As a technical founder myself, my perspective is a little different, but here’s a question I hear all the time: I want to start a SaaS business, but I’m not a developer. Where can I find a technical co-founder?
Finding and hiring the right people is one of the most challenging parts of any business, technical or not. Even more so at the beginning, when most entrepreneurs have the fewest resources.
In this article I’m speaking primarily to bootstrapped entrepreneurs: founders who have an idea and are looking for someone to join them on the journey to build something great.
I’m speaking to bootstrappers because that’s where my experience is. I’m a bootstrapped founder myself, having bootstrapped DonorTools.com to profitability and then subsequently exiting that business. Currently I’m bootstrapping Booster Stage as a brand-new agency with a goal of helping other founders to bootstrap their own SaaS businesses.
This is not to say that funded entrepreneurs won’t benefit from this advice, but companies that are pursuing venture funding tend to follow a different set of rules; having a founding team is almost a prerequisite to even approaching investors. Most venture capitalists won’t even consider your project unless you have a cofounder.
With that out of the way, read on to find out how to find out how (and whether you really need) to find a technical cofounder.
How are you going to build that amazing idea that you have in your head?
You’ve got this amazing idea, but how do you make it real?
If you’re not a developer, this can seem like a great big stop sign. How on earth will you get your project built if you don’t have the skills and know-how to create it yourself?
Or, what if you are technically-oriented yourself? Do you really want to spend your precious time and resources working in the business instead of on it? Wouldn’t your time be better spent building other areas of the business? Or maybe you’ve got a day job, and you don’t have the time to basically add another part-time job to your daily routine.
You really have only two choices: you can pay someone to build it for you, or you can find a technical cofounder. But how? If you don’t already know someone (and you’re not too keen on going into business with your cousin who made a website once in high school), where do you look? What do you look for in a technical cofounder?
Where to look for a technical cofounder
Where can you find a technical cofounder? This is hard to answer, because a lot of depends on who you already know.
Your personal network is the first place to start. Start by talking to people who you know who are well-connected. I know someone whose day will be made if she can help you make a business connection. Who do you know like that? Tell them your idea, and ask them who you should talk to. Don’t be shy about sharing your idea at this point (see NDA, below).
Go to local networking events and meetups. Entrepreneur groups are a great way to meet like-minded, entrepreneurial individuals. Check out your local chamber of commerce and sign up for Meetup.com.
It goes without saying that you should be using LinkedIn. Searching LinkedIn is beyond the scope of what I want to talk about here, but you can and should list your startup in your work history. And say that you’re looking for a cofounder. Believe it or not, good people may find you this way (and bad, so just keep a level head).
Aside from LinkedIn, there are a number of great resources online where you can create a profile and connect with potential partners. Here’s a very short and non-exhaustive list:
To NDA or not to NDA, that is the question.
Some founders are reluctant to share much about their idea. They’re in “stealth mode”. Don’t do that. Screw stealth mode: you should tell everyone your idea.
- Unless you’re Elon Musk, your idea probably has been done before and is no big secret, and
- Very few people are going to drop whatever they are doing to steal your idea and get to market before you do, and
- Because hiding your idea behind an NDA will severely hamper your ability to get people excited about what you are doing.
NDAs are appropriate if you’re going to show someone patentable intellectual property, personally-identifying information, or some other information where there is a potential penalty for disclosure to the public or a third-party. Not for ideas.
If what you are doing is worth doing, it’s worth telling people about it.
What to look for in a technical cofounder.
This depends a lot on the nature of your business. However, if you’re looking for a technical cofounder, it’s safe to say that you’ll want someone who is a pretty good programmer. You’ll probably want someone who will:
- Knock your MVP out of the park.
- Be responsible for building your engineering team.
- Be a master of the technologies and systems that will make your SaaS business run.
This brings up something that you should keep in mind: What got you here, won’t get you there. (I think there’s a book with that title, look it up.) What I mean is this: in the beginning you need someone who can do the actual work. The coding. The design. The deployment. The server management. All the technical tasks.
As your business grows your needs will change. You’ll probably hire a development team, a design team, a DevOps team to manage the servers. The person who was so good at doing those technical tasks in the early days may not be that great at being a CTO and managing the people who are doing the technical tasks. It wouldn’t be a bad idea to have this conversation early, with the understanding that you and your technical cofounder may end up hiring a CTO in the future.
