Ryan Rutan: Welcome back to the episode of the Start Up therapy podcast. This is Ryan Rotan joined as always by Will Schroeder, my friend, the founder and CEO of Start ups.com Will. It's no surprise to anybody listening at this point that you and I spend a lot of time talking to founders and one of the conversations we have over and over and over again is around co-founder. Well, co-founder issues, co-founder selection, lots of stuff going on with co-founders and one of the things is, you know, finding that perfect co-founder and often we'll have people come to us and be like, I think I found the perfect co-founder. We're like, how many did you talk to like one? And so, so from that point, so there's the stage set, how and where and when does this go wrong? It
Wil Schroter: almost always goes wrong. That's the, you know, that's the part of the mythology of co-founders that I've never been able to understand why like more start ups like that has become more of a thing. So a long time ago, like back in the early yc days that somebody made a miss of, I think it was Paul Graham or somebody that was like, hey, we only want people who have co-founders. There's something to that effect. Right. Like, like, really promoted co-founders. And so now all of a sudden everybody's like, I have to have a co-founder. I have to have a co-founder which again, not anti co-founder whatsoever. But I think people, like, associated having a co-founder with, I made a good decision. Ok. Stick with that analogy. It's the way when I see people either have spouses or, you know, boyfriends, girlfriends, whatever. And they're like, I'm with someone, I'm like, is it the right person? Yeah. Yeah.
Ryan Rutan: Right. You made a choice whether it's the right choice or not. We'll take some time to figure out. Yeah. And
Wil Schroter: I've actually found a lot of parallel and I'm sure you have two between, you know, picking a co-founder and picking a life mate because there's so many things that you, you need to consider. However I've generally found, I'm curious of your experience, I've generally found that people spend less time interviewing and dating, so to speak their co-founder who they're gonna build this massive enterprise. Somebody they would otherwise be dating on Tinder. It's amazing. I've seen
Ryan Rutan: people deliberate more over what they're gonna have for dinner than who they're gonna founder. I, I'm not kidding. Like, it's been one of those things where I was, like, well, how did it come to pass? Like, ah, you know, I was telling him about the idea and really liked it. And so then I was like, well, you wanna be my covenant, right? And some, sometimes it's quite literally that simple and that understudied. Right? Well, what was diligence like? No, no,
Wil Schroter: let me give you a perfect example. One of our favorite programs Start Up Weekend, right? They've had over 50,000 companies get created, which doesn't mean much. I mean, the whole purpose of it is people come together, but they're literally strangers and start up weekend, always had this amazing problem, which was everyone was super hyped to work on their business for the 50 four hours that they had from Friday till Sunday. So they could pitch it on Sunday night and then everybody gets together on Monday and they're all fired up to start a business together and nobody's together on Friday, right? Because they realize I just met all these randos, like I don't know what I'm doing here. And so, you know what I found when we had these conversations with founders who are considering finding a co-founder is that we basically got three different categories that people fall short on or don't consider selection, you know, kind of who and how you pick the person just in general, right? Or how you found them shared cost, whether or not they actually understand that it's not all just upside you're sharing, right? And the last part is, is commitment. Are they willing to work as hard as you are inside. I think we should explore each of those in detail because those are the big ones. I'm, I'm actually leaving out personality, obviously, personality matters. I think that's the part that everybody kind of understands, you know, kind of easy to overlook in some cases, but they understand. But these are the things that when you get them wrong, you get them super wrong. And I think it starts with finding a co-founder, right? Literally, like how did you go about the process when you talk to most founders, how did they pick their co-founder?
Ryan Rutan: Yeah, I mean, it's generally accidental, like it was some random particle collision that occurred, some minor spark happened and then we've decided we're going to build an empire based on this very tenuous and short lived relationship. Yeah, it's, it's not very, it's not a scientific process. In most cases, it's not deliberate process. In most cases, it's almost always some version of an accident, right? There is very little purpose behind the selection or the search if there even was a search again, like most of the time it was some random encounter that led them to thinking, oh, maybe this person should be my co-founder, right? Without any, any further deliberation, it's just like they're here, they're at least interested more so than anyone else and therefore they're qualified
Wil Schroter: now, they're willing to work on it. So they are qualified. So this is it, right? It's literally like saying this is the first person that said they'd go on a date with me. So we're getting married. That's, we're good. That's all I needed. Isn't that how it works? I'm good. And look just, just like in our personal lives, dating marriage, whatever, like it can work. Right. There are plenty of people who said, hey, I met this person in high school. You know, we've been best friends and we've been married ever since. Right. Awesome. It can work. It generally doesn't.
