Tech Uncensored - An Altitude Accelerator Podcast

Hessie Jones

So this week on Tech Uncensored finding your ideal technical co-founder. Welcome everyone. Today, I'm Hessie Jones. And you are an entrepreneur. You have this amazing idea. It's going to change process. It's going to make things faster and easier for people and you want to make this idea come to life. So you need someone who can not only build it, but someone who's actually willing to become a significant member of your team to help the growth of this idea, and also the growth of your company for the long haul. So finding the right technical cofounder goes beyond the skills necessary to actually build the product. There are many other things to consider: the soft skills as well as expectations that need to be managed.

Hessie Jones

So finding the right person to help you lead in this amazing endeavor can actually be a daunting process. So how do you go about it? What are the things that you need to consider in qualifying your co-founder? How do you engage with the right one and manage their expectation? What does this new co-founder marriage look like to ensure that both of you are building a sustainable relationship as your company grows?

Hessie Jones

So today I'm privileged to be joined by Glenn Nishimura, who is Principal and Chief People Strategist at Nishimura Consulting here in Toronto. So Glenn has loads of experience. As an advisor, as a consultant and mentor, and he helps a lot of early growth stage and scale ups across North America, Asia and Europe to build, optimize their teams, their culture and people operations. So welcome Glenn. Thank you for coming today.

Glenn Nishimura

Thank you very much for having me. Nice to see you.

Hessie Jones

Nice to see you too. OK so let's start with the first scenario before you even start looking for a cofounder, you advise that as a person who began this company, you need to ask yourself some foundational questions to determine whether or not you're actually venturing down the right path at the right time. So let's expand on that a little bit.

Glenn Nishimura

I'll start by saying that you're right. Finding a co-founder that fit is as critical as finding product market fit. So it's really important that you approach this entire process as if you're looking for a life partner and not just a business partner, that's the best way to go about doing it. But before you begin that, it's really helpful to gain some clarity by asking yourself some foundational questions first. The first one being, do I even really need a co-founder? Obviously, there's no guarantee of success. There’s no promise that things will work out the more cofounders you have. There are stories of very successful solo entrepreneurs like Bezos and Zuckerberg, Sarah Blakely, Drew Houston… the list goes on. Very successful solo founders who've gone out to found unicorns and do very well by themselves. So think about whether you actually want to go solo or do this with someone in the first place. The second is are you ready to have one? Are you ready to pay someone? Are you ready to give up some equity in this venture? Are you ready to invest the time that's necessary to invest in building this partnership?

Glenn Nishimura

And then lastly, are you actually looking for a cofounder or is a non-founding chief technology officer, perhaps what you're looking for? They don't always have to be a founder. Or maybe you're actually looking for an employee or an independent contractor who's a senior level engineer or developer. All of those things you need to get in thinking about first before you start going down the road of looking for an actual co-founder. In fact I would probably expand on some of those questions and I would highly, highly recommend that people start developing a questionnaire. Develop a questionnaire with a list of questions to ask potential candidates from the very start. Include your own answers to those questions so that the other person can see your responses as well. This will cast a wide net, but it will hopefully catch some red flags. So that you don't waste a lot of time pursuing people who clearly aren't a good fit.

Glenn Nishimura

Here's a couple of examples of questions that you can include. Do you find it easy to trust people? Right? Second one. What personality traits do you find are really annoying in people, and what personality traits do you find annoying in yourself? These types of questions in a questionnaire will be great to get an initial bird's eye view of of a person and their personality. And then you can decide whether or not you want to continue with coffees and in person meetings etc. But I would highly recommend developing a questionnaire first. That will pay some dividends down the road.

Hessie Jones

So let's look at this from the perspective of the candidate that you want to fill this technical co-founder role or CTO as you say could be the option. As we know especially in this market, technical skills and developers are very much in high demand. So they're count-compensated really well. So where would you find some of these CTO like roles? especially ones that may be more open to entrepreneurial opportunities.

Glenn Nishimura

Well, there are numerous sources and routes that you can take to try and find someone. In fact, I think on the Altitude site there's an article that talks about a whole list of them. Some of them include industry events, of which there are many in big cities. Co-founder dating sites. Those are probably the two most popular ways to go about doing it. One thing I'll say, however about the co-founder dating sites, you should be very aware that not all of these co-founder dating sites put in the same amount of due diligence and qualification before they bring people onto the platform. So some of them go into a lot of detail, some of them don't go into much detail at all. So just be aware of that. The quality may vary from platform to platform. You can also think back to your university days. You can think about your own circle of friends right now. Think about any past work colleagues. You can also try sites like Reddit and LinkedIn. My best advice here Hessie around this is don't rush it. Don't force it. I would much rather see a founder go solo rather than rush into bringing on the wrong co-founder and then causing more problems for themselves down the road.

