A number of times though, we've seen such partnerships not go through beyond a year or two due to rising cultural or ambition related differences between the two.
The importance of Term Sheets and Co-Founder Agreements notwithstanding, it's important that the two founders come on the same page in spirit for the benefit of the business.
Based on our experience, here are a few things that you must discuss with your co-founder when you think you've found the one.
1. Skills
a) List down your skills, achievements, and study each other's sincerely drafted work CVs
b) List out respective areas of strength - areas where you complement and/or differ from each other
c) Divide functions between yourselves in a way that you know how your functions are inter-connected, but who shall be in-charge of which function.
d) Answer to yourselves about if you genuinely feel your co-founder is amazing and you're excited to be working with them.
e) Do they like to do tasks that you dislike and vice-versa? Do they make up for your weaknesses?
2. Entrepreneurial Experience
a) Whether they have founded any venture in the past?
b) Have they been a part of an early team within an entrepreneurial venture that belonged to them or to someone else?
c) What happened of that venture? What is the sense of ownership that they have towards that venture and its results (success or failure, both)?
d) Are your independently made business plans with financial figures and timelines in sync? Can you both agree on a mutual philosophy and decide on one plan?
3. Commitment
a) Are they willing to give up on their current assignment or job for this venture?
b) If not, at which stage would they want to quit their job and work on the venture full time?
c) What is the bare minimum time commitment they can offer daily, weekly, fortnightly and monthly to the venture?
d) Are they willing to work on weekends, late nights, 6 or 7 days a week, etc?
e) Are they willing to work without pay for the next x months?
f) Do they have savings to last them x months without pay?
g) What happens when either person gets married or starts a family? Would that impact any of the decisions or answers here?
h) What should be the gestation period for this startup before it breaks even, starts revenue or raises rounds of funding?
i) If you had all the money and comforts in the world, would you still do this?
4. Determination
a) What was a tough time that they faced and how did they handle it in their life?
b) What if the start-up not achieve its short term goals in the next 3 months, 6 months, 12 months, 24 months?
c) Till when would they stand by the idea and when do they think it is okay to quit?
d) How do they handle stress? Do they behave differently when hungry or sleep deprived?
e) Are they willing to move locations because of work? When would they not?
5. Trust
a) Discuss a time when they think they did not keep their promise.
b) Have they ever been convicted of a felony, or a disciplinary action in their organization?
c) Can you trust them blindly to have your back?
d) What is their favorite hobby? can you enjoy each other's company engaging in such a hobby?
6. Ambitions
a) What is the ambition for the venture in the short term and long term?
b) How much wealth do they want to create? What kind of possessions do they want to own?
c) Which social circles do they want to identify with?
d) When do they think would be a good time to exit the business? In terms of business and financial goals and time commitment, both.
e) Would they be okay with you being the face of the organization in interviews and the press?
f) Are they motivated by celebrity entrepreneurs for fame and lifestyle?
7. Conflict Management
a) Is it easy for them to get angry?
b) How have you resolved a conflict before?
c) How well do they take criticism and constructive criticism?
d) Are they okay with a non-compete clause and the terms for it?
e) How and when do either of the founders get fired?
f) What red-flags do you see in each other? Discuss. In what ways are you willing to make efforts to make the other comfortable about such concerns?
8. Team Culture
a) What kind of people would they hire?
b) When would they fire people?
c) Will they be able to fire a friend?
d) What kind of remuneration and benefits do they expect for their team?
e) How will they communicate firing of people or pay cuts?
f) Are they trusting as a person?
g) What are their top 5 values?
h) Do they see employees as those who will work for the organization for 2-3 years or 5-7 years or longer?
9. Decision Making
a) Who will be the CEO or the ultimate one at the top? Who will be the COO, CTO or CFO?
b) Who will take decisions for which function?
c) Does the CEO have the veto power to reverse any decision of the other, if needed?
d) When can they step into your shoes and vice versa?
e) Do they take decisions themselves or always with a group? Are they dictatorial or collaborative?
f) Who is going to be the bank signatory and to what extent?
10. Capital and Equity
a) How much are they willing to invest in cash?
b) Do they have debt and personal expense commitments that wouldn't let them invest or give up on their fixed paying job?
c) Are both people investing the same amount in cash or different? Is the equity in line with it?
d) How do you value sweat equity in monetary terms?
e) How do you split the founder's equity between the two? How do you share profits?
f) Is the venture bootstrapped or VC funded?
g) Are both of you on the same page with respect to vesting of founder's equity?
h) How much dilution are both ready for at which stage and how much amount of funding?
11. Functional Division of Work
a) Who takes care of finance, accounting and compliance?
b) Who heads and controls marketing?
c) Who manages tech and product operations?
d) Who manages investor relations, the media and external stakeholders?
e) Who manages teams and human resources?
f) Who is in charge of IT controls, data confidentiality?
12. Networks
a) Do they have access to any media, VC networks, angel investors?
b) To what extent can they go and seek help from their networks and in which manner?
