Simon Rogerson explains why bringing a co-founder on board could give your business the added dimension it needs to scale.
One of the biggest early decisions an entrepreneur can face is whether to set up the business on their own or to bring co-founders on board. In the case of Octopus, the decision was simple.
There were three of us working at Mercury Asset Management, and we knew that if we wanted to start our own investment business the only chance for success was to combine our skills and resources.
But for many entrepreneurs, the decision to start a business on your own, or to assemble a team of co-founders can feel like quite a gamble. In its early stages, a business feels like a newborn baby, and the instinct to protect it and keep it away from the rest of the world can be strong.
Octopus recently published a set of findings that demonstrated the value of starting a business with one or more co-founder, rather than going it alone. It’s perfectly natural to worry about losing control. But I would argue that that the positives of starting out with a co-founder clearly outweigh the negatives.
So, in true Octopus fashion, here are eight reasons why a co-founder can help you turn your start-up idea into a successful business.
1. Providing the push you need
People often find it difficult to leave behind their old job to start up their own business. It’s a risk, and potentially a very costly one. But having a co-founder gives you to confidence that you can do it.
Sometimes, having someone in your corner telling you to go for it is the last great push you need to be brave and back your judgment.
When we decided to set up Octopus in 2000, we were leaving behind fledgling careers in a very well-respected financial services company. A lot of people thought we were mad.
But for me, sharing the risk with co-founders was like a comfort blanket that kept me feeling secure once the doubts started to creep in.
Rather than it being ‘me against the world’ instead, it was ‘us against the world’. That made what we were doing way less lonely, and far less scary.
2. Sharing insight and diverse opinions
Anyone who has started their own business will tell you that you can expect to make a lot of mistakes in the early months, and years.
But having a co-founder to talk through your business plans, and to help you with the decision-making process can certainly help to keep mistakes to a minimum.
And when it comes to working out the long-term strategy of a new business, two heads are almost always better than one.
For example, most start-ups begin with an idea based on selling a product or a service, but it can be much harder to work out what the long-term goal of the start-up itself should be.
A co-founder can help you to agree on the best strategy for the business.
It doesn’t have to be set in stone, but agreeing on the direction of travel can be really valuable in the early stages when everything is a bit of a scramble.
3. Increasing your bandwidth
Building a business is unbelievably hard work. All day, every day. It doesn’t get any easier as the business gets bigger. In the early stages, there’s no harm in being a business all-rounder, responsible for product development, the accounting, marketing and sales, to name just four roles.
But having a co-founder on board to take on some of the responsibilities makes a lot of sense, provided everyone is clear on who does what.
As a solo entrepreneur you may have the determination and drive to take your start-up forward, but building a business requires knowledge and expertise across a number of different disciplines. Very few people are capable of sustaining this level of work beyond a few months, let alone a few years or decades.
Even the greatest entrepreneurs can’t be good at everything.
Co-founders need to start by clearly defining their roles and responsibilities and to make sure that everything is covered. And once the roles have been defined, they need to be agreed on and kept separate. There’s no point having co-founders treading on each other’s toes and second-guessing one another.
4. Questioning everything
Having a co-founder on board who truly understands the nature of the business could also prove invaluable should the time come to change course. Most start-ups companies have to take a close look at their product offering and see whether it needs adjustment or to evolve.
This usually happens when the initial idea or business model gets introduced into the market and feedback from potential customers tells you that something needs to change.
Having a co-founder with you during this questioning phase can be crucial to making the right decisions.
Not only can they be a good sounding board to help you work through some of the problems of the business, but they will have an understanding of the business, and of you, which could prove vital to making the right decisions.
5. Pooling resources
Starting a business can be tremendously expensive. And raising funds to grow the business can be a full-time role in itself. Working with a co-founder could allow you to split the initial costs of getting the business up and running, and help you to cover more ground.
Having a co-founder also instantly doubles the network of potential investors, supporters and customers for you to try to win over.
In the early days of Octopus, we used our life savings to help keep the business afloat. I sold my flat to buy the car we needed to take us to meetings with potential investors.
Those were very difficult times, but the lessons we learned were invaluable and have stayed with us.
We still keep our running costs down to a minimum and we still tell people to spend the company’s money like it’s their own.
As with any mutual agreement, it makes sense to have clarity on the contributions made by each co-founder and when, both in terms of time and money. Finding yourself a co-founder with the same work ethic as you will help make it seem less exhausting.
And if you find someone who you enjoy working with, as I do, then it will be fun.
6. Lightening the load
Launching a start-up comes with a unique set of pressures and responsibilities. It’s also surprisingly lonely. Entrepreneurs invariably spend the first few years obsessed with their business, worried about its failure and often surrounded by people telling them it won’t work.
Faced with this, they quickly learn to rely on themselves, and their instincts. When they need advice or counsel, there aren’t that many places to go.
Talking to colleagues doesn’t work because as the founder of an organisation, you have a different status to anyone else within your company – these people are your employees, not your friends.
Even among fellow entrepreneurs, no-one will understand, or care about, your business as much as you do.
One of the best ways to alleviate the stress of building a business is to have a co-founder to help lighten the load.
It’s a unique arrangement that can offer you tremendous emotional support when times are tough.
Think of it as like a marriage. You’re going to see more of your co-founder than your other half in the early years when survival is everything.
Your co-founder will be the only person apart from you who truly understands those ups and downs. And they will be the only one in the world who will feel as passionately as you about what you both are doing.
No-one else can come close.
7. Showing your intent
You may be used to hearing about famous businesses founded by solo entrepreneurs, but these are usually the exceptions that prove the rule. The reality is that most successful businesses have more than one founder.
And, if you’re looking for funding to help your business grow, being a sole entrepreneur may even be considered as a drawback.
Most one-man-band businesses hit a brick wall very quickly, because one person can’t maintain the pace needed to keep the business afloat, or they haven’t got the necessary skills and expertise to take the business to the next level.
Two or more co-founders can be seen as clear intent that the business is not just an idea living in someone’s head, but a serious business enterprise that is headed in the right direction.
At Octopus we have one of the largest venture capital teams in Europe. We often back entrepreneurs who start several different businesses.
We would never rule out investing in a solo entrepreneur, but if you’re a co-founder, you’ve already convinced someone that your company is worth investing, time, money and effort into.
And you’re personally invested in making that co-founder relationship work.
Having a co-founder on board is a sign that the business has a brighter future ahead of it than if you were seeking funding but wanted to keep going it alone.
8. Defining your company’s values
Last, every business needs to have its own clear set of values – the fundamental beliefs upon which your business is based. Your co-founder should share the same values as you. If they don’t, and if you don’t trust them implicitly, then the relationship won’t work.
But the values that you ascribe to your business must be bigger in scope than your own personal values. As your business grows, it will need to operate by a set of principles that all your employees can understand and buy into.
The aim is to create a lasting culture, rather than a set of rules.
Talking about your values with a co-founder is absolutely vital because you both get to decide what’s important for your business.
Your values set you apart from everyone else, and they define you during times of crisis.
Together with your co-founder, you have the opportunity to tell the world that your company has a purpose, and to create a culture that will determine what your company truly stands for.