Hessie Jones

I agree with that. I'm actually part of a bunch of tech slack channels where everybody talks to each other. But there's a lot of trust that's built in those channels and from my perspective, instead of going in cold trying to find a co-founder actually go to people that you trust and let them know that you're looking. It could be a DM as opposed to an open call and invitation on slack. So I agree with that.

Hessie Jones

So let's assume so these. So you found some potential candidates. They're in a really good position right now, and it may be hard to actually move them away. They may not necessarily be willing to take the risk but you really like what they're doing and what they can bring to the table. So how do you attract them?

Glenn Nishimura

So I think it's important to remember that attraction, it means different things to different people. Right? Some people are attracted to the money alone. Some people are going to be attracted to the product and how it's going to change the world. Other people are going to simply want new challenges because they're bored and they're just looking for ways to grow their own skill sets. So I think it's important to understand what everybody's individual motivations are and then speak honestly about what you can potentially offer to them. In fact, I would probably include these in the questionnaire right up front to gain a better understanding. If you have a pitch deck that you use, or you're going to use down the road for investors, you can take some cues from that, especially when it comes to the problems that you're trying to solve and the size of your total addressable market. Those two factors are very, very attractive and intriguing to people.

Glenn Nishimura

But I will say, however, if you're an early-stage startup in particular, you may have to face the fact that you can't offer anything that people don't already have. Right? And that's fine. I would just move on and try and find someone else. I have seen many people make all sorts of false promises to try and lure someone out of a stable job. Please don't do that. It will end in disaster. It never ends well. And one other thing I'll say about this as well is please don't bring on someone who's clearly looking to get out of a bad situation. Those are your worst hires, and those two never end very.

Hessie Jones

OK, perfect. So this is one area I want to spend some time on. You emphasize the importance of a 360-needs assessment. So it's criteria that establishes traits not only about your potential co-founder, but also between both of you. So let's talk about this approach a little bit.

Glenn Nishimura

So again, focusing on someone’s skills and experience and building products in specific programming languages or environments or tools like Ruby or AWS or Java. That's fine if you're hiring a temp to work on a small project, but it's not comprehensive enough or deep enough, if you're looking for a technical co-founder. So two points I want to mention here. Number one, you should be looking for people who are what we call T-shaped, meaning they're very deep in one area, in this case, their technical skills, but at the same time they also have some cross functional knowledge and capabilities in other complementary areas. Say for example budgeting and fundraising. Or some degree of business acumen. Maybe some client relationship abilities. Those will be your best candidates to look at. I also talk a lot about the three H’s: head, heart and hands. Thinking, feeling and doing, in other words. We spend too much time emphasizing on the hands and the doing part, the skills, the experience, the languages that you bring to the table. But equally important are how people think and how people feel. And this is where, 360 degrees, you need to look at people in three dimensions. So the head you need to think about how curious they are. How are their critical thinking skills, their reasoning skills? How can they solve challenging problems, and how are their tolerance to risk? Do they have attention to detail, for example? Those are also important things to consider. On the feeling or the heart side: their emotional intelligence. Do they display empathy, kindness, compassion, integrity? What sort of things motivate them?

Glenn Nishimura

If you can look at an individual from those 3 perspectives, you will have a much better idea of whether or not this relationship will work or not? So if you do a comprehensive analysis like this, it's not only going to ensure that they can actually handle doing the technical work, but they also understand all the other pieces that are involved in building a successful business and a successful relationship.

Hessie Jones

OK, that's cool. Because ultimately you as a Co-founder… let's assume that you actually have an established or you have an idea of what your culture is going to be like. You were talking about the heart and the head and how they actually nurture employees through this process has to be aligned with how you want your culture to function.

Glenn Nishimura

Ideally, you know, down the road in addition to your co-founder, you're going to be hiring a core team, right? And then other employees after that and other employees after that. How you hire this co-founder will start to set the stage for the culture that you're ultimately building for your entire team down the road. So it's important that you start thinking about your values and whether or not your Co-founder shares them, whether they share the same vision as you do. This is really laying the foundation for building out your entire company.