Ryan Rutan: No, those are the people that are keeping the divorce rate at only 50%.
Wil Schroter: That's crazy. But when I think about it, uh right, when I think about how people go about this search again to be fair, it's not like we always have tons of candidates. Like it's The Bachelor and we're handing out roses, right? It's, it's not quite that simple. Ok, typically it's based on this who is willing to do it. That's it. And if one person steps up good, I'm good. Right. What we lose when we use that as our only, only measuring stick is how bad of a decision criteria that actually is now the alternative of course, is to go solo for longer. Right. You know, if that's your move, typically what I hear is, hey, I'm bad at this one thing. This person's good at one thing and like in other words, like nine times out of 10, it's like, hey, this person's a developer, they could write code for my,
Ryan Rutan: I was gonna say man, yeah, like the one time we do see people deliberately go looking for somebody is when they need the technical co-founder by which they actually mean I can't afford to pay a developer yet.
Wil Schroter: Yeah. Yeah. And, and look, I get it, I get it. I think what we're doing is is we're overshoot this mark right. Here's a good example. I need to build a house. So I need to go marry a general contractor. Yeah,
Ryan Rutan: this is the example I've used man. Yeah, you do not marry a carpenter just to get your dream house. There are other ways to skin that cat. Yeah, exactly. I
Wil Schroter: gotta go marry a plumber in order to get those built, right? Like no, you need to find a way to work with one and give them incentive, right? So that they can just produce work. They don't necessarily have to be the person that now owns half your company. That's insane. It
Ryan Rutan: is. Well, also just for what it's worth, right? This is one of those we deal with all the time, right? Where then somebody is having issues with this person somewhere down the road and you're like, ok, well, how did you find them? Well, I needed a technical co-founder at the time. Ok, so I'm hearing that like you need a developer. Great. And so you went and found the one person. Well, there's probably more but you found a person who was willing to work for free, you probably got exactly what you paid for, right. And this is where the problem starts to begin. It's like just because this person is willing to do this in some ways. To me that's a red flag that this person probably doesn't have the full requisite skill set that I need for the long term. Especially because we're talking about. Right. You're, you're making a short term decision and I need a developer and I can't afford one by making a long term commitment. I'm gonna make you a co-founder of this company. By the way, you were one of the very few developers I could find who was willing to work for free. But I think that you've got what it takes to run this thing all the way to the NASDAQ, maybe haven't seen it yet.
Wil Schroter: Yeah. Right. Let's just zoom out on these criteria for a second. Criteria. Number one is all you have to be willing to do is say yes. Yeah, exactly.
Ryan Rutan: There you go.
Wil Schroter: It was pretty easy. Criteria. Number two, I haven't talked to anyone else that would be willing to take the job. So regardless of whether you check any other boxes, you get the job by being the only person in the room, you're the
Ryan Rutan: most qualified person I've talked to. Yeah, because I've talked to the Yeah.
Wil Schroter: Number three. Have I ever worked with you on a start up? No, you know, we worked together at X company in the past. Cool. That helps a little bit. Almost literally nothing to do with this is we know
Ryan Rutan: where we'll have lunches. That's about it.
Wil Schroter: Yeah. Yeah. Yeah. Like, sorted that out before. If both of you were mad at your jobs, you get to blame the company. Now, it's your fault. Like, that's not the same thing whatsoever. Right. It helps to have a little bit of familiarity. Don't get me wrong. Right. I mean, that, that's a plus, but it doesn't actually get you that far. So I was talking to a founder, which you and I were talking about him before the show. We were talking to a founder last week and he was considering getting a co-founder and I kind of gave him the same speech that I give just about everybody when they're talking about this. The first thing I say is I don't need you to help you with the pros and cons of a co-founder because you already know what the pros are. Right? So let's just talk about the cons like, like what are the downsides and not to be anti co-founder? I just wanna make sure you're looking at it appropriately. Yes.
