A man holding a small house doing sums on a calculator

Do you want a marriage or mortgage with your co-founder?

founder experience risk Feb 01, 2022

Boris Johnson is in trouble. Only weeks after all the talk was about his reign extending for another decade, it has changed to the question of when, rather than if, he will be made to surrender his political crown. After a disastrous series of gaffes in which he managed to be in favour of sleaze, cancel Northern rail dreams and lecture business leaders on the merits of Peppa Pig world, over a dozen Conservative MPs requested a leadership challenge. This won’t materialise yet, but the clock is ticking. As one commentator acerbically said: ‘politically he is little more than a tooth kept in place by a few last strands of bleeding gum.’

This should not be a surprise to anyone. Boris’s competence was never his appeal. The only way he could survive in government was to surround himself with more capable operators. Fearing challenge, he took the opposite course, constructing not a team of rivals. but a team of ciphers. So he will sow what he reaped. There are, though, some surprises here. Firstly, the speed with which he has lost his political pixie dust. Once he could not be seen to do wrong, even when he tried very hard to do so, like asking Tory donors to pay for the redecoration of his flat. Now he can’t even announce £100bn of rail investment without it being seen as a disaster. Conservative MPs knew he had foibles, but they can only be forgiven if Boris is a certain winner. The latest polls suggest he might lose 70 seats at the next election. Don’t expect MPs in marginal seats to wait quietly for the axe to fall, especially since only 54 letters are needed to trigger a leadership challenge.

Moreover, Conservative MPs have now come to realise that Boris isn’t really a conservative at all. His enthusiastic adoption of traditionally Labour policies (higher taxation, levelling-up, massive increases in the public sector, government intervention into pretty much everything) has alarmed the party he leads. At its core it believes in none of these things and stands opposed to them. Boris’ entire political strategy is to eliminate Labour by becoming Labour, which must be demoralising for MPs and their constituents yearning to be anti-Labour. No one knew Boris stood for these things because the only issue that seemed to matter was Brexit. Now they know, the marriage of convenience looks strained.

There is a clear lesson here for co-founders: you need to make sure you are fully aligned to your core constituency. That they have your back through thick and thin and they won’t be sending letters demanding a leadership challenge. Who is that core constituency? It isn’t your employees, or even your leadership team. It is your fellow founder(s). Together you form a partnership that provides the core intellectual and leadership capital your business requires as it attempts to achieve the impossible. If your partnership performs then it is more likely your business will. If it doesn’t, then you have no chance at all.

No one expects co-founder partnerships to fail. But it happens. Tony Blair certainly didn’t plan on a decade of internecine warfare when he appointed Gordon Brown as his Chancellor. According to Stephenson Law, nearly 35% of co-founders leave at some point, usually two years after a funding round. A survey of 3,000 UK businesses found that 43% founders had bought out co-founders. 73% said they would never have a co-founder again and 81% said they would only do so with someone they knew well.

This is insightful: co-founders potentially don’t know each other well enough. Cofounder partnerships are often described as marriages. They are, after all, easy to create and, if necessary, easy to dissolve, providing you have the equivalent of a pre-nuptial in place (i.e. share vesting in a shareholders agreement). The current UK divorce rate is 42%, almost identical to the number of founder break-ups.

So perhaps the answer to stronger co-founder partnerships lies in looking at what makes marriages endure? Traditional wisdom was that you first had to court so you had more chance to get to know your intended. There is definitely something in this, but it misses the biggest point: people change. This happens naturally as you age and encounter different experiences. This process is accelerated in start-ups that are effectively giant pressure cookers, full of stressful setbacks. Ask anyone who has been married over twenty years, and they will probably say that both they and their partner have changed. What matters is that they have changed in the same way. So rather than more up-front dating, you need more in-depth dating. This boils down to two things: ambitions and values.

What does your partner want to achieve in life? If this isn’t aligned to your agreed business goals, they are not the right founder for your enterprise. Wish them well but find someone better suited. If your ambitions are aligned, then you should look at values. 18% co-founder break-ups are down to values. You need to agree what these are in advance. You must know, trust and respect your co-founder. You have to believe in them as people, that they will act in a way you are comfortable with. You also need to extend this alignment to your commercial vision and purpose. 72% founder break-ups are down to a difference of opinion over the direction of the company. I bet most of this was not down to disagreements over how to achieve a particular goal, but what those goals should be. All these can be mapped out in advance.

But there is still a danger in treating co-founder partnerships like marriages. It’s not enough to find a friend with similar ambitions and values. Because ultimately, your friend may not be capable of growing as much as you do, or as much as the business needs them to. They may buckle under the pressure of having to overcome a constant stream of challenges. Especially if you take on funding and find yourselves dancing to a tune piped by external investors.

There is a good chance you can find this out in advance. The big question is not would you ‘marry’ your potential co-founder, but would you take out a mortgage with them? Mortgages are a great test. They are serious, onerous, long-term commitments. They are devoid of both fun and romance, and so easier to judge rationally. They are the point when most marriages get real, because they are also symbolic of commitment and deeply meaningful (we get a house!). Any marriage built on shallow foundations will be crushed by the pressure of a mortgage. The strongest will be galvanised. 

This is exactly how you should see your commitment to co-founders. Yes, there is excitement. Yes, there is passion. Yes, there is romance. But ten years of constant delivery lies ahead if you are to successfully repay your founding debts to each other. Are you up for it? Is your co-founder? Are you up for doing it together? The good news is the answer to these questions is yes, then the data is in your favour. 42% marriages fail but only around 3.5% mortgages do (either through serious delinquency or foreclosure). That suggests that they represent enough of a test to filter out the uncommitted and unsuited.

Conservative MPs were happy to marry Boris Johnson. How many would have agreed to contract a mortgage with him? If they had framed it in these terms they wouldn’t now be suffering buyer’s remorse. Boris may still have been the leader, but it would have been on different and much stricter terms, with the more active involvement of a trusted bank manager. Is your co-founding partnership based on marriage or a mortgage? The latter may be less romantic, but it is a better indicator of future success.


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