Can you learn faster than your money runs out? Can you learn faster before someone copies that idea? So it's really about how fast you learn. A better relationship, a better product, a better market, about how to fundraise, about how to build a company. And the faster you learn those things, the more likely you are to survive and succeed. Building a company is so ridiculously hard, and so ridiculously hard to comprehend how hard it is that our brains just personalize the problem and put it all onto people. So because it's easier to believe that it's not man versus nature, but it's easier to be man versus man in our framing. So we over-index on, "This VC is terrible because the person doesn't believe in me, so I hate this person." But it's not. - Jeremy Au
In this special episode, Jeremy takes on questions from listeners on Compatibility, Role Negotiations & Minimum Viable Relationship.
Jeremy Au (00:00):
Welcome to Brave. Be inspired by the best leaders of Southeast Asia tech. Build the future, learn from our past and stay human in between. I'm Jeremy Au, a VC, founder, and father. Join us for transcripts, analysis, and community at www.jeremyau.com.
So the short story of it is that I've been working on an idea for about a year now. And I found someone who I really like, who connected with me a lot on the problems space, and was very important that we have some kind of shared vision that we both feel ownership of what we're doing, and that it's not just one person building the other person's idea, which I thought was very reasonable. And then when we were doing co-founder, we realized that we both wanted to be CEO, although for different reasons. For me, it was that I've been pitching this idea, effectively, for the last year.
And so that's something that I wanted to keep doing, whether it was investors or new employees or in general, just telling the story of this company, that's something I wanted to continue to do. And I felt like that was something that the CEO had to do. And for him, he basically had been number two at another company for a while, and he didn't love that because of his relationship with the CEO. And so basically was looking to be number one, and so that was his perspective. So my first question is, do you think that there's an obvious way to reconcile that?
Jeremy Au (01:33):
At the end of the day, there's going to be one CEO. Now, lots of companies can muddle along and they dodge a bullet by having co-CEOs, so never naming a CEO and saying we're all founders. And it can not only take a year or three months to figure this out, some companies can take forever. Two years, three years, four years, five years, and I think there's a lot of mystique around this concept of we're all co-CEOS or there's no CEO. And at the end of the day, it can work.
Jeremy Au (02:24):
It's just that the reality is that most of them don't work, for a very simple reason called people have to make decisions and start-ups are full of tough decisions, and a decision made is way better than no decision being made, right? So I think there's a very awkward reality where there's so many years of tough decisions to be made. Who to hire, who to fire, what to make, what to throw away, what to prioritize, what to deprioritize. And then there's the awkward reality where, technically yes, co- founders, it's a very equal thing. And so I think we have butting of those two very concepts and it was like all of these tough decisions need to be made for 10 years. And then at this founding moment right now where you're technically equal, because we used the term co-founders.
Jeremy Au (03:11):So I think that's really the crux of it. And I think that's really helpful to remember, because you're just talking about the founding moment, about the title of the CEO, but you just need to know that at some point of time in the future, there is going to be a CEO. Doesn't need to have the total, there's going to be a CEO. There's an implicit decision maker, there's a person that the VC is going to talk to, there's the employees are going to report to. You know what I mean? There's that point A to point B. So if you know it's inevitable there's going to be a CEO, it helps you set the frame to be like, "Well, this conversion's really important."
Jeremy Au (03:42):
Now, the orthogonal way to think about it as well is that at a founding... this is not your co-founder yet, because you haven't built the business with the person yet. Just because this person is hanging out with you, and talking with you and brainstorming with you doesn't mean this person is a co-founder yet. You haven't built the business. You've spent a certain number of weeks working with this person. And there could be many other co-founder candidates possible as well, so this person is not yet a co-founder. You haven't even gone through the gestation period, to be honest, of the startup, right? Because you haven't actually built all the revenue, it's just brainstorming.
Jeremy Au (04:14):
So I think that's another thing to think about is the co-founder title is such a sticky word. There's so many people I've met and my friends have met, early stages, who brainstorm and then people in and say, "Okay, I'm a co-founder because I brainstormed with you. I white boarded that," and it's just like, "What?" So there's a lot of story of that. And that's why you see all the realistic founders are very much like, "Well, the co-founders are the ones that you really built the business with. Just because you went to hackathons with this person doesn't mean the guy's a founder. It just means he contributed an idea."
Jeremy Au (04:46):
So I think that's important because you already used some language that was interesting, which was like, "Oh, I want to be CEO and he wants to be CEO and we're co-founders," and then all this language just makes it... hides the fact that this is... we're going to make some really hard decisions for 10 years, so who is going to make the hard decisions? It's not about the status and it's not going to be about who has been pitching to date, it's more like who is going to make the best decisions and the future orientation of it.
Jeremy Au (05:12):
And the second aspect of it is actually the fact that he's not your co-founder yet. So the real question that you're asking to solve is like, "Is this person someone that is going to build a great business with me?" That's the fundamental question. And hopefully, the fact that you've been discussing this conversation and how you've been discussing this question, does this person make you feel comfortable that you guys would be an excellent team together? Because there's lots of great pairings in the world, you and I both know that. There's so many people who have... A lot of people used to use the analogy of dating, because it's so helpful. There's so many great people in the world. It doesn't mean that they're bad people, but they may not be the right match. They want to go to different geographies to build a degree, so they break up, they're different life stages. You know what I mean?
Jeremy Au (06:00):
So we're not saying that he's a bad person, we're not saying he's a good person, we're just saying he is he, right? So I think he crux of it is, do you feel like you have the conviction that this would be a good working relationship with him? So I think that's my follow-up question to that. Yeah.