Ryan Rutan: Right. Yeah, exactly. Same thing we say with capital, right? Same thing we say with raising funds, right? There's nothing wrong with raising funds, but let's make sure it's the right thing to do. And now and that when you do decide to do it, that you approach it with eyes wide open and do it. Well, that's it.
Wil Schroter: I always tell people you're about to make probably the most expensive decision in your life with the least amount of criteria
Ryan Rutan: but will my equity is valueless at this point. And so therefore it doesn't matter. This is the cheapest thing I've ever done in my life. Yeah. Monopoly money. Yeah. Monopoly money. That is 100% of the future value of your company. So there's that you don't
Wil Schroter: believe there's any value you shouldn't be doing this. So here's what I say. I said, OK, let's zoom out for a second. Number one, you don't need a co-founder necessarily to do everything you're trying to do. Ergo. I need code R guess what? That's a contractor, not a co-founder, right? I need somebody to help me make, you know, good important decisions. That's called an advisor, right? I need somebody that's gonna be with me through this whole thing. Dude, hire an employee with you. Like if you're solving for loneliness, a co-founder is not the answer. If you're solving, forget work done. A co-founder is not the answer, right? What I'm saying is in each of these cases, yes. Having a co-founder could fill those roles. It is exponentially the most expensive way to get any of this done. It's like saying, hey, I live a mile away from the grocery store and all I do is buy groceries. I need a Rolls Royce to get there. You can, you can get a right to drive that mile. Right or not. There's a million other ways to get this done. The most expensive way is actually probably the worst possible decision. How many people here there are? No, I
Ryan Rutan: don't think they do either. And then to circle back on that, right, the other side of it is, it's not guaranteed. Right. It's not the most expensive way. It's a, it's an expensive bet, but there isn't even any certainty that anything is gonna come out of it other than, and the known downsides of now having another decision maker, having other people's emotions to deal with all of that stuff. Right? I was talking to somebody about six months ago and they were kind of in the same, same situation where they were like, look, I've been doing this on my own for a year and a half. I feel really lonely. I feel really isolated. You know, the ups and downs are a lot to deal with when I'm by myself and I'm just kind of scared and I was like, so you understand that the other person that you choose to involve in this will likely have the exact same emotional response to all those things. Do you think that seeing that reflected on the face of another human is gonna make you feel better? Right. Yes, commiseration helps. But if you're both going through exactly the same thing at the same time. Do you really think that person is gonna be able to emotionally support you? Do you think that they're going to be able to make better decisions under that type of pressure than you can typically? No. Right. So, now you've just got two people shaking in their boots and now you have half the equity. So, how much better does that feel?
Wil Schroter: Agree. Now, the other side of it too is I was like, listen, you don't have to solve every problem as a co-founder or specifically if what you're intending is a co-founder, you don't have to just give, give up all your equity right away and see how it goes. That's awful. Again, that's like handing someone an engagement ring and saying, yeah, we'll figure out the rest later. No, that's a terrible idea. So, what are the alternatives? Alternative number one in every single case? Not even alternative? It's really the only way you should go try before you buy. Yeah. Yeah, 100% and make sure that both sides are trying before they buy for the same reasons. So it looks like this Ryan, your superstar CTO that I seem to have found, that seems to want to work on my mobile app, right? You know, one of the most consistent scenarios ever, right? What I say to you as a CTO that might be interested in joining the company is let's take a 3 to 6 month period where I'll essentially pay you for your time, you know, in some version of equity, et cetera. And let's see if you even like the product, you know, by the way, let's also see if you ever deliver anything. Let's see if, you know, if you and I get,
Ryan Rutan: I was gonna say, given this scenario, let's give me at least six months to figure out if I can code N that'd be helpful. Exactly.
