Y Combinator Startup Podcast - How To Find A Co-Founder with Harj Taggar | Startup School

Episode Date: November 16, 2024

Building a startup and trying to break into an established market is very difficult, especially if you’re trying to do it alone! That’s why it’s critical to find the right co-founder for the journey. In this episode of Startup School, YC Group Partner Harj Taggar explains why you need a co-founder, when to bring them on, where you can find one and how to maintain the relationship.

Hey everyone, I'm Hajj Tagger. I'm one of the group partners here at Y Combinator. And today I'm going to talk about co-founders. We're going to cover why do you even need a co-founder, when's the right time to bring on a co-founder, and where can you find them? Let's start with talking about why should you have a co-founder at all? I think there are three reasons. The first, building a successful startup is an incredibly hard thing to do, and there is a huge amount of work to be done. Right. Like, you're trying to take your idea, make it a reality and compete with companies that have hundreds of employees and have been around for many, many years. And you really can't do that alone. Like, you need someone else there who, at a basic level, can just get more

work done with you, right? Two people is more working hours per day than one. But also, having a good co-founder improves the quality of your work. So if you have a co-founder with complementary skill sets, they can do things that you can't, right? If you have a co-founder who's smart, they can challenge your ideas, they can talk you out of bad ones and help you find good ones. That's why it's really important to have a co-founder just so that you can get good, high-quality work done at the rate you need to be successful. The second reason, startups are a real emotional roller coaster. You'll have moments where you think you're going to take over the world and moments where you're convinced you're about to die. And having a great co-founding relationship,

can be a huge source of support in a way that no one else can, right? Because your co-founder ideally should be someone who's all in on the startup in the same way that you are. And when you're having bad moments, they can bring you up and you can do the same for them. And that's an important reason why you can't just hire people or have people join your startup once it's already successful to get the true benefits of co-founders. You need someone who's all in and invested in the same way you are. And the final reason is simply pattern-matchezer.

If you look at the most successful startups in history, they all had co-founding teams. And we don't always realize this because once a startup becomes successful, it's common for some founders to leave and one founder, especially the CEO, to become well-known, famous and associated with the startup, right? If we go through some examples, Facebook, one of the biggest companies in the world, is really now known as Mark Zuckerberg's company, but he actually co-founded it with Dustin Moskowitz. If you think of Apple, it's of course known as Steve Jobs company, and very rightly so, but Steve Jobs literally couldn't have built the first Apple computer if he didn't have

Steve Wozniak as he's co-founder. So hopefully I've convinced you that you really want a co-founder to improve your odds of success if you want to start a startup. But let's say you feel ready to go now and you really want to start the company, but you don't have a great co-founder in mind yet. Should you start the company anyway or should you wait until you have a co-founder? I think again, in 90% of the cases, you should really spend all of your efforts and trying to find a great co-founder to start a company with.

But I do think in 10% of the cases, there's some exceptions. I think the business exception is if you meet two conditions. One, you have a very specific idea you want to work on, that you're very passionate about, and you have some domain experience that makes you really uniquely qualified to work on that idea. another way, if you have an idea that you have really high conviction about that solving a real problem because you've got some experience that makes you an expert on the problem and you're an engineer and you can start building it, you can make progress without requiring a technical

co-founder, then I think it's fair for you to get going. Start the company, build the first version of the product and bring a co-founder on as you start making some progress and traction. If you're not an engineer, I don't think you can do this, and I think you should really focus your time on trying to find a great technical co-founder to start the company with. Okay, so let me give you an example of when Y Combinator funded a single founder that worked out really well. It was Drew Hauston, the founder of Dropbox. So Drew applied to YC as a single founder, and he was actually initially rejected and told to go get a co-founder. So he did bring on a co-founder, a great co-founder, Arash, but Drew kept making progress on Dropbox anyway. He would both build the product, again,