For now, you’ll want to make a list of the specific qualities that you’re looking for.
- Coding ability: They know the code and have a portfolio of work to prove it.
- Ability to complete a project: Their portfolio isn’t a graveyard of half-finished projects.
- Business minded: Understands basic business concepts.
- Management experience: When the time comes to hire, this person will be in charge of the technical team.
- Location: Are you comfortable building a remote company in order to widen the pool of candidates? Or do you need somebody in your city?
Once you have this list, you can evaluate your potential candidates against an objective list of qualifications.
Coming to terms
Finding the right person to become your technical cofounder can be tough, but even more so because you’re staking the future of your business on this person. Depending on where you are in your business and what resources you have, this might be an equity position, a salaried position, or a mixture of both.
Negotiating salaries can be challenging, but equity can be even more so.
Unfortunately, there’s no simple answer to how much equity each cofounder should have.
Never split equity 50/50
The only rule of thumb that I’ve seen almost universally accepted is this: never split 50/50. The reason is because, in the event of a disagreement, you will need a way to break the tie. If both members have the same authority, you will end up with a stalemate. Every ship needs a captain, every kitchen needs a sous-chef, and every business needs a manager.
I’ve seen many two-person partnerships work well. A notable example is Drip, founded by Rob Walling and Derrick Reimer. However, they're rarely split 50/50. In a healthy partnership each member has an area of responsibility. At Drip, Rob ran the business and Derrick was responsible for the software. They consulted one another and each considered the other's input, but at the end of the day, Rob made the decisions about how to run and grow the business, and Derrick made the decisions about how the product would be built.
Speaking of 50/50
Speaking of 50/50, you’ll probably want to dial the equity portions back. Like, a lot. The consensus among founders is that, unless this is a very special person who was at the watering hole with you when you both hatched your crazy idea simultaneously and have been working on it together ever since, you don’t want to part with anywhere near this much equity. Except in such a special case as this, consider percentages in the range of 1%-7% as a reasonable equity share for a cofounder whom you are recruiting.
Balance equity with other compensation
You also have to decide if equity is something that motivates your cofounder. It might be the case that they are in a position to forego cash and take more equity, or it might be the opposite: maybe a higher salary is in order at the expense of equity. Remember, in a startup, equity translates to risk, and not everyone is motivated by the same things.
Listen to this great episode from the Startups for the Rest of Us Podcast where Rob Walling (whom we talked about above) explains his take on equity: Episode 111, Co-founders and Equity.
Use an equity calculator
How can you make an objective decision about equity? While not foolproof, an equity calculator can help take some of the guess work and emotion out of the equation. You could make your own using a spreadsheet, or try one of the many online.
My favorite is the handy Startup Equity Calculator which can help you develop a framework for how much equity to grant.
Here are a few other helpful resources:
Money and Motivation
One of the most seductive expectations of finding a cofounder is that could basically be getting someone to work for you for free, or if not for free, for a very low salary. In reality, you’ll both be working for deferred compensation: that is, the hope that you’ll both reap the rewards of future cash flow and maybe even a lucrative exit.
Money is a powerful motivator, but it’s not everyone’s primary motivator. Find out what does motivate your prospective cofounder. Is it money? Accomplishment? The particular meaning of the problem that you’re proposing to solve together?
Even if money is not the primary motivator, it’s probably not that low on the list. What's most important is to have these conversations up front. Don't let yourself get lulled into the trap of accepting platitudes because these things are hard to talk about. Talk about the hard things now, or you'll be forced to talk about them later.
Do you really need a cofounder?
Finding a cofounder can seem like the solution to a lot of problems: this is hopefully a person who is as excited about and dedicated to the business as you are. They’ll pour their heart and soul into the business, just like you will. Problems that you face together will occupy their thoughts while showering, mowing the lawn, and washing the dishes. And most importantly, (hopefully) they’ll work for free.
In a lot of ways, a cofounder relationship is like a marriage: it’s a contractual, long-term relationship with a purpose. It’s relatively easy to get into, but getting out of it can cause serious damage and heartache.
A cofounder relationship is a partnership. Unlike an employee, you cannot just fire a cofounder. If you have a serious dispute, you’ll have to be able to resolve it amicably, or it could sink the company. Even if you think you’ll never need it, you must have a process in place for dispute resolution and a clear hierarchy for decision making (see “Coming to Terms”, above). There are many ways a good relationship can go bad.
