Finding a Co-Founder | How to Find The Perfect Partner & Split Equity Fairly

About this video

Dan Martell uses his advisee Marcel’s search for a technical co-founder for his company Parakito — eventually recruiting Ben as co-founder and CTO after months of work — to outline how to find a co-founder and split equity fairly. His five steps are: find a shared problem, looking among open-source contributors, Product Hunt builders, forums, and developers at competitor companies who already feel the problem; meet face to face or on video to build trust, seek advice first, and start with a small collaboration rather than cold email; quantify commitment in time and money upfront, noting that after-tax cash is worth more than in-kind hours and recommending Mike Moyer’s book Slicing Pie; make it long-term with vesting, typically a four-year vest with a one-year cliff, so equity is earned over time; and avoid fails by testing alignment on skills, drive, and temperament, since a mismatch in any of the three creates resentment or leadership problems as the team grows.

Key takeaways

• Look for a co-founder who shares the problem — e.g. developers on open-source projects, Product Hunt, or at competitor companies in the same domain
• Build trust face to face or on video, lead by seeking advice, and test the relationship on a small project before committing
• Quantify each founder’s time and money commitment upfront to avoid misaligned expectations, using the approach in Slicing Pie by Mike Moyer
• Use vesting — Martell cites the typical four-year vesting with a one-year cliff — so equity is earned and does not leave with someone who departs early
• Screen for alignment on skills, drive, and temperament; a co-founder who cannot or will not lead a team will cause friction as the company scales

Episode details: published December 14, 2020 · 11:46 long. Summary written by Self Growth Videos from the episode itself. Business results and any income figures mentioned are Dan Martell’s own claims, shared for education — they are not typical or guaranteed.

← Previous: Angel Investors VS Venture Capitalists - Which One Is Right For You? · Next: Investing in 250+ SaaS Startups with Marvin Liao, Partner @ 500 Startups - Escape Velocity Show #43 →

All Dan Martell videos · Dan Martell profile · Dan Martell (official site)