Interesting, yeah. I think that was really helpful, and I guess I could spend more time thinking about how we really work as a pair. I have to questions related to that. One is that, first of all, we have very overlapping skills, which I think a lot of people see as a real weakness. It doesn't bother me as much. For me, the fact that we're really aligned on vision is very valuable. And it feels like in a startup, there's always enough to do that it's not such a problem that in general, I have the same skills. But to me, a real problem, at least for the future, could be that since we're both product people, I think there's going to be some kind of tension over product vision and who gets ownership over that or responsibility there. And if that has to be role of the CEO, if there could be a CPO who manages that. That's something I'm worried about, is who controls the product.
Jeremy Au (07:06):
Yeah. That's a real problem. I think there's a good book you should check out, it's called Founder's Dilemmas, and it's basic quantitative research of how start-ups choose their founding members and how much similarity there is versus differences. And I think it's not judgmental, it's just saying, "Okay, now these are the thing to be aware of when founders are very similar in skillsets," which you currently identified. Which is, just because you're overlapping means you both can work harder on that thing, but because of that, you could have scope conflicts very quickly, because who is going to own that vision? And I think the book also talks about stuff like there are things you don't know you don't know. And if you're both product people, or you're both engineers, or you're both business people, then neither of you can help each other figure out what you don't know that you don't know.
Jeremy Au (07:57):
And I think there's also a different psychological piece to it, by the way, as well. Which is that I think a lot of founders like to pick founders very similar to them, because they're more comfortable working with that. It's kind of like the old joke, "If I could date someone, I'll date someone just like me." Because you're like, "I know myself." Yes, that's the story of narcissism, but I think there's a lot of reality to that, which is it happens in lots of other working relationships. Like product people like to hang out with product people, engineers like to hang out with engineers, business people like to hang out with business people. There's a lot of affinity, a lot of shared language, et cetera. And I think what people forget is that they're mistaking the similarity of the personality and values and vision from the similarity in skill set.
Jeremy Au (08:43):
Now, they tend to be clustered together. Because if I went to UC Berkeley and I studied economics and the other person also did the exact same thing, we probably have the same vision, the same cultural values. There's a lot of similarities, basically, that get encoded and I mistake the skill overlap to be a prerequisite, if that makes sense. Or sorry, it's not a but I'm uncomfortable lumping it together, because I feel an affinity with this person and therefore, I'm okay with the fact that our skills have high affinity. But that's kind of like second prize, to be honest. First prize is you want to have that affinity on the personality, the values, the vision and have a different skillset that makes sense.
Jeremy Au (09:25):
So let's invert this conversation. What scenarios would it be super obviously that you would be CEO and the other person is something else, COO or CTO, or in what scenarios would it be super obvious that the other person is CEO and you are CPO/CTO? So let's go through that together. For example, the other person could be 10 years experience more, he's done this exact same problem in a similar domain, just in a different take, and he's already been a CEO. And I'm just giving an example. And he's already founded and sold a company for a 50 million dollar exit and now he's going to do it again. I don't know about you, but I will probably be happy reporting to that person equivalent, because it's a no-brainer that the person should be a CEO. Do you see where I'm coming from?
Jeremy Au (10:12):
Conversely, I just can imagine if the other person, say, had the same vision, et cetera, but was a junior engineer. Then you'd quite clearly... you'd be the CEO, because you more experience than the person and you share the same vision. So you see where I'm coming from? You could have same vision or values but different skillset gradients that make it obvious who's going to be the CEO between the pair.
Mm-hmm (affirmative). So yeah, so in this case, it's more like the first one, where he has done this at a large company before, as the number two, not the number one. But nonetheless, several years more experience, a lot more experience in kind of the same space. But I think to me the issue is about that he, in general, I think prefers much more to be internal facing and I prefer to be external facing. So in some ways, there's different axis along which I think we have strength. Because in terms of decision making, I'd be very comfortable with him as a decision maker because he has a lot of experience. But on the other hand, in terms of talking to investors, et cetera, I think that would be more my strength. So that's where I'm not sure how best to skin the cat.
Jeremy Au (11:14):
So that's an interesting question. I think there's a lot of different types of CEOs and I think there's a huge spectrum of it. So I will say that being more internal orientation does not necessarily disqualify you from being CEO, neither does being extroverted or external facing make you a better CEO. Because if you roll back the conversation, at the end of the day there's the core decision of the CEO is not necessarily to sell, of course that's one of the things they always have to do. But I think the big thing they have to do is they have to be the final decision maker, that's where they prioritize and organize a team and get teaming, whatever you want to call it, inspire or rally. What I'm trying to say, I'm trying to separate the role from the founder to the CEO. I think the definition of a great founder is someone who is able to use leverage and judo and create something from that thing, or in many case, punch above their weight, that's the role of the founder.
Jeremy Au (12:12):
But the role of the CEO is totally different, because you look at the CEO of a 10 billion dollar company. They're not necessarily punching above their weight, they're just making core decisions and prioritization and stuff like that. And so I think maybe another way to think about it is, carve out the path. There's the jungle, there's the dirt road, and then there's the highway. I don't know if you've heard of that analogy. So right now you're in a jungle, you don't have product market fit, you don't have a product. You're just trying to figure out a way out. The dirt road is kind of bumpy, you know what the product is, you're going along and it's just about getting the right people on the board and really discovering it. And then the last stage is the highway, it's convoy or trucks just barrelling down the highway.