Hessie Jones

OK. So you also say like within this process, 360 means also flipping the switch and looking at yourself and establishing your fit as a person with the new individual coming in. And so this phase requires I assume a lot of introspection.

Glenn Nishimura

It does. It does.

Hessie Jones

So tell me more about that.

Glenn Nishimura

Yeah, and it's not easy work to do because 99% of the time, we tend to frame a search like this with us at the center, right? I'm looking for a co-founder for me, who would be a good fit for me, who is compatible with my personality. But a co-founder relationship is a peer relationship. It's a two-way street, so it's important that you look objectively at yourself with the same discerning eye that you would apply to somebody else. So you have to ask yourself, would I be a good Co-founder to them? Am I compatible with their personality and where do I potentially fall short in that regard? So if you can take an honest, selfless look at yourself, that is the first step to building a strong co-founder relationship that's going to last.

Hessie Jones

There's a I think you and I spoke about this before, but I had a talk with an investor and he was saying that he had gone down the path of actually merging his company with another gentleman. And they were ready to sign the deal. But before they did that, he took him aside and he asked him, “maybe we should just answer 3 questions amongst each other. So what do we want the company to be in the next five years? What do you personally want to get out of this? And and thirdly, what are your expectations in terms of what you like to do?”

Hessie Jones

And so understanding, I guess your each individual motivations from those 3 perspectives will determine the likelihood whether or not this thing is going to work.

Glenn Nishimura

So I'm glad that they reached that point. It unfortunately happened a little bit too late, but at least it happened. But initially you want to have those discussions very, very early on in a questionnaire or initial phone conversation or something. Unless there's alignment in those areas, nothing else is going to work.

Hessie Jones

OK, so let's talk about compensation, because this is always or potentially the pivotal discussion. It establishes whether or not you know this is going to be also the type of role that that is employee CTO versus a true Co-founder. How should you approach compensation in your discussion and what should you really know about the potential cofounder beforehand?

Glenn Nishimura

And I'm very glad we're talking about comp because unfortunately, it's one of the very first conversations that people have with a potential co-founder. They start talking about comp. They start talking about equity splits etc. But my advice is to not lead off with the comp discussion. Most often it's very easy to say, hey, there's two of us. So why don't we split everything equally down the middle 50/50? Simple, simple! Maybe that's where you're going to land in the end, but it's really important to talk about some other things first, in order to figure out whether or not that 50/50 split makes the most sense for both of you. You need context and you need perspective before you start talking about compensation.

Glenn Nishimura

And one other thing I'll mention too, from a definition perspective, is compensation is not just pay. Pay is a subset of compensation. Compensation also includes perks like taking time off, for example, or having a flexible schedule, health benefits etc. Those are all part of the compensation bucket. And again, when we talk about motivations, we need to understand what compensation means to you. Maybe you're not doing it for the money. Maybe you want a flexible schedule. So it means different things to different people. So as part of your screening process, I would recommend asking your potential co-founder what their personal burn rate is. It's going to get a little bit personal here. How much money at minimum do you need in order to survive?

Glenn Nishimura

Notice we're not asking them “how much do you want to get paid?” We're asking them “how much at minimum, do you need to survive?” Because you do want someone who shares the same appreciation as you do for running lean and extending your runway. So it's important to have that conversation about how much money they actually need. As part of that comp conversation too, you should also talk about the time commitments that they're going to be able to handle, how much workload they can take on, where they are in their lives. Are they single with no commitments whatsoever and can they dedicate 100% of their time to this? Maybe they'll have a young family with twins and a dog. And they like to travel six months out of the year. That's going to impact how much they can take on and ultimately how much they'll get paid.

Glenn Nishimura

Are they an empty nester? And again, they will have all the free time in the world. What other commitments or side hustles are you currently involved in that could limit your capacity? These are really important conversations to have around compensation and they inform the compensation discussion. And I know it sounds like an invasion of privacy to ask somebody like basically “what is your family income and what your expenses and what is your discretionary income like?” etc. But you need this level of understanding and transparency at the very beginning and not get blindsided by it later on down the road. Because what ends up happening is resentment starts to build in the relationship. And ultimately one co-founder will start saying in themselves, “this guy's not working nearly as hard as I am” or “they're not worth the amount of money that I'm paying him.” You don't want to start thinking that. So it's important to get this stuff up front. One other thing I'll say about compensation, no matter where you land in terms of equity or salary or a combination of the two. Get a written agreement. If you don't believe in written agreements, all you need to do is look up Robin Chase and Zipcar and find out the hell that she went through with her co-founder. That will change your mind very quickly about that. So strongly recommend a written agreement. Put in a vesting schedule with a one-year Cliff. If you are going to be talking about equity, if you're talking about base equity, base it on the amount and the value of the work that's being done, not potentially any money that that co-founder is bringing into the company. It should always be based on the work itself.

