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. Please reach out if you have different experience.
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 say, 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 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. They cannot get revenues exceeding costs fast enough. 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 future, and there for the outcome is uncertain. 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 strangely even desired (see other Tribe blogs here on this topic), this conflict can turn destructive, and people fall out with each other.
This article will later talk why we believe co-founders is still ultimately the better group to back despite it seemingly being an additional risk to the success of a business. But before we get there, co-foundership will work or not work based on the presence or absence of another ingredient. So, whilst we are biased to co-foundership, we are even more biased to the ingredient that makes co-foundership work or not work.
Mutual trust and respect.
You can read our prior blogs on this subject here so we won’t go too deep now. The short version: 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 QLD based unicorn that is taking on the world, Vu spoke about the long-term history the 4 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 onto 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 is superior to sole founders can be explained with Ichak Adizes PAEI model (there are a myriad of other ways, please share yours).
There are 4 broad roles of management. 4 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 ingredient’s conflicts with each other. If we spend all day in “I” mode talking, integrating, strengthening relationships etc, 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 frustrate people that like getting the frontline work done. However, if we don’t have a threshold of “A”, something goes wrong and/or it’s not scalable outside of a few clever individuals. But “A” reduces gut feel, creativity, and intuition (E). But if we are all “E”, there’s little systemically to scale up. Both required, but in conflict.
You get the picture. 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 P.A.E.I. 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 veeeery difficult. Some say to us, “I’ll just hire people”. Problem is salary people often do not have the deep connection and long-term drive to push through the hard times. Paid employees find easier lives after awhile leaving the founder holding the bag.
Multiple people at the heavily invested founder level, however, can split up the roles. Apples Job’s and Wozniak for example: Jobs P and E and Wozniack 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 its more than 2.
Look at the rich lists and you’ll regularly see these sole founding “geniuses” enter the list, only to flame out in some screw up. Why? No/low A. “Rich” enough to employ people to drive the A, but it often just does not work.
We also find sole founders that have not been able to attract co-founders to stick with them can often be difficult personalities who find it too hard to work with and lead others. They can get to the small team level but can’t seem to push past die-hard true believers that are willing to put up with their strong personalities and command and control nature. This is not true for all sole founders of course. You will all have examples of sole founders that break the mold. We do to. It is just a pattern we see regularly repeating.
Note: sometimes it is not someone equality operationally focused as you either. As an example, an early large shareholder has created this energy and structure. Invested heavily in the success of the company, they help give different perspectives, help course correct, jump in the trenches when needed, drive “A” type initiatives because they are somewhat removed.
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 not good at sharing and was one of the difficult personalities described above (low I). Never enough time, and little respect for the “A” stuff. This allowed me to go fast. I built scaled multiple business, 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 aging (P declining), and I think 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”. I say ‘appreciation for “A”’ because it still lets me down. However, I respect this ingredient more than I did, and seek to drive “A” type systems and processes to ensure doing the best to build strong foundations for scale.
This personal maturing (some may lol at this), is probably one of the reasons why we also like older founders. Not trying to be dismissive of the exclusively early 20’s teams but having been an early a 20’s cohort that took investment from others, I’m sure those investors didn’t really like funding my personal education and maturing.
You just have not experienced a lot by them. Stuffed up enough. Been let down enough. Thought black was white, or white was black. This means it is hard to have trust and respect for things you haven’t yet learnt the value of. And, unfortunately having something, and then losing it is really the best, albeit painful way, to truly know somethings value. You need time to get, and then loose things of value. As such, we feel teams that are spread across the age brackets have an ability to identity opportunities and risks other teams may not see.
Theory into practical experience.
My wife is about to give birth to our 3rd 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. We’ve also got a 3 and a 2-year-old at home. Going to be a fun mad house.
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 as well. But between us, we’ll keep P.A.E.I. spinning even though one of us is going to be below normal capacity.
So now I’ve moved from anecdotal and theoretical appreciation of co-foundership, into experiential appreciation. And to them I say thank you in advance.