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Q&A with Tanis Jorge, Co-Founder of Trulioo and Founder & CEO of The Cofounder’s Hub
Investors that fund early-stage businesses are largely investing in its people. The chemistry, relationships and spirit displayed by the team is critical, as it can ultimately make or break the company. When establishing a founding team, the main consideration for entrepreneurs is the number of founders. Building a startup can be extremely stressful and difficult to do without an internal sounding board. 100% of the companies that Blumberg Capital invested in from our newest early-stage fund have at least two co-founders.
Given the importance of finding and building a successful co-founder partnership, we spoke to Tanis Jorge, a serial tech entrepreneur and author of The Cofounder’s Handbook and Founder of The Cofounder’s Hub. With over 20 years building startups, including “unicorn,” Trulioo, Tanis shares her experience with founders looking to build a successful business and co-founder partnership. Blumberg Capital was the first investor in Trulioo.
In this Q&A, Tanis shares actionable insights for entrepreneurs and founders on how to find a co-founder, navigate the roles each founder plays and get the most out of the co-founder relationship.
Q: How did you find your co-founder at Trulioo?
Stephen and I had neighboring lockers for the 5 years we attended high school and started our first business not long after we graduated. From there, we built three companies together over a decade and successfully managed to exit them all. In 2011, we launched Trulioo.
Q: How do you advise entrepreneurs looking for a co-founder?
Unfortunately, I can’t tell founders to go back to high school to find the ideal business partner. So, when I’m talking to entrepreneurs who are looking for a potential partner, one of the main things I ask them to do is look inward and take stock of themselves. Many times, when entrepreneurs are looking for a co-founder, they think their search needs to be very task or skill set-focused. For example, they’ll think ‘I’m a business person, I need a technical founder.’ I tend to ask them to step away from that kind of thinking and go deeper and undertake a more thorough self assessment considering factors like, personality, conflict and learning style, their life stage, goals, and time and financial commitment capabilities, to name a few.
Once you have a better understanding of yourself you can then identify what you need out of a partnership. You can look for the “gaps” that the right co-founder should fill and determine other traits or factors that you might want them to duplicate. Make sure however, to also keep your business’ needs in mind as well. Industry skills, time to market, capital and time requirements, are just a few other factors that may need to be met by your future partner. Taking all of these into consideration should bring to the surface a few “must haves” that your partner will provide.
Q: What resources or events should people go to to find potential co-founders? What’s the best way to find a co-founder?
One of the first things I recommend is that entrepreneurs begin the uncomfortable act of putting themselves “out there.” A lot of people underestimate their current network and the network of the people around them. I tell entrepreneurs to share their idea with those that they know and then ask if they or someone they know might be interested in learning more. I have seen a surprising amount of success when entrepreneurs, looking for co-founders, take this route.
In my book, The Cofounder’s Handbook, I include an exhaustive list of different places where people can look for a business partner and additionally, recommendations on how to properly engage. I touch on common mistakes that people do when pitching a potential co-founder. For example, sometimes a founder comes to their first meeting and drops a massive business plan, saying ‘here’s what I’m going to do.’ Unfortunately, this tactic leaves no space for the other person to be creative and come in with their own opinions and perspective. The whole point of entrepreneurship is to write your own destiny, so coming in too hard-lined, takes away their license to contribute and pitches them to be a glorified employee.
Q: Once you find a co-founder, are there any other actions one should take?
Yes. Once you find your co-founder and set roles, you’ll need to focus on how to formalize the partnership, legally. You need to put together a partnership agreement and determine which clauses you will put in and what they will say. This process, vetting and securing a cofounder, is just as important as the one to find them.
Q: How do you advise startups to divide responsibilities between founders?
One of the key factors to consider when determining equity distribution is capital investment. How much is everybody contributing? The bigger the risk, the higher the amount of equity may be considered. That said, time commitment may be another factor that tips the scales to a majority share. For example, if one co-founder will be full-time working on the venture and the other will be keeping their job until a certain milestone is reached such as profitability then no matter if the investment is the same, the one working full time may deserve the lion’s share. In
Q: What would one of those be?
However you end up deciding the equity split, I highly recommend a vesting period. That will protect everyone who is involved in getting the venture off the ground at a time when the business is the most vulnerable. Whether vesting is set for three or four years, it will protect the co-founders, should one of the partners leave. For instance, if one founder says ‘I’m out’ for any myriad of reasons, they do not take all their assigned equity with them. Instead they are recognized for the time they put in and the rest of the equity is distributed among the remaining partners.
Q: How do VCs assess solo founders?
As the rule goes, you will likely lose access to some investors because you’re a solopreneur. That’s just the way it is – I’ve never met anyone that said ‘I do not invest in teams,’ but I have met VCs, investors and angel investors who all say they don’t even pick up the phone or talk to a solo founder. As such, you do need to understand that you are shrinking the size of the pool of investors that you can go to if you don’t have a co-founder.
However, if you’re able to demonstrate that you have an incredible team to help you in the early days, it’s not impossible. Nevertheless, you’ll need to shore up and showcase that support. For example, what would happen if you’re hit by the proverbial bus? Who’s the person on your team that has the skills to take over? They might not be your co-founder, but they need to have the chops to take the ball and run with it. Those are the things that mitigate risk to investors and may be the determining factor of whether you secure funding or not.
Q: What do you do when a co-founder bails? How do you prepare for this?
The first thing you’ll want to do is protect your corporate culture. There’s going to be a lot of chatting at the watercooler. Make sure that you work to maintain confidence in the state of the business and be transparent with everybody. You don’t have to go into the nitty gritty details of what happened, but you should recognize that a key player has left, and share how you’re going to fill that gap.
Then, as the founder who’s remaining, you really have to ask yourself the question of whether this is something you can do, or if this is now a pivot point for the company. For some businesses, when a co-founder leaves, it really can be a nail in the coffin. So the next question is, can you do this alone, and whether the answer is yes or no, what do you need to do to navigate the path ahead. It may mean looking for another partner, hiring a key executive, or setting the plan in place to sell the company.
No matter what, losing a co-founder is difficult. Don’t be afraid to seek out professional help through coaches, mentors, lawyers and accountants. They can help clarify the situation you are in and provide valuable insights on where to go next.
Q: Any final advice?
The statistic is that 65% of businesses created by a partnership fail because of issues between the partners. My advice is to 1) Take the finding and vetting process of finding the right co-founder seriously 2) Get as much in writing as possible to give you peace of mind should things go sideways 3) Be intentional at building and maintaining a strong co-founder relationship 4) Always remember you are on the same team, view your partners actions and words through that lens and you will mitigate the chances of failure.
The right team is critical to founding and scaling a startup. Tanis believes that, by having a co-founder, you can make up the whitespace that your experience and focus areas may lack when it comes to building a successful business.
Thanks for sharing your valuable insights and practical advice, Tanis!