3 Things You Must Do to Build High-Performing Founder Teams

1. WRITE OUT AN OPERATING AGREEMENT

Too many handshake deals lead to early startup divorce.

  1. “You are going to want to make sure you have a clear understanding around roles and responsibilities up front. Yes, it is critical [for] a co-founding team [to] collaborate and… create an open and shared culture amongst themselves but… too many startups make the mistake of thinking that every decision has to be made collectively and every founder has control over every decision. That will inevitably create confusion and frustration. [Y]ou should [instead] strive to establish… a functional management system that enables each of the co-founders to have clear responsibilities and reporting obligations.”
  2. “[I]t is imperative that you nail down how you will split up the equity between the founder team upfront to make sure there are no misunderstandings or hurt feelings once things get off the ground… You may have to tell your co-founders they are not your co-equal[s]. But it’s always better to have that conversation on day one [rather than] move forward with a new enterprise and then get stuck on [questioning] who owns what.”
  3. “When you and your co-founders being to iterate on an idea and… build a product or a platform, you are creating intellectual (IP)… [M]ake sure that whatever IP is being developed for your new enterprise belongs to the entity and not the individuals behind the development of the IP… [T]here are many forms available online that get this basic assignment accomplished. Do it on day one and don’t wait too long.”

Your operating agreement should include at a minimum:

  1. The basis for how decisions are to be made, reporting structures and mechanisms, and who gets final say on what
  2. How the team will move forward should a deadlock occur
  3. Equity splits, vesting, and changes in capital contributions
  4. An exit strategy should a startup founder want out (or another one is brought in)
  5. IP issues, who owns what, and what should happen should an ICO occur or acquisition
  6. A mission statement for why the partners are getting into business with one another
  7. Values that will ground the co-founder team (e.g., transparency, respect, perseverance, etc.)

2. COLLABORATIVELY DISAGREE WITH EACH OTHER

Founders will have moments where a decision has no clear black and white answer.

“[T]he emphasis [on partnership disputes] should be on achieving a win-win solution and on avoiding greed and vindictiveness. The plan is to optimize the gain for both [partners].”

Founders should learn how to have win-win disagreements known as Collaborative Disagreement that puts everyone’s cards on the table.

Use F.I.R.E. to transform the discussion and collaboratively disagree:

  1. F.irst Validate — create rapport by validating what was just said or acknowledging the other side respectfully.
  2. I.dentify the Issue — make sure the issue you’re fighting about is business-related and is not personalized (i.e., don’t name call or insult)
  3. R.eframe the Issue — take the bite out of the issue and use a business interest to showcase what is occurring because of the other side’s actions.
  4. E.nd with a Request — invite the side into a joint problem-solving process or dialogue.

“Discussing these issues with your co-founder could get uncomfortable, create rifts, or even uncover deal-breakers. If you are able to successfully have these difficult conversations, this is a testament to your partnership and to the strength of your relationship — and will serve as a solid foundation from which to grow your business.”

— David Ehrenberg

3. DEFINE ROLES EARLY-ON (AND PLAY TO YOUR STRENGTHS)

There are different types of leadership styles. Not every founder should be a top-down, take control and command type of leader. Or even the visionary type. Instead, founders should specify exactly what each person is responsible for.

“Building your team demands matching jobs to people’s strengths. That means giving people responsibilities according to skill level, not based on how close a friend they are, or how closely related they are to you, or whether you just like their sunny personality. That includes you as well — don’t give yourself an impressive title and job unless you’re right for the job.”

— Steven Robbins

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Bryant Galindo

Bryant Galindo

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I help founders and business leaders negotiate agreements and resolve disputes while improving communication on their team 🤝 More at www.collabshq.com