This is why, like selecting a spouse, it can’t hurt to be excessively choosy when deciding who to partner with. Do not partner with someone who is “just ok”. Avoid anyone who is not willing to be as committed to your business as you are. Avoid characters who are lackadaisical, untrustworthy, or careless. It would be better to wait indefinitely to find the right person than to get into a contractual business relationship with the wrong person.
Founders should have shared experience together. You should know this person very well before you get into a contractual relationship with them, because you are going to be spending a lot of time together. Make sure that you share values, and that this is a person whom you will be able to respect and be friendly with for the coming years.
Do you really need a technical cofounder? You might not. Here’s a short list of businesses that you might have heard of who started with a single founder:
- David Karp of Tumblr
- Cotter Cunningham of RetailMeNot
- Aaron Patzer, founder of Mint
- Jeff Bezos, founder of Amazon
- Markus Frind, Founder of PlentyOfFish Media Inc.
- David Karp, founder of Tumblr
Those are big examples. There are thousands of single-founder small and mid-sized companies that fly under the radar.
That’s not to say that finding a technical cofounder is not a good idea. If that’s what your business needs, then go for it. I just want you to consider the option very carefully and make an informed decision.
Ok, let’s go down that road. What are your options if you don’t find a technical cofounder?
Code it yourself
Wait, don’t skip this just yet. It sounds preposterous, I know. But you might be surprised how accessible this option might be.
There are several companies now that provide pretty decent no-code software builders. Basically they provide a point and click interface that allows you to create a user interface, and basic scripting tools that allow you to perform logic behind the scenes. Then they generate an app for you that looks and works like you’re a developer.
The nice thing about this option is that you can quickly put together a prototype that you can test and make changes to. This is essential for market validation: you want to find out if customers are really willing to pay for your product before you spend lots of money and resources building it.
Partner with a technical firm
If you’ve got the cash, and you’ve validated that you can create a customer, hiring a development firm can be a solid choice.
Warnings abound against outsourcing your development. “Don’t offshore your core product!” goes the conventional wisdom. The truth is that many businesses have failed because the outsourced development team didn’t understand the project correctly, or build a poor-quality product that had to be rebuilt, or failed to deliver a functional product at all. It’s also true that this has happened to companies with internal product teams. It’s not outsourcing itself that’s the culprit, it’s the founder’s abdication of responsibility that gets startups into trouble. Ultimately you’re responsible to make sure your technical cofounder, your lead developer, or your outsourced technical team are hitting deadlines, creating quality code, and delivering the right product.
A reputable development agency will create a high quality product in a very short amount of time. They will be able to listen as you explain what your project should do, and translate your spoken and unspoken requirements into a product that does exactly what you need it to do. Even better than that, a top-quality firm will be able to guide you in forming the requirements so that the project fits within your budget.
You might find that your technical firm can create an MVP, help you beta test, build the final project, and help you launch it for less than the cost of a year’s salary for a full-time developer.
Hire a developer
Hiring a developer can also be a solid choice. Keep in mind that, unless you can afford to pay them full time, they’ll probably be dividing their attention among several different projects, yours included. A freelance developer is also much less likely than a development agency to take ownership of the requirements, and so you’ll more than likely end up acting as a project manager, making sure that requirements are met and doing your own quality control.
Where can you find a good developer? Upwork.com and Freelancer.com are both good ways to connect with developers and designers. You can also go to your local programming meetups; a lot of developers hang out at meetups when they’re looking for work. Sign up for Meetup.com to get notifications of upcoming programmer pow-wows in your area.
Find a fractional CTO
I’d be remiss if I didn’t mention fractional CTOs. This is just a fancy term for part-time Chief Technical Officer. While not an entirely new idea, part-time executives are growing in popularity.
The attractiveness of hiring a fractional CTO is that it may put more experienced executives, with extensive experience, within the reach of your budget. This is especially advantageous if you intend to raise capital; having an experienced CTO on your team can look really good to investors.
Tying the Knot
Partnering with a cofounder is a big deal; it's not something to be taken lightly. Like a marriage, a cofounder relationship gone bad can be difficult to dissolve and can leave havoc in its wake.
That's not to say that you should avoid it at all costs, but that you should consider the options very carefully, and that you should be sure—100% sure—that partnering with someone is right for your business.
What about you? Do you have any success or horror stories involving cofounder relationships? Leave a comment below and share what went well, or where it went off the rails.