Wil Schroter: Right. And so in that time, here's what percentage of the company or, you know, what kind of equity that I'm willing to give you. Right. And it should be a fairly small amount. Right. Not like 50% of the company, like maybe five or 10% of the company, which is a massive amount for a ridiculously small commitment. But again, people think, hey, it's monopoly money. I'm not, you know, it's not real money so I can give it away. It will be the most expensive purchase you've ever made in your entire life with that said, give it some period of time, probably six months. I haven't seen a lot of cases, Ryan, you and I have worked with a ton of people. I haven't seen a lot of cases where you can't start to see whether things are going right or wrong within six months. Maybe it takes you longer. Certainly hasn't. We usually find out pretty
Ryan Rutan: quickly. You'll have seen enough red or green flags at that point to sort of know the score.
Wil Schroter: I think at least you'll have something by the way and this is just as important. So will they? Yeah. Yeah, you need to give them time to get into this to see if this actually works because here's what actually happens. 80% of the time someone gets real geeked up by your idea. They say yes, I wanna work on it. They start working on it and then life happens, right? Life happens. They have a kid or their job gets crazy or they lose their job or they're just get burnt out or they, they get depressed or you name it, it, it actually kind of doesn't matter. The probability that the person you're banking on is gonna be the same person with the same enthusiasm in six months is like 20%. But here's the trick you being all founders, you've never done this before. So you have no idea how this works. Imagine you're giving this advice to your kid and it's your son or daughter and they've met someone and they're like, you know, it's sophomore year of high school. This is the person I wanna be with. Forever bar. None, no questions asked. And you're like, you know, I mean, you've really never done this before. So kind of makes sense, right? We always use this mantra, you know, Ryan with all of our founders here is that there's no reason you should know this stuff because there's no reason you've probably done it before.
Ryan Rutan: You've never done it
Wil Schroter: before. Yeah. You've never done it before. So there's no reason you should have this experience. Totally get it. So, you know, as folks are listening, they're like, oh man, these guys are pretty hardcore about this stuff. We're just trying to help. Yeah, we're just trying to help you. Like,
Ryan Rutan: if the conversations that we had were overwhelmingly positive in all cases around co-founders, that would be a different story. Now, of course, like anything right? Having co-founder conversations is a lot like reading yelp reviews because people tend to go after something's gone horribly wrong, right? We tend to have these conversations, things aren't going right. So I do need to be a little careful there, but a few things jump out to me in, in terms of these types of conversations. One is that it's rarely the original founder who's causing the trouble and I don't, I don't necessarily mean causing trouble, but basically it's, it's usually the original founder who comes to us with the co-founder issue. I can only think of maybe one or two scenarios where it's like a later stage co-founder. It could be months and it could be a year and could be whatever. It doesn't really matter that they're the ones who are coming and saying, look, you know, this was their idea, they started this thing, but they're not really pulling away. It's almost always somebody who came in later to your point, they got excited about it. You know, they jumped in and now life has happened. And that's one of those scenarios where I think that we need to be careful there. But this is just the balance is sadly on the site, it's like any relationship, it's most likely to not work out, right, for lots of reasons. And these are insanely dynamic relationships. So this is why we have to be so hardcore about this. Why we have to be adamant about this because we see the reality of it on the other side,
Wil Schroter: you know, something that's really funny about everything we talk about here is that none of it is new. Everything you're dealing with right now has been done 1000 times before you, which means the answer already exists, you may just not know it. But that's ok. That's kind of of what we're here to do. We talk about this stuff on the show, but we actually solve these problems all day long at groups dot Start ups.com. So if any of this sounds familiar, stop guessing about what to do, let us just give you the answers to the test and be done with it. It's also the hardest to unwind. It's the hardest to unwind. It's that simple, right? So the second part about it, when we're talking about the kind of this break in period is also this concept of explaining to them the equity split or whatever the split is, isn't just upside. Now, this is specific to co-founders. This doesn't really come up with employees even though they technically own some equity. And technically they would, you know, owe their pro rata share of some of, of expenses. That's usually not the case that they're kind of shielded from it. We're generally talking about people who are significant co-founders like 5050 kind of co-founders when you talk to co-founders and you talk about the percentage split, the part of the conversation that never comes up because again, founders haven't, you know, been doing this long enough is the other side of the 5050 which is, by the way, you also now share 50% of the cost, ok? So, so let me play out a couple of those scenarios that terrify people right now, I'm not trying to terrify people, but this is, it's kind of the point though, right? You sit down with the co-founder and you say, ok, you know, we're gonna split 5050. Cool. We have about 3 to $5000 a month worth of expenses that I'm now covering myself and now I need you to cover half of those in the future, right. Going forward.
