Do You Really Need a Tech Co-Founder?
With the word “startup” coming out of everyone’s mouths lately, it seems like everyone I meet is rushing to find a tech co-founder. First, I want you to ask yourself though…do you really need a tech co-founder? Here is why, or why not, and some big issues to watch out for when choosing a tech co-founder.
Do You Really Need a Tech Co-Founder?
I do see alot of entrepreneurs that think they need a tech co-founder just because they are on the internet, or there is “some” technology in their company, when really they don’t. Ask yourself, if your company is deep into technology? How complicated is the technology? Are you really even in technology…or are you more in the internet space? Heck, you might even really be in digital media…which is like a cross between technology and graphics/media. In most of these cases, you may be looking more for a project manager type, not a tech.
Usually Only Complex Technology Needs a Tech Co-Founder
With very complex technology companies, yes…you probably do need a tech co-founder. For the most part, almost every tech right now has had a least of few offers to join a startup. They usually have their pick of startups to work for, and the good tech co-founders will usually only join the best CEO’s. Problem is, unless you are a big shot…you probably don’t have any kind of traction to pitch why you are the best opportunity.
How Complex Is This Technology Really? (dig deeper)
Another mistake made, is assuming it’s complex…when it’s really not. Techs love to make stuff sound really complicated so it makes your head hurt. I swear one day…I’m going to write a book for you guys about this. I’ve already come up with the title: Be Smarter Then Your Developer, a no BS Guide for Entrepreneurs.
For example, I know many developers that pitch the idea that you need to spend $20,000 just for a CMS. Mostly because many business owners are clueless in the tech department, they get taken advantage of easily. In reality, what they should be telling you is “well, actually you don’t need Joomla or Drupal for this unless you’re enterprise grade. A self-hosted WordPress is your best option for now until you grow. That is free.” A good tech co-founder will clearly point out, and identify, where technology savings can be achieved without jeopardizing IP, because they want the company grow. If they are jacking up prices, they’re viewing you as a vendor relationship. That’s a no go.
Bringing Yourself Back Down to Earth
But back to the first question of “Do You Really Need a Tech Co-Founder”…consider also that technology has changed…quite a bit. That means prices have gone down dramatically. You really should be considering where this equity goes, and who it goes to. Consider other alternatives to a technical co-founder, such as convertible debt…because you’ll likely have a lot more big chunks of change going out other then just technology.
Now, I see graphic design bills are just as much as the technology bill. I also see many entrepreneurs not understanding that completing a technology cannot be done with just a tech. They recruit a tech co-founder or developer on equity, then look puzzled at why it doesn’t function/look the way they thought. A hard realization hits when they realized they gave up half their company for code…and they are only one step out of a 100 steps closer to finishing. At that point, they have to shut down shop.
Bringing Your Tech Co-Founder Back Down to Earth
And that doesn’t include the marketing, which can be a whole different department in itself. If you thought building your technology was rough…what till you get to marketing, and under the scrutinizey of customers. That also doesn’t include the business, operations, travel, investor management, legalities, customer acquisition, customer retention, finances, accounting…etc, etc. I also see many tech co-founders that fail to understand these are all costs of starting a business, that is usually left on the founder’s shoulders. The legal paperwork fee for just an investor’s documents can be about $10,000. That doesn’t include the legal fees recruiting that tech co-founder incurred in the first place.
A Tech co-founder can quickly get into this mindset of “I’m the only one adding value here”. It’s often because they become so absorbed in the technology, and never stop to look at what it is going on in other areas of the company.
“As many as 95% of partnership failures are attributed to lack of communication”.
A Good Tech Co-Founder
If you do have a good tech co-founder or any tech (yes, there are bad and good ones), take care of them, make them coffee. They like a little security. Most techs like to be nurtured, praised, and taken care of (I suspect this is why women led tech companies often produce a higher ROI, despite taking longer to get to market). You can even see this if you look at the personalities many female entrepreneurs marry. Most of the female entrepreneurs I know marry techs because female entrepreneurs…well, we tend to be more aggressive than normal women. In business, we often get into power struggles with type A’s, but the techs & introverted business guys…I find they’re usually happy with letting a woman take the lead. In fact, they encourage you to. You can be assertive around them, and they won’t try to put that “you’re a woman” label on you.
So it doesn’t matter if you’re a tech, or if you’re an entrepreneur, or if you don’t even know who you are. Consider the risks, the benefits, and everything in between about whether or not you need a tech co-founder.