Ten questions I would ask a potential cofounder – part 1 of 2
A helpful guide for anyone who is in the process of finding a good fit for their next venture
Cofounder dating should be a lengthy process that goes beyond simply, “Do I like this person and do they seem smart?” So many people jump into cofounding relationships without extensively vetting the other person first and I’m always shocked. Committing to building a venture together is a huge undertaking, and while you can’t uncover everything through discussion, it’s a critical first step for laying a strong foundation.
Through my own experience at a startup and talking extensively with mentors and mentees about their experiences, I’ve compiled this list over the years.
Today, I’m sharing the first set of questions, which focus on the company and investors. Stay tuned for part 2, where I’ll focus on the potential cofounder and what they bring to the table.
One quick caveat
There generally aren’t any right or wrong answers in this process…unless the other person reveals they’d break laws and commit crimes to help the venture succeed, in which case it’s probably a good thing you’re finding out early.
Going through these questions is all about finding someone who is the best match for you. Listen to and internalize their answers – ask yourself if they resonate. The more answers that resonate – and the fewer that create knots in your stomach – the likelier that you’re a good fit with this potential cofounder.
And – it should go without saying – you should also be sharing your own answers to these questions with the other person so they can do the same reflection.
1: We all dream big (as we should), but what does the more attainable vision of success look like for you? Under what circumstances would you consider closing down shop?
Not every company is going to become a unicorn and IPO. Investors and employees only have so much patience when it comes to waiting for an exit. Exits can take many different forms. Which of those are enticing and acceptable? If it’s an acquisition, what sort of companies would be acceptable acquirers? What’s an acceptable price tag for this sort of transaction?
On the flip side, under what circumstances would you consider shutting down the venture? How do you feel about becoming a zombie company? Is there a threshold when you’d want to return money to your investors?
2: What are your must-haves in order to feel proud of what we’re building?
This could be specific to the product – the scope, the users served, the market in which the product competes. This could be about the way in which the company is run from a team culture perspective. This could be about the leadership style that you want for yourself or for both of us to have.
If it’s hard to get an answer to this, start by discussing anecdotes in the news about different companies. “If you were part of the team that built [ XYZ company ], how would you feel when [ scandal / news headline / other incident ] happened?”
You can also talk about which companies are models for your respective values. What makes them so worthy of admiration? What do you want to emulate?
3: How would you describe your approach to business ethics? What is a must-do, what is borderline, what is unacceptable?
If this is tough to answer, you can once again start by discussing anecdotes. It’s possible that in discussing q2, you’ll already touch on this.
Other prompts include: How ruthless are you willing to be in order to achieve commercial viability? How will you approach competition? How will you overcome other hurdles that come up, regulatory or otherwise?
4: With what sort of mentality will you approach spending the company’s money?
For example, do you feel that we should be very frugal and optimize around spending the least money to extend our runway? Or, do you feel that funding we raise is meant to be used for attaining team efficiency and progress? (E.g., are you willing to spend money more heavily-handed in order to purchase tools that increase efficiency and save the team time, or would you lean towards asking the team to be scrappy and figuring out workarounds?)
Related, how do you expect to be paid? Would you expect to be paid “market rate” or would you take a lower salary? How well do you want to pay your employees, relative to market benchmarks?
5: What sort of relationship do you want with our investors? What do you see as the role of our investors?
Not all cofounders have equal relationships with investors – sometimes one cofounder is more involved than the other. In other situations, all cofounders serve as a collective point of contact for their investors. It really depends on the situation and what each person prefers.
Similarly, not all investors are made equal. Some are more involved in the company’s day-to-day while others prefer to just receive monthly or quarterly updates through a Board meeting or other written communications. What do you envision and/or prefer?