Ryan Rutan: Whoa, hang on, hang on, I'm here to hold the mallet the day. We we ring the bell at the Nyse, right? Like that, that's it. I
Wil Schroter: want upside equity. I don't want the downside equity, right? Or when shit hits the fan, we have to let go of everybody. I'll take half the people and you'll take half the people.
Ryan Rutan: II, I get the half that are staying. Right.
Wil Schroter: Yeah. Nobody understands what their equity means. Again, everybody wants the upside. Nobody wants the downside of who would want the downside. And it's almost
Ryan Rutan: always not even addressed, right? Like, how often is it? You talk to somebody and you're like, OK, so as you were getting them all excited about this to the point where they said yes, that they love your idea. How much of the risk did you talk about? How much of the strife that you've already suffered in the last 18 months that you've been running this thing? Have you talked about and like, yeah, no, we pretty much just talked about what happens when everything goes perfectly.
Wil Schroter: Yeah. Men that, which never happens. Yeah. Yeah. Yeah. Cool. And look like, you know, if we have a bad month, bad quarter, you know, whatever our time period is, yes, we were both making like kind of shitty but ok, sal like livable salaries now when this thing goes sideways that's gonna get cut in half to zero or
Ryan Rutan: negative.
Wil Schroter: Yeah. Yeah. Yeah. Or negative, right. And so I think for a lot of folks that are, you know, coming from the other side of things, which could probably be its own episode around, what is it like to be a co-founder? And you know, kind of take that journey, a big part of what you need to consider is someday, this might be equity of value, but right now it's equity of liability and you really have to understand what that means. Right? So again, the person coming on, they come on and they say, ok, cool. You know how much are gonna get paid? When am I getting paid, et cetera? And it's like, well, you're getting paid today maybe, right? You may not get paid in the future. These are things that people just don't consider, they just need to understand. This isn't an employment offer, this is a substantial co parenting of the business and you gotta own yours. I think it's hard,
Ryan Rutan: it's hard to have that discussion. I think it's hard for a lot of founders who they're so caught up in that or what's around the next bend, right? That they're so caught up because it's what motivates us, right? If, if we were just stuck and mired in that whatever the current situation is, we wouldn't run these things because, you know, at various periods, they're awful. And so I think that most founders avoid that. And, you know, in order to sound great, we've talked about this in so many ways, founders are always in positive pitch mode, right? To themselves, to everybody around them, to investors, to partners, to employees, to the po potential co-founders. They're so used to just pitching the positive aspects of this and being ready to defend the negative if it comes up and that's it. Right. And so they end up in this situation where all they've done is extol all of the wonderful things this business is gonna be and there's just absolutely no discussion about this and I understand it. Right. They want people to believe in it. They need that positive reinforcement at the point where there's no customers, you need somebody to tell you this is a great idea. This is really cool. I like this. I like this a lot. I'd love to work on this and that's, there's that magic moment where they're like you like me. Oh, let's be friends. Oh, let's be co-founders. Yeah,
Wil Schroter: let's get married. So I think that, you know, that's a part of it and to your point, nobody wants to everybody. But look, if you're going back and forth with this discussion of equity in developers, like, hey, I have to have 50%. That's like cool dude. Next month I need to, to shell out $1500 a month, um, to pay for these expenses. Oh, wait, you know, maybe I don't want 50%. Are you kidding me? Right. Like, again, even a small amount of responsibility makes people realize that this isn't just all upside. So we've hammered that home. The third part that we talked about was commitment. Pe how do you know the other person is more committed? And what I tell people at a high level because I've had this experience myself is you ideally wanna find someone that will outwork you. Now, commitment can be a lot of things. It's not just ours, right? But that's just, it's an interesting metric in my first business back in the agency days. At first, I was by myself, then we merged with another agency and I essentially had like, like a partner co-founder kind of thing. And it was the only person I've ever met that has clearly outworked me, right? Like, dude, no matter what time I came into work. And this is back in the day where like the boss comes in early to open up shop kind of thing. If I came into work into the office at like 6 a.m. let's be honest, that's a ridiculously early time. Uh I was the second car in the parking lot every single time, right? When I left at nine o'clock at night, I was the second car to leave every single night. Right? It was bananas, right? That, that guy was a machine and you know, he did well by it, but it made me want to work more. Not that was a problem. I
Ryan Rutan: was gonna say we, if we, if we go back and, and, and unwind this, that makes it, that might be something your therapist wants to talk about will.