Jeremy Au (13:00):
So there's different styles of leadership for each stage. Like for the jungle stage, the most valuable skillset is just figuring out product market fit and executing and doing all the work yourself, which is why the word founder is often at this stage. But that's why you also see lots of founders drop off between the jungle stage and the dirt road stage, because the dirt road stage, because dirt road, lots of founders are like, "Ah, this is getting boring," or, "I figured it out," or, "Now I have to hire people and fire people." Lots of founders and CEOs and CTOs transition out right before the highway stage because they're like, "Well, I don't want to be in meetings back-to-back."
Jeremy Au (13:40):
So I think there's a lot of fuzziness in the language we're using here. We're saying like, "Oh, CEOs need to go out and sell or be external facing." And on a time dimension, I would say not so much in the first phase. I think it's more about finding product market fit is really important for the first stage. And adding phase two, phase three is when some of the externalness comes in.
Jeremy Au (14:06):
I think the second dimension of it is people can learn and people can learn other jobs. So just because someone is internal facing historically doesn't mean that they can't learn how to do external, and just because you're external right now doesn't mean that you can't learn how to fundraise from VCs more, et cetera, over the next one year, two years, three years, four years, five years. So I think it's a fair statement.
Jeremy Au (14:29):
And the third thing is of course great founders and great CEOs build a team around themselves. So if you're really good at business, for example. Lots of my great business founder friends, they look for great engineers and great product people to flesh them out. So to build the team to make them stronger, or they look for founders that make themselves stronger without being overlapping. Whereas conversely, I've seen great engineer friends bring on great CFOs or great COOs to help them really build out the business side of the business.
Jeremy Au (15:00):
So I think those are three things to think about, the three different stages for the company. Jungle, dirt road, highway. Secondly, people can grow. So there's still a time length to it for both of you. And then thirdly, whoever is in charge, CEO ends up making the decision around how to build the team to compliment the entire team.
Mm-hmm (affirmative), yeah. That makes sense to me. So then this is, I think, a harder question, but for me it feels like in some ways, bringing this person on, even though we have somewhat similar skillsets, to me feels like an opportunity to also bring in at the same time, a mentor or someone who can guide me over time, since he has a lot more experience than me. And I think I could try being the CEO and looking for someone who has complimentary skillsets, and building the team around myself. And I feel like the company would be stronger if we had someone who led a big business before to do the same role. But maybe that's not the thing that I would best benefit from, but it feels like probably the best thing for the company..
Jeremy Au (16:08):
Yeah. I think you're asking an age-old question for so many co-founders who are just... and I think it's not just going to happen for the CEO title, it's going to happen for many decisions as well. It's like, "Who do we hire? Who do we bring in as a mentor? How do we make a decision on A or B?" There's so many different permeation of that question happening over and over again, we're just, "Personally, should I do this for me or should I do this for the company," whatever that means. And then conversely, "Is whatever this person deciding helpful for the company or do I believe differently and how much weight should what I say be versus what this other person's saying?"
Jeremy Au (16:47):
It's not an easy... I would love to say, "Okay, I'll give a 80% on that and 20% on that." It's so situational. I think the best thing I can do is maybe just give you some heuristics at best. I think the first one is, do you want to be rich or do you want to be king? And that's a framing that Founder's Dilemma uses. But I think that's really illustrating, "Is your desire to be CEO number one? Does it outweigh your desire to be rich?" And it's a fair question, because being king is not just about being power. It's about autonomy, it's about decision making, it's about skillsets, if that makes sense. Whereas deciding to be rich, it means I'm all out to build that financial, et cetera.
Jeremy Au (17:40):
And I think that value decision is going to drive so much of your decision making around it, because you can be like... I think what Founder's Dilemma says is that on average, if you decide to be rich, people tend to be much more looking for the best talent, if that makes sense, wherever they are, in the best combination, if that makes sense. Whereas people who are looking to be king tend to look for more junior folks and look for people who are more similar to themselves, on average.
Jeremy Au (18:10):
Again, it's not a hard and fast rule, but it's just a thing they saw in the field. And I think it makes intuitive sense to all of us, right? And I think it's just like, if you're able to articulate that to yourself, that can potentially help a little bit.
Different frameworks for splitting up responsibility, whether it's one of us being the CEO and one of us being the COO, or one of us being the CEO and one of us CPO or other arrangements like that. I'm curious if you have any insights on that?
Jeremy Au (18:44):
There's a great article by First Round which has a super solid founder questionnaire to go through with your co-founder. It's 50 questions. It does feel pretty heavy, but it's good because the length of the questionnaire probably makes it, what, like a five hour conversation? And you're going to easily spend more than five hours of conversation on your product or your finances or whatever it is, so you might as well spend five hours on whether the relationship can work.
Jeremy Au (19:18):
And I think it does have some specific grids that help you divide responsibility between... it's a grid of responsibilities and it just says that, "Which ones do you want to be handling, which ones do you feel confident about?" And then you match it to the other person and see what it is. What would be interesting, I think, and what I suspect will come out from that grid exercise is that both of you are going to index very heavily on product, and then may have different overlaps, levels of overlap in other areas. And I think the truth is, the other person is also thinking about this problem as you are, assuming this person has two eyes in his head. And I think it's a rational question, because the other person will be thinking to himself, "Hey, you also want to be CEO and I want to be CEO, so how does this work? And when you look at this grid, both of us are strong in product, so how do we solve this problem?
Jeremy Au (20:10):
So at the end of the day, I think if you're going to have that conversation with a person and then find out if you actually... This question is not the hardest question that you're going to discuss and debate with this person. It's one of the easiest, because all of the detail is there. All the detail about whether you can work for each other is there. You know it, the other person knows it, there's no detail to be found. In the future, when you're doing cohort analysis and the detail is kind of spotty and really messed up, it's really hard to tell. But right now, you have all the detail to decide. So if you're able to come to the decision, you can.
