Roles and Responsibilities
Charting a clear route with regard to roles and responsibilities will smoothen the functioning within the startup. But one person must emerge as the clear leader in the form of a CEO. This makes it easier for the delegation of responsibilities. As the company grows or traverses through various stages, the roles and responsibilities of each co-founder could change. Enough space should be left for negotiations on this issue.
Exit plan
Some entrepreneurs start off with the clear idea of selling the company after some years while others decide to build a large corporation. The co-founders should talk about the various possibilities right in the beginning. However, most entrepreneurs do not have a clear idea about an exit at the time they are putting in place a startup.
The situation remains fluid in the case of startups as no one knows how things will pan out. But an informal discussion from time to time can reduce the possibility of a surprise stand by any of the co-founders. “You may start out thinking it may not be a big company and look for a potential sellout but may quickly realize it may be a very large engine. So at different points of inflection, the discussion should be done with a lot of objectivity and not with preconceived notions,” says Aggarwal.
Formal Agreement
It is always advisable to pen down the details of equity sharing, roles and responsibilities and tenure within the company in a formal agreement to avoid any misunderstanding at a later stage. “Once the VCs come in, they would want everything penned down and all that gets formalized. So rather than have the VCs force you to do it, it is better to get it done yourself,” says Agarwala of iTrust.
Another option is to try and work together for some time to get a good understanding of each other and of the business before signing the formal shareholders’ agreement.
Making partnerships work
Getting a good co-founder is not enough. The onus of making the partnership work rests with all co-founders. The best way to ensure this is to talk on every issue that concerns business. In fact, spending time with each other can help give valuable insights into the aspirations of each other.
Co-founders must put the interests of the company above their personal interests. While it may sound a bit of a cliché, this is true in the case of Infosys. While addressing a group of entrepreneurs at a conference in New Delhi recently, one of its co-founders, Nandan Nilekani, said at his company, whenever there were divergent issues, the co-founders always put the interests of company first before anything else. It made decision-making faster and smoother. Each co-founder must show a level of maturity by respecting each other without intruding. “The co-founders should believe that they would not rescind on promises made. Therefore, the most important thing is to spend time to build trust,” says Deb.
Like in any other relationship, the one between co-founders could also see ups and downs, more so in the case of startups as the initial challenges can sometimes be too much to bear. There could be conflicts related to the direction of the company, hiring of key employees or potential exits. The startup team must have a conflict resolution process in place. The co-founders should sit across the table and discuss issues threadbare. If that does not help, the CEO or the leader of the team should take the final call. “In the worst case scenario, one should use the board,” says Aggarwal.
“Typically difficulty arises when things are not going well and the other partner may want to leave. Therefore, having some type of an informal commitment to work for some x number of years together even if things start to go wrong, could be a good idea,” says Agarwala of iTrust.
But then, there is no magic formula to find the right co-founder, and work happily ever after. As Jansen puts it, “It's like marriage, some of them work, some of them don’t”.
Subscribe to this comment's feed
| < Prev | Next > |
|---|
Any ideas to improve it greatly received!