Wil Schroter: There's no question, right? But like it was very inspirational. It's probably a good way to say it. But most importantly, I never questioned his commitment. That
Ryan Rutan: is as important. I mean, I think those two things are both important. They, you know, great co-founders motivate each other, right? They, they motivate each other in, in positive ways, they inspire each other and they don't give pause or concern, right? Because I think that's one of talk about a transaction that has all kinds of buyers remorse, signing those co-founder papers and, and and signing away equity is one of those things where then from that minute forward, you start to evaluate things very differently, which I find really funny. Right. Again though, there was so little deliberation put into this decision up front. Then after it's done, then it falls under all the scrutiny. It's like, you know, if you'd put a little more of that time in upfront, this might have gone very, very differently. But I think it's one of those really important things that after that decision is made, you need to feel like there's at a minimum parody in the output. And the effort is at least you're not worried about what that person is doing, right? Because that that is a major major drain because now instead of adding some support, you've added an additional worry, which is not something you need to try to accumulate as a starting founder, they come for free in all directions,
Wil Schroter: but you also feel shitty, right? 100% that was my thing. Like, while it wasn't so much, I just needed somebody to motivate me to work harder again. Not really a problem I was trying to solve. There was another side of it where I never felt like I was rowing the boat without them. Yeah, I was never concerned that my co founder at the time wasn't carrying his fair share. Right. No matter what. And, you know, it's funny Ryan, there's this quote from investment banking and now that I think about it, he actually came from investment banking. The quote goes something like this. If you're not willing to come in on Saturday, don't bother coming in on Sunday, right? In, in, in, in the, you know, concept of course, being like, look, if you're not 100% committed, don't bother being here at all. Right? And that's how I felt like I felt like I was the person who's gonna come in on Saturday and Sunday. This has nothing to do with hours. So don't, don't respond to the literal hours. It has to do with just my level of commitment, whether I came in on Saturday or Sunday or not. Not really the point point was I was willing to and my commitment was there, but so was he. And so I never felt like, hey, I'm on, I'm there Saturday or Sunday by myself, which is metaphorically what you don't want. And when we talk about commitment and we talk about finding somebody that has that parody of commitment. There's nothing more frustrating in that relationship than being at a point where it's like, dude, I'm working my ass off and forget our for a second. I'm contributing more than they are. Right. That's the most frustrating thing in the world because, and we talked about this before. They have no idea that they're not contributing right in their mind. Everybody thinks they work hard so they don't know that they're not contributing. OK? So what? But you do, you're well aware, right? Even
Ryan Rutan: if you just feel like that it's a problem, even if it's not entirely factually accurate, maybe there's just a visibility issue, whatever it kind of doesn't matter at the moment. You feel like that this is where, you know, regard of the actual chop on the seas. It starts to feel like pretty rough water at that point, man. It just, it's an awful feeling that can, that drags you down and then it can start to impact your work output, right? This is the last thing we need as founders. Yeah. You
Wil Schroter: see this in team environments, right? You know, with people on the team, one person's kind of just slacking, they're clock punching all the time, like they're just, they're always out, always gone, they always doing what the fuck ever. And the rest of the team, you know, we've seen this when we've had to let people go and the team does a sigh of relief. Like, dude, like that person was dragging us down. Right. It's the same thing. It's, it's, if you don't have parody of commitment, it doesn't feel great. Now, the tricky thing here is to assess that you actually need a period of time, but I'll throw in a few caveats that I think are interesting. I think there's like two levels of commitment. One that you can test and, and one that just takes time, right? The first level of commitment is, is the person, like we said, six, within six months, within six months, is the person still kind of like as excited or, you know, contributing as they are in six months, I would say. And this is, this is fortunate. I would say that probably in 50% or more of the cases you'll see it right there because it's easy to get excited about anything. It's hard to actually do it. Yeah. Yeah.