Jeremy Au (20:47):
One other thing is, this is not the only person you can potentially co-found with. If it took you, how long, right? It took you a while. Six weeks to find this person. What if you took another six weeks and continued searching within the program or outside the program. You see where I'm coming from? Just because you ran across this person doesn't mean that they're the only person who can share the same vision as well. So the next cohort is coming in soon and another cohort will come in after that, every quarter. So all I'm trying to say here is, this person is not the be all and end all. You don't have to make it work. And I think sometimes it's a bit hard, because sometimes you feel like this is the only other co- founder candidate who has ever shown similar interest, and so you're comparing this person versus the void. And it's kind of like, "Okay, I've got to choose this romantic partner or I can be forever alone." And everyone's going to be like, "All right, I'm going to choose someone over being forever alone." But now we have our doubts and we're like, "Oh, we're choosing one romantic partner versus the possibility of dating someone else could be better."
Jeremy Au (21:55):
So I think the question is, do you hear that point of this person is not just good enough, but good enough to build a company with. And your conversation with this person in a short time is going to tell you and inform you whether it's... it's going to give you a signal whether you can't work with this person. You can't really give a single whether you can work with this person, because you haven't done the work yet, because you haven't gone through any tough decisions as well.
Interesting. Another question I have is around with our dynamic, I'm trying to figure out if it would make sense to bring on a third co-founder as a way to distribute power more widely and also fill out our weaknesses. But I think I'm also sensitive to dilution and bringing on someone too early, or bringing on the wrong person at the wrong time.
Jeremy Au (22:44):
I think there's so many parables in my brain but it's somewhere along the lines of if your foundation isn't strong, you're not going to fix it by adding another foundation next to it. You have a fundamental core issue, which is you and this other person have a lot of overlap, both share a similar vision, but disagree on the role on CEO, and it's a big enough problem. And it's not blindingly obvious that either of you know how to solve this problem, which indicate that it's not so clear to people outside, either.
Jeremy Au (23:23):
So how do we solve that problem first? And adding a third person doesn't help, because it doesn't solve that core fundamental relationship issue between these two people. All it can do is maybe improve some mechanics around the controls and balances, but it doesn't solve the core issue, which is if we need to make the product go in direction A or direction B, who is going to call the shot? And is the other person going to happily oblige and just do it anyway? Or unhappily do it, but execute it with full faith and respect to the other founder?
So then another question I have is that if I made my co-founder the CEO, I feel like because I'm more junior in my career, that I could really end up in the company kind of floating. Because I couldn't see myself, I assumed we'd always bring on someone more senior for any real role. And I wonder where that would put me.
Jeremy Au (24:21):
It's not necessarily a bad thing. Like I said, jungle, dirt road and highway. The truth is, the hardest part of this business is building this company at this stage. That's the hardest, hardest, hardest part. Nothing else is going to be as hard as this stage. If you get through this jungle phase, at least you see the dirt road happening, it's going to get easier and easier in the business side of there's a lot of stuff that's really, really hard. And that's the whole point of vesting. If you're there and you're there for one year, you've got two years, you've got half. That's what vesting is for. It's meant to fairly compensate people for their time. And I've known many founding teams who separated and there's lots of founders who stayed behind and felt like the person leaving had a great deal because they got half of the founder shares or three quarters of the founder shares. And then they left to enjoy life on the beach, the equivalent of it, or start another start-up with what they've learned, if that makes sense. And then other person is stuck building the rest of the company through the dirt road and highway.
Jeremy Au (25:28):
I'm not saying that's going to be the scenario. It's just that it's not necessarily a bad thing. In the worst case scenario, vesting shares is meant to do that. And you and I have walked out of previous jobs before. This company is not the last company of our life. It's one of the companies in our life. There's another, probably... assuming every company is five years, there's probably another seven companies for either one of us. Does that make sense?
Jeremy Au (26:01):
So yeah, you're going to leave. The truth is, even if you're founding now and you're worried that someone may take over the role, the truth is, you're going to leave in four years or seven years. At four years, you might be like, "I'm glad for someone take over. Peace out, I've got my shares." And that's great, because in that scenario, it assumes that the company is still around in four years and doing well. So in that case, you'll be very happy to leave, because your shares are worth quite a bit. That's the financial side of it. And too, obviously, hopefully at that point of time, you also feel like, "When this happens, I'm self-aware enough, et cetera, to feel like this person taking over makes a lot of sense." That's the best case scenario, in that sense.
Jeremy Au (26:41):
But let's flip the switch, this company is going nowhere, then what's the point? You're going to walk out anyway and build something new. You learned something. This company doesn't work or this idea of it doesn't work, but a new company, that's not a problem. Or in one year, you guys can't work together. Then dissolve the company, leave. It's fine, you can always found a new company. The idea is in you, there's no IP, et cetera. What's the cost of it? You see where I'm coming from, right? If you don't know within six months that you can work together... you will know within six months. The problem right now is that you have too little time. You have six weeks. It's not even a trial right now.
Jeremy Au (27:27):
Use time as your gating threshold to explore and experiment, which is, "What's the minimum viable relationship for me to have this guy, to see whether this relationship is going to work?" If it doesn't work, that's fine. We just say, "We learned from this experiment, not that it was a failure, but we learned from this experiment that we just can't work together in this configuration. So let's figure out how to negotiate this in one month's time, or let's just separate and look for someone new." That's totally fine, happens all the time. So look at it as a minimum viable relationship, rather than apply that lean process to the relationship.