make progress on the MVP, while also looking in the background for a co-founder, and he found a great one. So let's talk about what should you look for in a potential co-founder. I'm going to start by giving a bit of meta advice here. The thing that's most important about your co-founder is that they can handle stress well, because there's going to be lots of stress as you start and work on your startup journey. And even if they have the perfect set of complementary skills, if they don't handle stress well or you don't help each other handle stress well, it's very unlikely your relationship is going to last the stress and rigors of founding a company. And this is why failed co-founder relationships is really the number one reason we see startups fail here at Y Combinator. So how do you

know if someone can handle stress well or not? Well, the best way is to have worked with them under stress previously, right? Counterintuitively, this is one reason why often starting a company with a friend or a former work colleague isn't always guaranteed to work out because maybe you never worked under real stress with your former colleague because you were both working at Google or a big company where there just wasn't like the same amount of stress as you have under startup conditions. Or maybe you and your friends really enjoy hanging out socially and you have a great time together, but you've never been in any intense stressful situations. So if you've not been in a stressful situation with someone before, you can never know for sure how they'll handle

stress, which means no co-founder relationship is a surefire bet, but you are definitely more likely to survive and do well with someone you've already worked with and that you already know in some capacity than a total stranger. The second thing when you're looking for a co-founder is make sure that they have the same high-level goals in starting a company as you do, right? People have different motivations for wanting to start startups and the type of startup they want to start. So let me give you an example. If you really want to found a high pressure, fast-growing startup that raises multiple rounds of funding and can one day go public, then you will not be a good co-founder fit for somebody who wants to grow

slow and steady and build a lifestyle business that makes good amounts of revenue and pays good salaries but doesn't come with a ton of pressure and expectations, right? That's just one example, but there's all kinds of other ways we see co-founders who are individually very skilled and have great complementary skill sets still not work out, which is they just had different reasons for starting a company and that eventually causes enough friction to really fracture that relationship. So my advice would be, before you start a company with someone, talk about this stuff.

Ask them why they want to start a company. Ask them what success looks like for them, and try and get a good read on, are you both aligned on why you're starting this company and what you want out of it. My final advice would be, don't overly focus on the specific set of skills your co-founder has today. Of course, ideally you want a co-founder

that has complementary skills. In particular, if you're building, a software or technology company, there really should be at least one co-founder who's technical and can program. But let's say you have that. Don't overly fixate on which specific technical skills does that co-founder have. It doesn't matter if they can only program in a certain language, or if they've only got experience building iPhone applications versus web applications. Again, the meta skill you care about is, is your co-founder smart and are they willing to learn new things and willing to adapt as your startup grows and changes?

which means you care a lot more about their trajectory. Like how can they grow as your startup grows and can they acquire the skills they'll need? More so than do they have a specific set of skills today? So next, let's talk about where can you find co-founders? And my meta advice is you should ideally have a set of potential co-founders long before you actually pan on starting a startup. And the way you do that is in the course of your life, when you're studying or when you're working, is to kind of always be trying to find people

to work on projects with together because working on projects, whether they're weekend projects, side projects, just stuff purely for fun, gives you a chance to get to know what someone's really like to work with, are they motivated, do they, like, are they good at the things that they say they're good at? In an environment that's a little bit less pressurized than a startup, right? I think one of maybe the edgiest pieces of advice I have heard on this at a WICOMNator talk was from a founder who said, that in the sort of decade before they started their company, they really used to think a lot

about who are their friends, who are the people they were closest to and spending the most time with, and how many of those people would they start a company with someday? I'm not saying this is the right advice for everybody, but just to give you one extreme end of the spectrum, it would be to like always be scanning for people you might start a company with someday and making sure you're spending time with them. Now, let's say you want to start a company now, like you are ready. how do you do that? Where do you find potential co-founders? Again, the advice is obvious. It's people you already know, but the number one blocker I see to why people say they're having a hard time finding a co-founder is that they already assume that everybody they know is not available. Like,