Ryan Rutan: Yeah. And getting excited about an idea is just talking, right? You're just, you're just, it's an emotional response. The minute you actually have to put the gloves on and start digging holes, it becomes a very different situation. If you
Wil Schroter: wanna kind of envision the example of it. Every sales person ever. I'm going to sell this much. Cool. Six months. You didn't do it. Yeah.
Ryan Rutan: No. What?
Wil Schroter: Yeah, every salesperson ever.
Ryan Rutan: And I think that's one of the complications that some things like sales are very, very objective I, I had a conversation earlier this week on a Monday, Tuesday around exactly this, where there was this feeling that one co-founder wasn't pulling their weight. There's three co-founders in this company. One co-founder isn't pulling their weight right now. And in talking to the other two, it turned out in, in separate, separate conversations. It turned out that there was really about a 2.5 month period in which this co-founder isn't pulling their weight. And as you really dig in what we found out was they're kind of in pause mode waiting for some stuff that the other two are working on, right? That what they need to do is somehow predicated on what these other two are gonna do, right? So it was a communication issue and they just weren't, right? So it's so tough though, right? Because again, the other two felt adamant enough about this, the fact that they were pulling weight and this other person wasn't that it was starting to cause real dissension amongst the team and trying to fix that. And so I think that you're right. I think we need to be very careful in which the hori like the the event horizon, which we're, we're looking at these things. How long of a period of time are we talking? Is this a blip or is this a trend or is this just absolutely, you know, the, the way this person operates and how important is this and because they were at the point where like 2.5 months of this, they were already like, ok, so can you tell us how we get rid of a co-founder? And I'm like, well, ok, I can like, let's talk about whether that really needs to happen or not. First. Give me, give me a little bit of background as we dug into it. I think this one will resolve. Right. It's one of the few where I look at it and I go, there's not enough here that makes me think this person needs to be jettisoned from the ship just yet,
Wil Schroter: right? And sometimes it's do they have value or are they not contributing value? Right? Because like you can have value like, like there, Tom Brady loses Super Bowls or used to when he played, right? Like he clearly has value, but sometimes it doesn't always show up in the same way, right? We wanna make sure that that person is still recognized.
Ryan Rutan: Yep, this was a pivotal question in that conversation actually. And I said, ok, well, why are they here? And in both cases, both of the other co-founders said, well, they're the only one who knows this aspect of it was like, ok, so they are very important. Um And that led us to another discussion which sometimes, you know, going back to contribution and measuring of contribution and equity splits. One of the things that I said was like, look, you know, this may just be a neces case where you adjust equity at this point. Like if everybody's contributions aren't gonna be important on an equal level going forward. This is part of what defines that equity structure and who owns what of the company? Uh, they're important, but maybe they're 10% important and the other two of you are 4040 or 45 and 45% important. Right. So, figure it out. Yeah, I
Wil Schroter: agree. And so, so how I think about this is commitment has these two tiers that we talked about. You know, the two event horizons, you've got the short term one call, it six months could be a year. I'm just making up a time and then there's the long term one, the long term one, the reason I'm, I'm separating that one is because it's also easy to get involved in anything for one year, right? Even if, even if you're not lose some excitement, your deliverables aren't there. It's hard, hard to get involved in anything for five years, 10 years, right? Because usually things aren't going well. Like most of the founders I talked to when they hit those, those milestones. It's like, man, I can't believe how much money we're making. Like this is, you know, this is not the problem. You don't know who your friends are so to speak until things go bad and I'll give you an example. So back in the day when Elliott and I started afford it. Right. And for those of you don't know, Elliot's r coo when Elliot and I started to afford it, this is 2007. Give or take. Things went really well. Right. And it was, it was going awesome high five palooza. Right. And then all of a sudden things took a turn. The, the market just imploded and we couldn't raise a penny and it was an absolute disaster. The reason Elliott and I work together today, like, after all these years is because during that time he was cool. That's simple. Right? During that time, he could have been an ass.