Right, the more I, in some sense, hire people who are more senior than me, in some ways that's a process of forcing myself out in some ways, in terms of finding responsibilities or work for me to do within the company. In some ways, it seems like if I'm in some sense trying to get rich instead of trying to be king, and hiring people who I think will do a great job, better than me, I feel like in some ways, that limits what work there is for me to do at the company over time.
Jeremy Au (28:39):
I think the second part of it is just you shouldn't work too much your own role, because like I said, it's a function of time. You have the opportunity to grow. You are who you are today, but it doesn't mean that in two years or three years time... you're learning, you're talking to me, you're talking to your peers, you have a group coach, you have an executive coach. There's so many ways for you to be learning, you could go for classes. You know what I mean? I've seen many people retrain, reskill themselves in different ways. Because the truth is, a hyper-growth start-up, if it's successful, again, probability, it's going to require both founders to learn a ton of stuff in a very short amount of time. I wouldn't worry too much about that. On your behalf, I'm worried less about the cap of your role when you're on the highway. I'm worried more about whether the two of you, or whatever configuration it is, has the skillsets needed as a portfolio, as a team, needed to get out of the jungle. That is is what I would solve for.
Listener (29:51):And what does that really mean to you? Does that mean finding product market fit? What does it mean to get out of the jungle?
Jeremy Au (29:56):
Yeah, finding product market fit and finding the business model fit, as well. So product market fit, I think a lot of people look at it as virality or users, whatever it is. But I think you're only really out of the jungle when you're... for example, your LTV:CAC. Three is to one, lifetime value to customer acquisition cost. It's when you have a high net promoter score. It's when your economics makes sense. That's when you're really out of the jungle, and the dirt road is really about using those economics as those product market fit that your fans love of your loyalists love, and then bringing it out to a larger audience and making it more stable, or whatever you want to call it. And the highway is expanding the geographies, expanding product verticals, et cetera.
Interesting. And so right now, it's all about getting out of the jungle and can we do that together, I think that makes sense. I guess this is more of a tactical question and less of a co-founder fit question, but I'm curious at what stage does it make sense for the co-founder to... since we're still testing out the relationship, when does it make sense to incorporate and create contracts and everything like that? Is it too early to do that?
Jeremy Au (31:13):
I think there are two questions to it, which is I think the first question is, "How do we test the co-founder working relationship?" And then the second one is, "How do we protect ourselves from something going wrong?" Which is what I think... I'm reading two different questions in that statement. So I think the first one is really most important, which is how you rapidly test and see if your founder fit together, and it's just going to be work sessions together, hackathons together, just working together as much as possible within a week. It doesn't need to be a drawn out one month, three month process. But you do a week and work very intensely, get something out the door and see if something works, and see if you enjoy working with each other.
Jeremy Au (31:58):
It shouldn't be a pain to work with each other, it shouldn't be respectful to work with each other, it should be fun to work with each other in the roles that have been ascribed, whatever you want to call it, co-founder and someone's in charge or whatever it is. But just test that, testing that faster is more important than figuring out your protection measures faster. Because the first one generates value and the second one does not generate any value, it's just a fail safe for that. And I think I've seen a lot of founder friends who over-index on the second because they're like, "Oh, if I have the protection mechanism there, then it gives me more time to figure out the first one." But it doesn't really make sense, because normally what happens is that people become lazy about the first part, because they're too busy sucking up time building up a mechanism for protection, but they're not able to source new alternatives to the co-founder or really thinking through whether this person's the right fit. So I think really index on the first part, which is how do you solve that part, which is, "How do I test rapidly to see whether this is the right co-founder?" And then using minimum viable relationship. Figure out what you need to learn to improve your relationship or say someone else. So this is really index on that part.
Jeremy Au (33:22):
Now, that being said, of course there is a protection mechanism, like the questionnaire that we talked about is a good one because it helps talk about, "What happens if one of us has to leave?" Things like that. So I think you want to create a founder's agreement, basically. one page bullet-point thing. It's not a legal contract, but it's like, "Let's agree. These are the things that are important. We're both going to commit certain number hours. We're going to bump it up if this happens." Some basic one page founder's agreement that is more like a or an encapsulation of what you both agreed on. Maybe the roles, the equity, if that makes sense. And that's good enough as a document.
Jeremy Au (34:03):
The problem of cooperating and making a legal document as well is that it often causes both parties to lawyer up, if that makes sense. Because again, if you feel like you have a very strong relationship out front but then the protection measures are very simple, as everyone is like 50/50, we're both excited with each other. Who cares about the details? We'll just use a stock template, YC template or Clerky template," or whatever it is. But the converse is when you don't have that strong relationship, then people tend to get very, "Okay, what happens if this happens?" Or, "What happens if that happens?" And it's just not a value added activity, because you end up talking a lot to lawyers, which is a waste of time.
Yeah, that makes sense. If I focus on creating value and less on the protection mechanisms, that'll help us get our company off the ground. I like that a strong relationship makes that whole process easier. I think that makes sense. Yeah, I think that's very helpful. I think that's the next stage that I'm up to, is to really try and get something out of the door together. I guess the thing I'm worried about is that since neither of us are technical, we might need to hire someone, and I feel like you have to incorporate once you start using money and spending money.
Jeremy Au (35:23):
Yeah. The requirement to hire a technical person to execute your product is a symptom of the fact that your current teaming does not have the minimum viable teaming or skills needed to deliver on your product. So that's the real crux of the issue, and I think to be more direct, my concern as someone who does not know both of you is that you two together may not be enough to actually deliver the product and get out of the jungle together, because like you said, you don't have the ability to build it.
