you will be working with new partners constantly.Have candidates interview with several teams to ensure there is a cultural fit! For crucial first hires, run deep background checks and use references.
9. Create Operating Agreements
Bringing in a new partner to an existing business can be complicated. Make sure you have a great operating agreement written by a seasoned attorney that outlines what happens to the business under all possible scenarios. Make sure that the agreement outlines how the members of the business will handle partners who stop contributing. It will be an expensive investment, but it will serve as the foundation for your relationship. If you have an existing operating agreement that is short and simple, it probably is exposing you to all sorts of risks.
10. Have Conflict as Soon as Possible
Between partners, conflict is bound to occur in absolutely every business. It’s how your company handles conflict that will set you apart. It’s vital to ensure that everyone uses conflict as a way to move the business forward, rather than create divisions in the company. As long as everyone embraces intensive discussions as being a healthy part of the company, conflict will be a net positive. When bringing in a new partner, it’s important to make sure that he will be a good cultural fit. The sooner you have an impassioned disagreement about something important, the sooner you’ll figure out if he is a good match.
11. Show Her the Ropes
Let her shadow you for a few days. Working at a startup is very different than working in a corporate environment, and even though the potential partner might have been a rockstar in previous companies, she might not thrive in a startup environment. Let her see what it’s really like so she knows what she’s getting into.
12. Speak the Same Language
Make sure you are speaking the same language. Research to one partner might mean 30 minutes of light skimming on the Web, while research to another is three hours of intense reference-checking and phone calls. In other words, make sure that you not only want the same things, but also that the meaning of those things is the same. Everyone wants a business to be successful, but what is a new partner’s definition of success compared to yours? While you might have the same bullet-pointed goals, the translation of someone else’s points might be completely different. Make sure everyone is on the same page and speaking the same, fully translated language.