a common excuse I hear is, oh yeah, like I know lots of people who would be a great potential co-founder, but they're not ready to start a startup right now, or they just got a job at Google or Facebook and they would never leave. And my number one bit of advice to them is you can never make any assumptions about who's available. You have to always make the ask and you have to get in the habit of asking people, hey, like, I want to start a company, would you join me? I think you'd make a great co-founder. I think we'd make a great co-founding team. Here's one tactic I also give people, which is once you made the ask, if that person really says that they're not available is ask them, who would they pick to be their co-founder if they were starting a

company and ask for an introduction to that person, right? So go and meet that person and get to know them, but this sort of like branching out of your network is a good algorithm for finding more potential co-founders who aren't in your immediate network. Another way to find more co-founders, if you need to grow your surface area, is to just start doing things. Like in particular, if you're technical or if you're an engineer, but you're a Work on some open source projects, attend hackathons, attend developer meetups in your area.

Those are great sources of finding other people who like doing and building things, who might be open to quitting their job or dropping out of grad school to work on a startup with you. Now, the specific place to find potential co-founders is the YC co-founder matching platform. So we've made it easy for people who are trying to find co-founders to upload their profiles and find other people that might want to start a company with them. Now, I'm going to give you my honest take. We started the YC co-founder matching platform because we want to increase the number of startups that exist in the world.

And part of that is helping more people find great co-founders. But there is a particular formula that works well for finding somebody on a co-founder matching platform, even Y Combinators. And that is to try and find people who you have things in common with, who are the kinds of people that there's a good chance you would have ended up meeting. at some point anyway. Okay, so let me give you a couple of examples to give you a sense of what I really mean by that. A good example of teams we see from the YC co-founder matching platform are teams that we could describe as two co-founders who would probably have eventually met each other

anyway. It just happened to be on the co-founder matching platform. And that's teams where, you know, it's people who both studied computer science, roughly the same age. They work on projects and seem to have like similar flavors to them. Their interests overlap. Like that's the kind of team we feel like, like that's probably the kind of team that would have eventually found each other anyway. The kinds of teams we don't get so excited about are where the co-founders would never have met each other in sort of any conceivable universe.

It's where there's a huge age difference or they don't have any sort of mutual interest or it just doesn't seem like those are the types of founders that would have anything in common if they hadn't found each other on a co-founder matching platform. So once you found a potential co-founder, how do you go about getting started working together? Well, if you already know each other well, you're already friends, former colleagues, then I think you just get going. Like, you decide what to work on, you start building a prototype, you can apply to Y Combinator. There's lots of great advice out there for how do you get a startup going once you have your co-founder. If you don't know your co-founder very well already, which again is not optimal, but

But my advice would be to just test it out for a bit. Like, can you spend some evenings and weekends working together and trying out small projects? Like, really, this is not that different from deciding who to marry. You want to have like a little bit of a dazing period where you kind of just get to know each other and have conversations of the type I mentioned before about, you know, why do you want to start a company? What are your goals from this? And have a period of trying that out before you really jump and go all in on being co-founder.

Okay, so once you've decided to go all in and start a company with somebody, you'll go through some logistical steps, like you're incorporated the company and you're usually each other shares. You will have to decide on what the equity split will be. And my default advice here would be you should split the equity equally between yourselves. And the reason is, if this startup is successful, you will end up working on it for the next 10 years or more. And so even if someone's been thinking about the idea for a little bit longer now or done a little

bit more work, that will really be quite insignificant over the long term of the startup's life. And so it's better that you both start from an equal co-founding equity split. So you're both equally invested and you both feel like you have real equal ownership over the company and want to give it your all. So while everyone does their best to make sure their co-founding relationship works, unfortunately they don't always. And as I mentioned before, the number one reason startups fail at WICOMATAM is the co- co-founders break up. So what are some of the most common reasons for that happening?