Jeremy Au (35:56):
Now, like you said, there's lots of teams out there that end up hiring, et cetera, and get an MVP out the door. So I think there's different approaches to it. That being said, let me articulate I don't know what your idea is, I don't know the co-founder. But seeing other teams, they solve it using NoCode for example, stuff that use... The truth is, today, either you or I can set up a blogshop in 30 minutes for clothing. And so individually myself, I have the minimum viable team to set it up, because I can use Shopify and all these other things to et cetera.
Jeremy Au (36:40):
So the idea is actually very achievable by myself. But of course, you go back 20 years ago, the minimum viable team to set up a blogshop for clothes would have been me and a CTO, because we would have to code a website from scratch using HTML and say, "Okay, how do we have a checkout button using HTML?" So obviously, I think the crux of the question is, is there a way for you to modify your MVP, your business idea, your approach to be something that both of you could achieve because you both love working with each other? Or conversely, how do you build up the team that's able to achieve the product vision? And long shot of it is I think most people would be, superficially at least, looking at, "This is a bad pair," because this group does not feel conviction that they have the ability to build a product together because they have the same skillset.
Jeremy Au (37:32):
Now, there's lots of other people who aren't able to build the product in time for similar reasons or for different reasons. Maybe because they don't work well together, because they disagreed on product vision, there's so many reasons why things don't work. So this may not be the only reason, but there's only one way for the product to be delivered on time and in a way that works well. What's the story about, it's like, "Every happy family is the same but every unhappy family is unhappy in their own unique way." So what I'm just trying to say is, there's only way that you're going to be able to deliver this product that you have, which is you simplify the product in a way that is achievable, you have a great working relationship with the person, decision making is clear, together you figure out a way of how to build a product on time, on target, you've brought in the right advisors to help. So you're all very similar in that way, but how you fail could be lots of different reasons. I'm not saying that the team is the only reason why it could fail, but I think that's something to be mindful about.
Yeah, that's helpful. Yeah, this gave me a lot to think about. So I figure I'm getting something out that we can get on together and how we need to do that. Yeah, Jeremy, I feel this was very helpful. You have a lot of good advice, I really appreciate that. I appreciate you giving me a full hour of your time.
Jeremy Au (38:56):
Yeah, no problem. I'm happy to help. And, I’ve been in that situation before. I think my first company, my co-founder in the army with me and we had been friendly acquaintances in middle school and high school, but we were in the military together and infantry commander course together. And we had a blast, it was great. I really enjoy going through some really tough times with him and I had no idea in middle school or high school that I would enjoy being his companion and buddy in solving the problem, which is mind blowing. And so years down the road, we stayed in touch and obvious, we weren't chatting every day and best buds, but we had a lot of respect for each other. And then years down the road when we wanted to build something, we had different skillsets. I was in business side. We were very comfortable working with each other and every time we made a certain set of decisions, he uses a very smooth process to make a decision.
Jeremy Au (40:07):
I appreciate the fact that he was more thorough than me and more detail oriented, and he was calmer than me, to be honest. And me, I'm very speed oriented, execution, big picture as well. And we were a great, it just felt natural, we had some similar role discussions and they were easy to get through together. We got stuff done together, we laughed at random shit together. In army, I think we were doing a route march at 3:00, 4:00 AM in the morning and we were singing Jason Mraz Geek In The Pink together, that's how we got through that insane route march together, because we sang to get through it together. And then who knew that years down the road, we would be going to a fundraising meeting together and we're both stressed out of our mind, we don't know what we're doing. And so we sang geek in the pink together to boost ourselves before the meeting.
Jeremy Au (41:07):
So it felt easy in that sense and the reason why I shared the story is no one... obviously, there's a big mystique around founding with people who you already have had an experience. That's why people say, "Go match with people who are in your network who you really feel great working with." Because you already have that time and you spend those three months, or six months, or two years working with that colleague or equivalent on someone else's dime. So we were both poorly paid by the military, we discovered that we really enjoy working with each other, right? And so we had that benefit. The ultimate path, of course, is finding someone that you want to work with in these founder matching programs or whatever it is.
Jeremy Au (42:00):
And I think it's great, I think it's like relationships. You can date people that you were friends with in middle school and high school or you can meet on an online app. Why not? You can definitely meet a co- founder online. I think the key difference between a relationship online and running a start-up as a founder matching program is that you don't have time. You have a personal runway of cash and there's people out there who are competing to build a similar idea, perhaps. Because if you're thinking about it, you're not the only person in the world thinking about it. And so then the challenge is because you're trying to build this relationship and so forth, so the question is, how do you create that bootcamp equivalent of it, that military... how do you inject that experience into one week? The minimum viable relationship.
Jeremy Au (42:49):
So I think that's what I'm trying to say here, is just I don't know if this person is the right fit or not, and it's not a helpful question, I can't answer that question for you. I can tell you that from the outside in, it feels like these are the flags that I would test. So that's what you've got to do, the minimum viable relationship test is going to be both of you need to figure out product. Can you guys work together and actually feel happy working together on a product to deliver as an MVP? And you guys can agree that you just learned that you're too overlapping to make a decision about it, and you've got to make some hard calls about the pitch or how the project should be structured, et cetera. And then if you choose to be CEO and he chooses to be appointing to you, then both of you are going to learn whether you're happy with that structure. Or conversely, you choose to report to him, you are both going to learn whether you can do it.
Jeremy Au (43:47):So I think it's really more important what's the testing process that you're going to have.
Listener (43:52):This process to evaluate the relationship. Yeah.
