What Makes a Founder?

Founders aren't young geniuses with perfect ideas. They're usually older, have failed before, and argue a lot with their co-founders.

This post is primarily based on notes I took from the first chapter of The Unicorn's Shadow by Ethan Mollick.

Being a younger founder

Paul Graham, co-founder of Y Combinator said that "the cutoff in investors' heads is 32, After 32, they start to be a little skeptical". And It seems that most people expect founders to be young. Since they're more in touch with new and emerging markets, and are quicker to catch on. Plus, younger entrepreneurs are more likely to take risks and come up with innovative ideas that would seem "impossible" or "ridiculous" to older founders.

Ethan Mollick, the writer of The Unicorn's Shadow, mentioned research that presents a different perspective: U.S. Census data shows that the average age of successful founders is 42. But on a personal note, I believe this number is dramatically decreasing over the years, globally, and locally in the kingdom.

The "it" startup

There's belief that there's a common personality type for founders. But across hundreds of studies, the impact of personality is relatively small. This doesn't mean that personality doesn't have an impact on startups, rather, it means that we can't predict which type of person is going to be a founder.

Venture Capitalists also struggle to predict which startups are going to skyrocket based on personality, but they can predict which founders are likely to start a company—overconfident individuals. Overconfidence doesn't have an impact on success, but, similar to being a writer or a musician, entrepreneurship is a risky path which attracts people who often think (rightly or wrongly) they are better than everyone else.

Are Co-Founders important?

Graham emphasizes the importance of having a co-founder as the very first point in his essay 'The 18 Mistakes That Kill Startups'. While having a co-founder can help share the workload, it can also lead to conflicts that might result in the startup’s failure.

A study discovered that co-founding with a complete stranger is generally catastrophic. While a second finding shows that starting companies with friends can be as bad as founding with strangers! Ultimately, starting with someone who you never worked with will create all kinds of problems. Instead, the most successful founders started with people whom they had previous experience with.

Although, starting with family has its own problems, some data suggested that it can be the most successful team relationship, and also have the highest survival rates.

Figuring out your founding team

When you have a team, as opposed to starting alone, you will need to put extra efforts in order to succeed: deciding on which person does what, what role they take, what the goal of the team is, how to give feedback and handle disagreements all are better to be figured out before too much commitment both in money and time. But the most critical and trickiest one is dividing equity. And if seen by any team member to be unfair, it will lead to long-term conflicts.

When you make that decision, it might seem like splitting the equity evenly makes sense. But remember that dividing equity shouldn't only based on what happened so far, but also about your future plans, or what could happen.

You can think of the Johari window model, which is often summarized by Donald Rumsfeld's quote: "There are known knowns, things we know that we know; and there are known unknowns, things that we know we don't know. But there are also unknown unknowns, things we do not know we don't know."

In startups:

• Known knowns are considered facts, and can be easily managed.
• Known unknowns: We know that founders may decide to leave for a job, we know that founders need to raise funds but when or from where is unknown. Since these are likely to happen, we can use contracts such as vesting, which simply means that you have to earn your equity stake over time. It ensures that founders continue contributing in the future, rather than being rewarded only for their initial work.
• Unknown unknowns: These can't be handled by contracts but only by trust, discussions and negotiation.