A guide for entrepreneurs looking to co-found a company
Following Marcus Tonndorf’s ending to his time at the ‘choose your own adventure’ audiobook app Audiogent, he’s hoping no other entrepreneur meets the same or similar fate. Tonndorf’s golden rules may seem like common-sense to some, but as most co-founders would’ve found out – starting a company is much like entering a marriage: Everyone’s hoping for a happy ending and a lifetime of success stories, but we all know – that’s not always the case.
Here are some important pointers to follow early on, to ensure a smoother relationship and possible ‘divorce’. Think of Tonndorf’s following guide as like taking a risky road-trip with your seatbelt firmly fastened.
“Trust is everything”
It’s not something that you can build up overnight, but what did your gut instincts tell you about your potential business partner? “Trust in a small firm can be easily ruined,” says Tonndorf. Before Tonndorf recently joined his new company Palupas, he made sure to spend valuable business and leisure time with his potential co-founder.
It’s all about building trust through establishing common connections: “Mathias and I even went jogging together, we tried to build a friendship outside of work because we both knew we’d be working really close,” says Tonndorf.
Getting along on a social level can certainly help: “Make sure you have fun together – that’s how you celebrate your successes,” says Tonndorf. But being friends is also about understanding differences and turning it into something valuable. “Your differences have to complement each other.”
But be wary of co-founding with friends. “I’m not a fan of starting companies with friends if you’re only friends that want to start something,” says Tonndorf. “You may be building on something that is fragile if you both don’t have the business know-how to back it,” he adds.
“Do your research”
Spend time looking into the company, “but remember, you’re not the secret police,” says Tonndorf. Check founder references, study their employment history, and work environment; “See how they work and how they structure their day. It’s like going into someone’s living room and looking at the book collection – it says so much about the person or people that live there.”
Draw up a contract
Set up all the terms and conditions between all parties involved. It’s easy for founding teams to put off the paperwork until solid successes arise, but Tonndorf says that a contract should be in place – as early on as possible. Stipulating what happens if anything goes wrong is especially important, and can always been revised and updated as the climate of the company changes. But remember, always get a lawyer to look over the contract, which brings us to the next point..
“Lawyer’s advice is cheap life insurance”
Yes, it can be costly when more contentious issues arise within a company, but at the very least – have a lawyer look over your contract. “When I get my new contract at Palupas I’ll be getting it checked with my lawyer. It’s a few hundred euros, but that’s nothing if anything goes wrong, and if it all goes well and become successful – it’s also nothing,” says Tonndorf.