Jeremy Au (43:56):
Yeah. I remember there was a second company, I partnered with this person. She looked perfect on paper, different complimentary skillset, Ivy League education, similar outlook on the business, et cetera. And it was even clear that I was going to be the CEO and the other person would be reporting to be, et cetera. And so it felt like a good fit for the product and idea. And then we went for hackathon together and I quickly discovered that I would not want to work with her, unfortunately. That's it, because in hackathon it was like 48 hours or something like that. We were pretty sleep deprived, it was pretty stressful and at the end of the process I was like... we just couldn't come to an agreement on certain stuff. And it wasn't a bad thing. The truth is, she's highly competent in her field and it's just that this start-up relationship for this idea and me and her doesn't work in this context.
Jeremy Au (45:02):
So we shook hands after that and just parted ways, because we just couldn't work well together. I'm not a bad person. There are lots of colleagues who like working with me, but there are also lots of colleagues who didn't like working with me, because we're not a good match. And similarly, there are lots of people who are great colleagues with her but unfortunately, I was one of the people that couldn't work with her. So that's what I'm trying to say here is this other person, are they good or bad, hard to tell. The big question is, how do you rapidly test? The MVP is about testing the riskiest part of your product. What are the riskiest parts of your relationship to test that you have? CEO, who is going to be a CEO? Who can report to who? Number two, internal versus external, from your perspective. Is this person able to work well with you in achieving both internal and external success with the company. And the third thing is product, both of you are product people. Can you actually rapidly iterate on product and get stuff done and actually deliver on the product as well? Those would be the three major things to test rapidly.
Jeremy Au (46:10):
Yeah, and I think you can be upfront about it with the other person, because the other person is experienced, the other person is thinking about it. So the more clear and transparent you are about this process... It's an honorable agreement. I guess historically, they call it a gentlemanly agreement, whatever you want to call it. I remember there was a situation where... lots of people talk about equity splits, and I've done equity splits multiple times. It's another conversation altogether. And the biggest thing I ever got from my mentor who was a Harvard professor, teaches on Founder's Dilemmas and journeys, great guy, professor. And I think the biggest part he told me was, "Hey Jeremy, it's not about what you negotiate. It's about how you negotiate," because how you negotiate is going to tell you so much about the other people around the table and it's also going to tell other people about who you are, because now there's stakes.
Jeremy Au (47:13):
So how you negotiate is more important than what you negotiate, because you have not generated any value, you're just pretending to be kings of this magical piece of paper that will supposedly be worth one million dollars or one billion dollars in five to ten years. So it's such a theoretical exercise, right? So you don't want to negotiate in a way that destroys your ability to generate a value, but at the same point of time, from an inside out, how you negotiate is reflective of how you're going to work with them, and how they negotiate is going to be reflective of how they work with you.
Jeremy Au (47:49):
And so if everybody is clear about that upfront, then it makes the negotiations much better, because everyone knows like, "Hey, you know what? This is theoretical value. Everybody can walk out in some period of time. We're currently in the jungle phase, not a dirt road or highway. And let's all be adults and professions here around the table." Yeah.
Very true, very true. Yeah, and it's interesting to hear your experience and perspective on this, also. Because I don't know your background so well, I don't know what your previous stuff was. I'm sure I could have found it. So it was cool to hear those stories.
Jeremy Au (48:29):
Yeah. It's crazy, right? It's a crazy thing to do. You just build a business from nothing with a stranger that you hardly know. Exactly. At least if you're skydiving, you're skydiving, normally, with a known instructor who is a clear expert, who's doing it Tuesday. And you're jumping off a plane but you have the safety harness. Everything is laid out for you and that's one of the riskiest activities we have, that we can think of. How many people don't even skydive because they're too worried about it? You're basically saying, "I'm going to learn how to build a plane, I'm going to fly the plane myself. I'm going to jump out of the plane and I'm going to strap myself to someone who hasn't done it either." And then figure out how to pull the parachute and land on earth together. It's a crazy activity. So don't feel bad that... it's a totally fair set of questions to ask. In two years, in five years, you're going to learn just enough about this process to pay it forward to someone else who is going to ask the same question. And to you, it's going to be as it is to me, which is intuitive. I wouldn't say obvious, I wouldn't say simple, but intuitive. It's going to be as natural to you talking about this problem to future founders.
Listener (49:58):This is a hard process, that's for sure.
Jeremy Au (50:02):
Yeah, it's hard. Yeah. People survive, companies don't. I'll tell you that. Yeah, those are the companies that didn't survive that learning process. But there's lots of great founders who walked out of bad founding relationships. I personally know lots of founders who had great funding relationships and turned out to have later bad working relationships, and then they separated, and then they learned from that process and they became friends again. I have no founder friends who've come together... I've introduced them both together, they come together, they start working great together, they separated, they both learned from it, they both came back together, did some great stuff together, then they left again, and then they're still best friends. I know other people who've had terrible relationships and then will never speak to the other person ever again, but they walked out and said, "Okay, when I build my second company or third company, I know so much more better about how high a standard I need to have for my co-founder, my working relationship." Yeah, so I think people survive, companies not necessarily so. But that's okay. Ideas and companies are just outputs. Like we said, we both have seven companies in front of us.
Listener (51:25):No, as I said, I really appreciate you talking through this with me, and I'll let you know where it goes, I'll keep you updated.
