43 Questions to Ask Before You Start a Company With a Co-Founder
Too many startups get into serious trouble because of issues between the founders. Whether it is conflicting visions for the company, overlapping roles or fundamentally different values and priorities — not talking through the following essentials can really hurt your business in the long-run.
Here is the list of questions you can ask the potential co-founder for your Startup.
Personalities and Incentives
- Reason: Why do you want to start a company (in general and in particular, right now)?
- Motivation: What motivates you (e.g. a technical challenge, an overall problem, helping the world, etc.)
- Goals: What are our respective personal goals for the startup (e.g. a sustainable business that is spinning off cash and running it forever or high growth and some type of liquidity event?)
- Capabilities: What are you awesome at?
- Suckiness: What are your absolute weaknesses or things you hate to do? It’s best to be able to complement each other.
- Learning: What do we need to learn ASAP? How will we address these?
- Match: Why do you think we’ll be good together?
- Work Ethic: How many hours a week could you see yourself committing to this project?
- Work Style: Describe your working style to me in a few words?
- Handling Stress: How are we going to be able to handle stress and stressful situations?
- Decompressing: How do we unwind? How do we make this sustainable?
- Change of Heart: “If either one of us loses interest and wants to move on, how can we handle the situation?”
- Exit Goal: Where do you see yourself in 5 or 10 years? Are you swinging for the fence with a high likelihood of failure, or more modest in your goals?
- Exit: Are you setting up to sell, or is this a lifestyle business to live off long-term? Both are fine, you just need to be aligned.
- Sell out Price: If someone made an offer in a year, what would you sell for? Is there a price you are both ok to ‘sell out’ at? Say $1m in the first year, $5m in year two? Or maybe if you get to $50m you’re out of there one way or the other!
- Press: [If not the CEO] How motivated are you by a celebrity? Are you ok that as the CEO I’ll do the interviews? People can get weird and bitter about things and I’ve experienced arguments about the press.
- Pay: Can you afford low pay or do you expect 6 figure salaries the moment you can? Money should be spent on growing the startup not having a comfortable life
- Piggy Bank: How much have you saved? How many months can you go without cash in the bank?
- Full Time: Are we both going full time on this, or are we going to keep applying to jobs until a certain point?
- Commitment Duration: Are you in for 3 years or 10+?
- Family: What happens when someone gets married and does the kid thing…? What commitment is still expected? [Don’t laugh. 10 years is a long time]
- Test Period: How long do you think it will take to figure out if this has legs? Are you going to ‘give it a go’ for 3 months and see how it goes, or do whatever it takes for as long as it takes?
- Missionary or mercenary: What gets you out of the bed in the morning? Are you doing this out of passion or a better financial outcome?
- Primary Focus or Side-hustle: Are you doing this 100% full time with no distraction? You will lose their mind if they start losing focus and doing side-hustles for ‘fun’.
- Other Shizzle: What if anything can we do on the side? Can we be mentors at accelerators? Can we do advisory roles of other startups? What is ok to do that is non YOUR startup
- CEO: Who is the CEO?
- Decisions: How will decisions get made? Where do you trust one another to just do things and when do you talk things out?
- Can you outvote me?
- Can either of us fire the other?
- If one of us gets fired, what do we leave with?
- When shit happens: What do we do when one of us needs to get fired?
- Splits: What is the equity split and is it even? I recommend 50/50. Watch out if someone thinks they should have 80% or even 10%.
- Investment: If we put in cash, how is it dealt with? Debt repayable from investment, convertible debt, sunk cost as an equity investment? Are you putting in the same amount?
- Vesting: Are we both committing to founder reverse vesting so that we’re both committed and even a one year cliff?
- Feedback: How are going to provide feedback to each other?
- The Short-term: Who is going to be accountable for what in the first 6 months (before you have staff etc)? There is going to be so much to do, and people will need to deliver.
- Funding. Is this a VC funded approach or a bootstrapped? You don’t want to find out your cofounder doesn’t want to raise money, or that they do.
- Pivoting: If things aren’t working, are we both OK to keep testing new things?
- Prioritization: What are the three things you could be working on right now and what are you working on- how are you making it happen? You need to know you are not going to be messing about chasing the wrong goals at the wrong time. Will your cofounder make logical, prioritized plans and execute on them?
- Location: Where do we want the business to be located?
- Culture: If you had to come up with 3 words to describe the culture you want to create, what would they be (e.g. open, hard-working, eccentric)?
- Staff Trust: Do you have a view of trust and openness? What kind of person will succeed here? Do you want to hire amazing people and let them fly or are you a B player worried they suck and will lose control?
- ESOP (employee stock ownership plan): What are your views around giving staff proper equity to incentivize them to kick ass? You don’t want to be super cheap with equity. What are you OK giving the staff? What about the first 5 staff?
- Value: What would be our top 5 values? What company do you admire? You can learn a lot from someone by what they value and articulate.
- Tech vs Business: Do you think this should be a tech or product focused company?
- Developing Staff: How do you help people grow to the next level and be their best?