Co-Founders and Early Team Structure

Key Economic Insight

Starting a company is inherently difficult, marked by long hours, the constant fear of failure, numerous rejections, and a heavy emotional burden. Solo founders experience high rates of burnout, as the emotional load is often too severe to manage alone. It is strongly advised to find a co-founder with complementary skills to share this intense burden, significantly easing the load and increasing the likelihood of success. The principle 'owning much of something is better than owning 100 percent of nothing' underscores the value of such a partnership, making it 'worth it' to give up a large percentage of the company.

A co-founder's primary objective is to help achieve product-market fit (PMF). While their initial contributions are vital, their continued value-add beyond PMF is considered a bonus, as the company will likely hire more specialized talent as it grows. A critical mistake to avoid is forming a 50/50 partnership. Despite its superficial appeal, this arrangement frequently leads to deadlocks and 'real pain,' as 'unanimous decisions are tiresome to create day after day after day.' Allowing one person to have the ultimate decision-making authority 'eases the burden for all involved and leads to far better outcomes.'

The perils of 50/50 splits are exemplified by one founder's experience: 'Two of my previous companies were destroyed by a 50/50 split.' Alternative approaches to prevent deadlocks include incorporating a third co-founder with a smaller stake, or allowing ownership to naturally diverge over time through vesting, cash investment, or differential compensation. An exception for solo founding exists for individuals who are highly experienced, possess the majority of necessary technical, social, and financial skills, and are prepared for the intense, solitary challenges, often bolstered by a robust support network, as one founder noted: 'The key for me in doing it alone is a strong friend group that supports me.'