Co-founder conflicts are a major cause of closures of businesses in India.
The author lists out a checklist to follow to avoid conflicts between cofounders.
"Abhi To Film Baki Hai Mere Yaar!," Tarun, a flamboyant budding entrepreneur, had posted this Bollywood quote on his Facebook page after his food-tech startup received “fantastic response” from cinemagoers in Hyderabad theatres.
This food-tech was “enhancing moviegoers experience” by taking orders for drinks and snacks, over its mobile app, and delivering them at customers’ seats while they enjoyed a movie. On the day of its launch, DineSmart serviced "over 300 orders at the Asian Cinema multiplex in Hyderabad.”
Within a week of its launch, DineSmart saw revenues grow with each passing day.
The startup was addressing “a major pain point experienced by all moviegoers --how to get their favourite drinks and snacks while watching a movie”, says Tarun Aellaboina founder and CEO of DineSmart.
In the following six weeks, DineSmart’s revenues were touching nearly four lakhs though it was still not making a profit.
However, given initial traction, wherein DineSmart registered 3000 customers with 40 percent retention, Tarun was confident that his startup was on track to create a unique user experience that he could expand to other industries such as hotels and restaurants.
At around the same time, on the other side of the twin cities of Hyderabad and Secunderabad; Rahul a 1st-year IIIT student along with his six engineering classmates was busy rolling a signature style sandwich startup called ‘Wich Please’
In a short time, the freshly toasted sandwiches with unique flavours were being served at most startup events within the twin city.
In less than two years, since its launch in 2013, the startup went on to open four outlets.
‘Wich Please’ started clocking up sales to the tune of eight to ten lakhs per month with a "decent double-digit margin."
The start-up had a potential to grow at 10X, says Rahul Sachdev, Founder and CEO of Wich Please.
Both the budding entrepreneurs were surfing forward with confidence having spotted and climbed the right wave.
However, they weren't prepared for their surfing board to break - in the form of their co-founders.
Both Rahul and Tarun were facing conflicts within their respective companies.
Eventually due to disputes between co-founders both the startups suffered – DineSmart came to a grinding halt with Tarun left alone to take it forward, and Rahul had to step away from the day-to-day management of Wich Please to ensure “it was alive” even at the cost of experiencing stagnation in growth.
There could be multiple reasons why co-founders fall apart during an entrepreneurial journey.
However, there are ways to minimize the possibility of a fallout by doing a few simple things before starting on a journey.For the benefit of budding entrepreneurs, both Rahul and Tarun helped me in listing out five things to check before onboarding co-founders;
- Vision: It is critical that co-founders are aligned towards a shared vision and invest all their energies towards achieving their defined goal.
Rahul explains, “Imagine all co-founders tied to a rope and everybody is running in different directions- so you are not leading anywhere, and you are just wasting energy. It is very important you are running in the same direction when you are so closely tied.”
According to Rahul, Wich Please team should have defined its vision for next five to ten years before rolling out the startup as that would have prevented many of the pitfalls that the startups experienced since its launch.
2. Commitment: Ask your potential co-founder “can you give a personal commitment for next ten years.
Are you committed enough to put in seven to ten years that is required to take the company to its destination,” advises Tarun.
Cofounder’s "personal commitment" comes handy when startups go through difficult time explains Tarun, he further adds, when a startup "is grounded co-founders support matters.”
3. Long term and short term expectation: Before embarking on a long entrepreneurial journey- it is must that you are aware of the long term and short term expectations of your cofounders especially from the day one.
Rahul explains some people may join your startup to gain experience, make money or for passion- let that be known to all in the team.
Tarun further adds, some people are into it for the glamour of being part of a startup- “nothing wrong with it but at least say so.”
This way the core founding team comprises of people who are in it for a long haul and are ready to rough out the ups and downs during a startup's lifecycle, according to Tarun.
4. Personal Life Challenges: Rahul explains, on any given day, budding entrepreneurs spend more time with each other than they might with their life partner or family members- so it is important to know each other’s personal life and challenges.
It becomes even more critical for a bootstrapped startup. “Find out who all have a say on your co-founder’s decision maker ability – is it his family or friends,” explains Tarun. Are there any family restriction and or commitments?
Both Rahul and Tarun, agree that personal life challenges have the potential to completely disturb the equation among co-founder and the future of a startup.
5. Roles & Responsibilities: Have defined roles and responsibilities, so there is no ambiguity on who does what as this helps in keeping everybody to their task, says Rahul.
Both entrepreneurs agree, most disputes begin when roles and responsibilities aren't defined.
Budding entrepreneurs searching for a co-founder should look at the personality traits in addition to core competencies and skills of their fellow entrepreneur.(The author is founder-CEO of Hyderabad based AskMentor, a platform for startups. Views expressed are personal)