I want to share a few notes on what I’ve learned securing one of the smartest technical co-founders I’ve come across for our next product Memli – An easy to use private content management platform fully integrated with Stripe.
It’s important to note, I not an expert in this field and have only co-founded one other company in my career (a blog network back in early 2008).
Hopefully the following points will help anyone looking for a co-founder – whether technical or not.
1. Know the space well
I have personally tested out 6 different private member platforms and have looked at many, many more. I have been in this space for 2 years now and know what’s broken, and more importantly, how to fix it.
By having the knowledge of the space you are venturing into, I think this will not only help your product, but also in finding a great co-founder.
2. Connect, connect, connect
I feel a founders role is to always be keeping an eye out for talent – whether you have the cash to pursue recruiting or not. I feel this is the same for co-founders.
You should be making mental notes of the smart people you encounter, and put yourself in a position where you get to meet smart people on a regular basis.
How do you connect with smart people? Hang out where the smart people in your community hang out. Attend meet-ups. Become an early adapter of products in your field. Spend time on online communities where they gather.
Send emails. When’s the last time you emailed someone working on a product you use with “hey, keep up the great work!”. No one does this. You’ll really stand out.
3. Be prepared
This is the first email I sent to the guy on the top of my list (I had emailed him prior with constructive feedback on how to make his product better):
I’m currently in the process of designing/launching a private members area that fits better with our needs. It will integrate with Stripe, just as slick as Plasso.com does.
The idea behind it is to keep it as simple as possible. Just 3 main areas – Settings, Members and Content.
I’ve tried just about all membership products and I’ve yet to come across something elegant and simple that does one thing really well – allow registered users to access private content while fully integrated with a payment solution.
Closest competitor is memberful.com, which in my opinion, is too complicated (too many bells and whistles) and their pricing is far too aggressive.
My thinking is to offer this as a flat x per month fee. That’s exactly what I’d be willing to pay. As with the software, the aim is to keep everything, including the pricing, nice and simple.
Using BuiltWith.com, I can reach out to thousands of sites using popular membership software programs. I have the resources to contact them individually.
I’m looking for a developer to work on this with me, and the first person I thought of was you. Is this something you’d be interested in coding? Happy to split the project 50/50 – you handle the development, I’ll handle design, marketing and sales.
I’ve attached a mockup I’ve designed (happy to send you more pages). This is work in progress and I have my developer coding it in html for me so we’ll get a much better sense of the members area in a web browser.
Let me know your thoughts. Would be great to collab together.
You’ll notice a few things from this email:
A. It’s short, precise and to the point. Long emails are a drag to read and are often unnecessary.
B. It showed I know the space well. How large the market is. Who the competitors are. How we can make it better.
C. By attaching screen shots and spending a few bucks outsourcing a HTML version of the product, this showed I was serious. I’m also confident this better articulated what the product is designed to do.
D. I held nothing back. And I’m not doing here either. Ideas are cheap. DNA’s are often worthless. It’s all about the execution. I believe by being open, it will in turn produce better ideas, feedback, products and results.
4. Be honest
This may seem obvious but it’s so important you really lay out every concern from the get go. This is also a sure way to build trust – especially if you cover hard-to-have conversations from the start.
It’s kind of uncomfortable to say “Let’s discuss what happens if this does not work out” when you are excited about the project you are about to embark on, but it needs to be done. Try and cover every possible scenario from the beginning.
My co-founder and myself have not met. So we needed to express in words (and on calls) how we can trust each other. I’m so glad we did this. Here’s an email I sent to my co-founder regarding trust:
How do you trust me? I’ve spent the last few years building my reputation and branding online. I would be foolish to tarnish this by doing any wrong doing. I have lot’s of ideas I want to follow through over the next few years, but this is the idea I’m most knowledgeable and passionate about.
Which leads me onto… how do I trust you?
To be brutally honest with you, apart from basic PHP/CSS/HTML…. I can’t code. So I’m in a sticky situation. I need a great developer. After thinking about who I should approach first, it boiled down to needing someone with the expertise you have.
I’ve also been highly impressed with your feedback loop so far and your assertiveness on getting new features rolled out. Along with this, I’m guessing you already have (or understand) the codebase that is needed to get a project like this off the ground.
My co-founder responded with:
For me, I’m a programmer through and through. I’ve delved into business side of the startups many times and though I didn’t hate it, my passion is building things, so my focus has been just that – building, building and building.
I’ve been doing it for quite awhile now, so I think I have my development process pretty well laid out. The reason why I was interested in your idea was because I think you and I will have complementary skill sets to balance things out.
6. Define founder roles & expectations
I think it’s paramount you find a co-founder who has complimentary skill sets. As you can see from the email exchanges above, our roles were defined from the get go – my co-founder will focus on development, I will focus on design, marketing and sales.
I did share my marketing strategy. I think this is important to do so with a technical co-founder.
7. The split
In our case we were already further along that most startups launching with just an idea. My co-founder has written a lot of the code that will be used in our product, and I have spent the last year building an audience of tech entrepreneurs online, so it made sense we split the project 50/50.
Every co-founder’s situation will be different. You need to work out a split that’s fair.
8. Initial costs
Thankfully it’s never been so cost effective to start a software business. With a couple of hundred bucks you can get most products off the ground (albeit very time intensive).
We have shared a Google Doc which lists all expenses incurred, and agreed on deducting these when we start generating revenue.
This might not be the most professional way of doing things, but it works for our own situation.
9. When do you incorporate?
I love this video with Mint founder Aaron Patzer where he goes into detail of how Mint incorporated late into their product timeline.
Incorporating, accounting, lawyers etc. are both time and capital intensive. I feel both are unnecessary when you are first starting out.
With that said, we did both agree when and where we would incorporate. Again, we wanted to lay everything out on the table so that in the future, we know exactly what’s going to happen.
We agreed on a 4 figure monthly profit, and both agreed to incorporate in Hong Kong (I wrote a handbook on why founders should incorporate in Hong Kong if you are interested).
Along with trust, vesting is one of the most important aspects of forming a co-founding relationship. Most vesting periods are 3 to 5 years, although we agreed on a shorter vesting period as we have both done a fair amount of work into the project.
This is the email I sent on proposing fair vesting terms:
While not legal as we have not incorporated, let’s agree to a gentleman’s virtual hand shake to start the project with 20% ownership each right off the bat, and we both earn an additional 10% per 6 months going forward (x3).
Profits will always be distributed 50/50, until someone wants out. This will insure in the event one of us wants to leave (I doubt this will happen, but better to lay it out), the other can continue working/growing the project fairly.
Hopefully you found the above useful. If you have any specific questions, feel free to reach out to me.