Jeremy Au (51:35):
Yeah. Who knows? There's so many ways the story could go. You two could be a great working partner, both of you do those minimum viable relationship tests and each one you do gets harder and harder, and you both really enjoy the process and then you become good buddies. Not necessarily best of friends, but great working buddies. And then at some point of time, you both shake hands and go off, do separate things. It's inevitable, because in 20 years, you're both definitely going to be doing separate things. And it's a function of time, or it could be the other way around, which is it doesn't go so well, but you learned a lot from it and then it helps you better position yourself. So even if it goes well or goes poorly, it's more about what you learned from it and how you take it to your next iteration of the product or idea of company. It's actually much more valuable.
Listener (52:31): Yeah.
Jeremy Au (52:32):
Yeah, I think the truth is if you have the right mindset for the minimum viable process to this thing, you can't lose. You're either going to learn to be a great CEO or you're going to learn to be a great CPO, or you're going to learn what it takes to find a great co-founder. And you're going to learn how to yourself be a better co-founder as well. So in any scenario, you're going to win.
I'm learning, for sure. Hopefully learn as much as you can when you need it and then you can when you need it, that's what I hope. That all the timing works out. I'm doing a lot that I never did before.
Jeremy Au (53:14):
Yeah, I think that's the crux of it, it's really about the velocity of learning. Can you learn faster than your money runs out? Can you learn faster before someone copies that idea? So it's really about how fast you learn. A better relationship, a better product, a better market, about how to fundraise, about how to build a company. And the faster you learn those things, the more likely you are to survive and succeed. Sometimes the founder struggle feels like... Here's my personal theory. I think my personal theory is, building a company is so ridiculously hard, and so ridiculously hard to comprehend how hard it is that our brains just personalize the problem and put it all onto people. So because it's easier to believe that it's not man versus nature, but it's easier to be man versus man in our framing. So we over-index on, "This VC is terrible because the person doesn't believe in me, so I hate this person." But it's not.
Jeremy Au (54:14):
It's more like we don't have the traction yet and the success needed to make it mindblowingly obvious to the VC to put money into this thing, or that we as a team don't have the communication skills to effectively communicate our idea in a way that makes it enticing to someone else. It's sort of a man versus nature framing. And actually to be honest, man versus self. "Can I learn fast enough and can I solve this problem? And can I build the skillsets?" But it's just easier to make it man versus man. It's like, "This idea didn't work because of this person." So I think that's the framing, is it man versus nature, man versus man, or man versus self? And I think the more you make it man versus self in any situation, the better of you are, because man versus self, you solve the problem yourself. Man versus nature, well, the story of every man versus nature story is that the guy has to discover himself, and the story of every man versus man story is also about himself, because that's the one thing he can control.
Listener (55:25):Meaning that we like to put the keys to our success in the hands of other people, but really the ones we can control are ourselves, and the ones we can't control are out in nature.
Jeremy Au (55:36):
Yeah, exactly. It's not about whether he's going to be CEO. It's more about, "Am I going to be happy and productive in this configuration? And do I choose to enact this configuration or do I choose to make the best of this configuration?" It's a much more solvable problem. The truth is, he could be a good CEO in certain situations and you would be a good CEO in other situations. Both things can be true and it's hard to tell with this imperfect data. We're so much brain power to say, "Who is going to be the best CEO in this..." It's a really shitty model and it's like we don't have any data for the next 10 years and we're trying to the data and the model, but are you going to be happy in this configuration and building this company with him? That's the only thing you can control. And do you choose to work with this person? That's the thing you can actually choose. That's it. Don't worry too much about whether the company is going to succeed with X person or will the company succeed with that product. The only thing you can really control is yourself. Life's short, man, you don't need to work in a sub-optimal company.
Listener (56:53):Yeah. Jeremy, I really appreciate you staying up late with me to talk through this experience I'm going through. I really appreciate that.
Jeremy Au (56:59):
Awesome. Well, it's getting close to midnight for me it's 11:00 PM and I'm sure you've got a lot of stuff to do. Is there anything else I can help you with, any other questions or anything else that you're walking away with that you're looking to explore or... ?
Listener (57:16):If you're willing, I can follow-up with you and let you know what I took away and where it left me.
Jeremy Au (57:23):
Yeah. Yeah, that's perfect, just think through the action steps and then go from there. I think as a third party, from my perspective, I think you're on the right track in terms of asking the right questions. I think you're asking the right questions of yourself. Yes, it's been asked multiple times by similar founders in your spot, but it's just like every new parent asks themselves, "Okay, I read I'm supposed to diaper the baby this way and I feel puzzled by it." It's not bad, it's just a natural thing. Every new parent has to figure out the diapering process. Even though they read it, some people are a little bit more prepared with birthing classes, some people have helped their brother do it.
Jeremy Au (58:07):
So I think you're already asking the right question and I don't think you should feel... Just in case, I don't think you should feel bad about asking question. I think it's good, actually. It's better that you're asking this question and it's good that you're asking someone, in this case me, but it could be anyone else... It's good to be asking, because only by asking can you learn. It's like minimal viable self-learning process. So if you keep those learning loops high and quick about what does it take for you to be a great co-founder in any situation, the better. So I think you're at a good spot. I think you'll figure it out. Yeah. Yeah, so even though you don't know the answer yet with this guy, and then though you don't know the answer of how you would answer this question if another founder asked you this question, it doesn't mean that you're not going to get there within one to two years if you keep the same philosophy of personal learning that you have right now.
Listener (58:59): Awesome.
Jeremy Au (59:00):Awesome, okay. Let me know if there's anything else, man. Stay well and all the best.
Jeremy Au (59:07):
Thank you for listening to BRAVE. If you enjoyed this podcast, please share this episode with friends and colleagues. Sign up at www.jeremyau.com to discuss this episode with other community members in our forum. Stay well and stay brave.