I would say like the number one core reason is the co-founders didn't respect each other, or they grew to not respect each other. And specifically what I've seen is it's very common for co-founders to have different roles and responsibilities. A common split is one co-founder is responsible for sales and getting customers and the other co-founder is responsible for product and building their technology. And that's a very clear delineation of responsibilities. which is great. But problems will creep in if the sales co-founder feels that the technical co-founder is not building the product quickly or well enough and or the technical co-founder feels the sales co-founder is not selling the product well enough.

If that respect breaks down and one co-founder feels they could do the other co-founder's job better than them, it's very hard to recover from that and that's usually the single most common reason we see startups break up. The second reason, which is But similar but subtly different is when both or all co-founders want to be the CEO. The actual titles you give yourselves at the early stages of a startup don't really matter that much because they don't really change the work that you do on a day-to-day basis. But there is something symbolic about the CEO title and what it says is that this is the person that's trusted to have the final call on really hard decisions.

And even if people don't agree with them in the moment, everybody agrees to disagree and rally behind the CEO. Like the CEO is really the sort of true leader of the startup. It's bad when there are multiple people who want to be the CEO because it's basically saying, I'm the person that should really be in charge of this place. And I don't trust and respect the other co-founders to have that. The third reason that co-founder relationships often break up, it's really kind of maybe arguably similar to not having shared goals or values, but a specific instance of it, which is having very different work ethic expectations. Startups are very hard and all-consuming. There's no one to tell you

which hours you should work or how much you should get done in a day. It's all up to you to define how much you're working, what you're working on, how you build the company. And if you and your co-founder have very different work ethic expectations, one of you wants to be working all the time, like eat, work, sleep, but you know, the other co-founder wants to have more work-life balance or just feels differently about how they should be judged and what their expectations are. Those relationships get very, very strained under the stress and pressure of a startup, and we don't see those typically work out so well. So again, have these conversations early on and set expectations up front to be sure that your co-founder is on the same page as you are.

So how do you avoid getting into a co-founder breakup? Well, to some extent, it's unavoidable. This happens. And the best lesson you can take is learn from the experience and move on and don't repeat the same mistake with your next startup. But having dealt with hundreds of co-founder relationships and breakups over the years, one piece of advice I do give is don't avoid disagreements. Like, anytime you disagree about something, have the conversation. Don't delay hard conversations. Like, it's very easy for co-founders or people to just be short term about this. And what I mean is you feel like, oh, like, okay, we're disagreeing or I'm upset about something, but I don't want to rock the boat. Like,

we've got so much work to do. I don't want to bring this up right now. I'll bring it up next week or I'll bring it up next month or you always procrastinate and you delay on having a hard conversation. And really, I think what that does, it's like death by a thousand cuts. Like it just means that pressure just builds up and it builds up and it builds up. And then when you do eventually to spill over and say something, you're now so heated that it's not possible to have a calm conversation where you work things out. It becomes very emotional and confrontational, and that really damages a relationship. And so my tactical advice on this would be set up regular one-on-ones with your co-founder, and that may sound a little formal, but something I did

with my startups is I would just put time on the calendar at the end of every month, where we would just go for a drink or a meal and just talk about how we were doing. We were just checking and like, do we think things are going well? Are we excited? Like, how are like the two of us working together? And if you put that on the calendar and commit to it, it gives you an opportunity to regularly release some of the pressure that every startup co-founder relationship has slowly over time rather than having it all build up and come out in one big burst.

So hopefully I've convinced you of a few things. One, that you really should get a co-founder if you want to start a company because it's just incredibly hard to be successful without one. Two, that you should ideally start a company with somebody you already know, like somebody you have a sense of what their skills are and how they cope with stress. And three, even if you have a great co-founder relationship, you will still have to work hard to maintain that relationship and avoid it getting stressed and fractured over time by having difficult conversations regularly.

I really hope you find a great co-founder. Best of luck with the search and I hope to see you at Ycombinator someday.