Why we prefer co-founding teams

We have a bias towards multi-founding teams at Tribe. For me personally, this bias started more from a theoretical standpoint given I had only ever been a sole founder. And I should say it is anecdotal. I cannot find a study that proves companies with co-founding teams are more successful over the long term. However, our collective anecdotal experience is that long term success is weighted towards these co-founding partnerships.

But if this anecdote does equal fact, a co-founding partnership guarantees success, right? Not so fast.

Whilst we believe there are more co-founding businesses that survive longer than 5 years (there is data that shows 95% of businesses don't last more than 5 years), I would also be willing to bet that of the companies that did not get to 5+ years, the co-founder ones potentially died quicker than the sole founder ones.

Sole founder businesses that die early often die because they just do not get product market fit right and/or they run out of money. Whilst this is still a challenge for co-founder partnerships, they have an added stressor of the conflict that can occur between co-founders when making and implementing decisions. Sole founders can do what they want when they want. Co-founders tend to need each other's agreement and support.

Furthermore, there are co-founding teams that did crack the back of product market fit and started building a successful company, only for it to still fall apart due to conflict. So this co-founder thing seems to cause problems in all directions.

Uncertainty can lead to conflict

Because there are generally multiple paths to solve a problem, the best decision around what to do, how to do it, and when to do it cannot really be known in advance. The bigger and more complex the issue, the less things are knowable. Because outcomes are uncertain, different people will have different views based on their own experience, personality, self-interest, circumstances, perceptions, roles and values. These differences are often in conflict with each other.

Whilst these conflicts are inevitable and even desired, this conflict can turn destructive, and people fall out with each other.

Mutual trust and respect

Whilst we look for co-founder teams (there are exceptions), we are also trying to evaluate the trust and respect between co-founders. Trust and respect are the glue that holds things together during times of inevitable conflict. Trust and respect get you through times of struggle. Trust and respect make the destructive, constructive.

In our podcast with Vu Tran from Go1, a Queensland-based unicorn that is taking on the world, Vu spoke about the long-term history the four founders had together, and the trust and respect they had developed in each other over two decades working together. Success leaves clues.

When talking with sole founders that are still trying to get momentum, we'll often point them in the direction of finding someone to jump in the trenches with them. Easier said than done, but in another podcast, Kim Hansen of Cake Equity talked about how he deliberately sought to find a co-founder. He found his partner Jason at a startup event, and they went on to start Cake, another business in the process of going global.

Why we like co-founding teams: the theory

The theory around why co-founding teams are superior to sole founders can be explained with Ichak Adizes' PAEI model.

There are four broad roles of management. Four ingredients that must be in place over the long term:

• P — Produce the products and results your customers want and love.
• A — Administrate so that things are efficient, work with the least blood sweat and tears possible, and can scale outside of a few clever individuals.
• E — Entrepreneur so you can bring on new ideas and new products.
• I — Integrate by bringing people together so that vision, mission and passion comes from within the collective.

The problem is that each of these ingredients conflicts with the others. If we spend all day in "I" mode talking, integrating, strengthening relationships, we get nothing done (the "P"). But if we spend all day head down doing things in "P" mode, and do not spend the time integrating to ensure we're on the same page, we fall apart. Two ingredients required, but in conflict.

The "A" administration ingredient in terms of systems, processes and controls slows us down and frustrates people that like getting the frontline work done. However, if we don't have a threshold of "A", something goes wrong and it's not scalable outside of a few clever individuals. But "A" reduces gut feel, creativity, and intuition (E). And if we are all "E", there's little systemically to scale up. Both required, but in conflict.

All ingredients are required to varying levels depending on your lifecycle location, but they are hard to do to 100% simultaneously because they are in conflict.

Sole founder vs multi-founders spinning the PAEI plates

A sole founder must somehow create enough P, A, E and I over the long term. One person trying to drive four ingredients that are simultaneously in conflict is very difficult. Some say to us, "I'll just hire people". The problem is salaried people often do not have the deep connection and long-term drive to push through the hard times.

Multiple people at the heavily invested founder level, however, can split up the roles. Apple's Jobs and Wozniak, for example: Jobs P and E, Wozniak A and I. Have a look at really long-term successful organisations and you'll often see the front-line person and the rear guard person. The P and E outside, and the A and I inside. For some teams, like Go1, it's more than two.

We also find sole founders that have not been able to attract co-founders can often be difficult personalities who find it too hard to work with and lead others. This is not true for all sole founders of course. It is just a pattern we see regularly repeating.

My journey: learning the value of co-foundership

In my younger days my "P" and "E" was very high, and "I" rather low. This means I liked birthing new ideas (E), and I was able to drive things personally more than most (P). However I was not good at sharing and was one of the difficult personalities described above. Never enough time, and little respect for the "A" stuff. This allowed me to go fast. I built and scaled multiple businesses, one that became ASX listed and multinational. But the low "A" and "I" sowed the seeds of its future problems.

It is a function of ageing (P declining), and a reasonable ability for introspection post failure, that my "I" has increased over time. "P" dropping back creates the space for other ingredients like "I", and also an appreciation for "A".

This personal maturing is probably one of the reasons why we also like older founders. It is hard to have trust and respect for things you haven't yet learnt the value of. Having something, and then losing it, is really the best albeit painful way to truly know something's value. As such, we feel teams that are spread across the age brackets have an ability to identify opportunities and risks other teams may not see.

Theory into practical experience

My wife is about to give birth to our third child, and whilst she will bear the brunt of this new arrival, I'll do my best to be as supportive and present as I can be. This means less time for the business for a while.

This is really what has me write this article in the first place. The reflection that if I was my old sole-founder self, something is going to significantly suffer. It must, because there is fixed time and energy at any point in time.

Sole founders have to keep all the plates spinning by themselves. But I am part of a co-founding team, and for a short time they are going to pick up my slack. I will do the same when something requires them to pull back. But between us, we'll keep PAEI spinning even though one of us is going to be below normal capacity.