Ryan Rutan: You're cool during the hard times. Yeah, gives you great indication.
Wil Schroter: And that's the way I look at things. I look at things like, I don't really know who people are until things go south. You never do when we were running the agency. You know, things got really big really fast and all of a sudden everybody is my friend. Right. And I was like, oh, cool. I must be really popular and good looking. Right. It was like, oh, no, I had something to offer lots of people jobs and, you know, partnerships and whatever. And so I didn't understand at the time I was young. I didn't understand why everybody was my friend in good times. Now, when things went south. Meaning.com bus tip. Right. And we had to lay a bunch of people off every single one of those managers that was my ride or die partner, right? Was literally hiding in their offices. So they didn't have to talk to any of the people that were about to get let go, that
Ryan Rutan: ride or die turns into I'm gonna ride while you die real quick. Right? Like that's, that's how that plays out every time.
Wil Schroter: And look, I, I get it, I get it right because, you know, like who wants to be there in bad times? Of course. But what I'm saying is like the real commitment isn't for, hey, we just raised money. I can't believe you're willing to join for like a full time salary. No shit. Like God, who wouldn't. Right.
Ryan Rutan: Yeah. There's a difference between involvement and commitment, right? Employees generally speaking are involved, right? And they may be bought in. But if something really bad starts to happen, there's a big difference in why they would tolerate that downside, right? We get that. So no bones here. But that's the way this works, right? There are gonna be some people who are committed, they're gonna be some people who are involved and just because you're a co-founder doesn't mean you're committed. Like you might be committed on paper, you might be committed legally to things and this, this is all those things that might scare people off which, hey, by the way, best time to scare them is before you sign those documents, not after. And I think it's so important that we keep all of this in perspective as, as we're near into these things, these things starts are really hard. Relationships are really hard when we merge these two things together, they become even harder. And I think that's one of the fallacies that, that needs to be broken down is that, like, look, if I just had somebody else here with me, this would all be that much easier. Yeah, because dealing with somebody else's emotions is always way easier than just dealing with your own. But yeah, it's a fun web. Right. It's an interesting thing to become entangled. And I think with the right decision made up front, it becomes a lot easier. I
Wil Schroter: agree. There's plenty of things that you can do early on to try to just pump the brakes a little bit and that's all we're talking about. That's all we're talking about is, yes, there's some upsides, but there's kind of a lot of downsides and unfortunately the downsides are really, really expensive, not just financially but emotionally and all, and legally and all these other different ways. All we're saying kind of the, the synopsis of all this is simply to state that if you're thinking about finding a co-founder pump, the brakes, spend some time getting to know the co-founder, let them work with you for a while. Figure out first, if you actually just needed an employee, a consultant, an advisor or a co-founder, chances are you didn't need the last one. Ok. And you were about to give up the farm to do it. Sometimes you just need time right now. You don't have anything, you don't have a product or anything else like that. And then all of a sudden you ship the product and you're like, huh? I didn't actually need like a 50% person just to get some code written. Right. Some of this is just a factor of time. It's almost all a factor of time. But wherever you are in the process, take a step back, take a beat. This might be the best co-founder ever, but statistically, it's probably not. And the only way you can protect yourself is by biting a little bit of time. So in addition to all the stuff related to founder groups, you've also got full access to everything on start ups.com that includes all of our education tracks, which will be funding customer acquisition, even how to manage your monthly financers. They're so, so much stuff in there. All of our software including Biz plan for putting together detailed business plans and financials launch rock for attracting early customers and of course, fundable for attracting investment capital. When you log into the start ups.com site, you'll find all of these resources available.