I read an interesting article this morning from Joel Gascoigne, who I have a huge respect for and enjoy reading his blog (You should also check out his app – Buffer). The article he wrote today was about avoiding the 50/50 co-founder model (find it here) – have a read and this is my response.
When I set up Silverchip in 2008 it was pretty much a company to handle all the contracting work I was doing, it wasn’t a ‘business’ as such – I mean sure, it made money and had accounts but it was just me. I decided to get serious towards the end of 2009 and to do this I knew I needed help, I needed someone I could trust. The person coming in to work with me would essentially have full access to all my previous clients and contacts and more importantly, the “co-founder” would need to be 100% dedicated and I mean give up there life to make this work, we needed to take 8 months without a salary to give us a fighting chance and I knew there would be long night and weekends involved.
With all the demands I needed to place on the other person I knew the only way I could get what I needed from them was to offer the 50% – against much advice from friends, family and colleagues. Jamie (Who really needs to sort his blog out!) officially started in March 2010 after 4 months of planning. Our aim was to get the business self-sufficient by the end of the year and we succeeded. It was hard but I’m glad I made the decision to offer the equal stake.
The most important thing about the 50/50 model is that ideas we have, we talk about. This results in problems being discovered before they cost the business any money (Sure we’ve made mistakes but we’ve also thrown hundreds of ideas away at concept level – before they have cost us any time or money). Neither of us can demand the idea goes through unless the other agrees and we are both logical people so things get worked out. Sometimes a start-up is a lonely place and is a very rarely and easy journey, having someone of equal responsibility is a way to share the worries of running a business and allow us to focus on creating (in our case) great websites.
People might be reading this and thinking, “I created this I want the cash reward” and I went through this mentality but strongly believed that having a 50/50 partner gave me a greater chance of success than going it alone – and it’s worked.
Now this wont always work and I was lucky enough to know someone I trusted, who had the right skill set, who was willing to give up his job and give this a try – it wont always work like this. The key element is that both of you truly want the same thing and are prepared to work equally hard to get it.
I really enjoy reading about how people got set-up so if you have an opinion on this please share via the comments below.
Really great post Liam, you make a lot of fantastic points.
In fact, I think I didn’t quite get the point across in my post that I was trying to make. With hindsight, it is less about the 50% ownership stake and more about a single person getting the ball rolling before someone else comes on board. From that perspective, you’ve done exactly what I’d recommend others to do. The fact that when you needed to get someone else on board you chose 50% is awesome in many ways I believe.
Some argue never to do 50/50 partnerships because a single person needs to make the calls. My point is more about a single person starting it and validating some problem with a solution.
Cheers!
Yea, I think we are both on the same page and it’s all about situation. It’s been very interesting looking at this as a topic though. Until you posted the link, I didn’t know what a large topic it was!
Really nicely put! I see both sides as it can go horrible wrong with no effective ‘veto’ but it just so happens that on our side the structured logical approach to a deadlock always forces the greater decisions to be taken.