Hessie Jones

OK. Can I ask based on your experience, I'm just going to throw something in here. Cofounders, typically the ones that work out and for the most part, are they at the same life stage or should they be at the same life stage?

Glenn Nishimura

Most of the successful ones that I've seen, yes, they are very much in the same life as opposed to someone who's been in business 25 years versus a new grad, for example. That might be too much of a delta to try and bridge. But yes generally speaking, the ones that I've seen, they've all been at the same stage. Different personalities though interestingly. I can think of one co-founder team that I know of. One of them was a very gregarious, very mercurial personality. The other one is very quiet, very intellectual, like polar opposites. But the reason why they got along was because there was mutual respect. And the more senior cofounder wanted to basically impart his knowledge and his experience on the younger one. So it took on a mentoring relationship. In fact every month he would take time out to basically teach this other guy the tools of the trade. Let me tell you about the mistakes that I made when I started my first business. That’s invaluable stuff that you can't get anywhere else, but they made a deliberate arrangement to have these mentoring sessions, and that's what built a very, very strong relationship. They were strong friends.

Hessie Jones

That's interesting because that also builds legacy at the same time, right?

Glenn Nishimura

But you have to be in that right frame and do it deliberately and set aside time for it.

Hessie Jones

So I actually have a few friends that have founded a few companies. They've evolved their relation to the point where they now say we can complete each other's sentences, but it wasn't always that way. I think as a lot of cofounders and a lot of people that go into business with other people realize that the honeymoon period doesn't last very long. And they went on to have many, many uncomfortable conversations to the point that one was almost willing to walk away a few times. So your prescription is to hire for the bad days. Tell me more about that.

Glenn Nishimura

So when everything is going smoothly, everyone is a good cofounder, right? Everyone's a good employee. Everyone’s a good spouse. But there's going to be bad days. There's going to be disappointments. There are going to be difficult decisions that are not always black and white to make, and they could potentially have big repercussions as well. It's going to be inevitable. So having the confidence that having a co-founder near you who shares the same optimism as you, the same temperament as you, the same values as you, that is going to help you to get through the tough times because what you don't want is a co-founder and a situation where those days are compounded by sleepless nights. Where you know that your cofounder is going to blame everybody else for what went wrong, or they're going to start throwing things, or they're going to threaten to quit again. If you can identify those bad habits or those bad behaviors during your quote-on-quote “dating period”, you'll be much better prepared. So anticipate that they will happen and get a sense of how they will react in those bad situations. I also recommend having a written code of conduct or some sort of social agreement between the co-founders. Both of you should work on it. Both of you should sign it. That will also help to keep the relationship from going off the rails.

Hessie Jones

You also talk about your life partner. What is their role in the process of you actually finding your co-founder?

Glenn Nishimura

Again, another lens to look at people through. We can sometimes impart our own biases when we see people and particularly if we're looking for a co-founder in this case. If you can bring in someone who's close to you, it can be a life partner, it can be a spouse, it can be a sibling, someone who knows you really well and knows what a good partner would be for you. You could bring those people into the conversation. A little bit later on, but maybe as you go off for dinner and I would recommend that the other person do the same as well. Have a dinner of four people, for example.

Glenn Nishimura

But set the expectation that you might be going into business together, but I would like you to have a look at our dynamic. Tell me whether or not you see any red flags or any concerns around this person's personality or temperament versus the type of person I am. It's just an extra lens and an extra opinion to see people through. And they might concur with you that yes, this is going to be a good fit. Maybe somebody will say I have some concerns. Let's think about this before you sign on the dotted line.

Hessie Jones

So let's get into some of the common mistakes that founders make when they venture down this path. Can you talk about a few?

Glenn Nishimura

Yeah, I would say misalignment is a big one and particularly when it comes to two things: vision and values.

Glenn Nishimura

So let’s say your vision for the company is you want to bootstrap it. You want to grow organically. You want to stay private. But your co-founder, on the other hand, wants to take outside money as quickly as possible, and they want to cash out as soon as the first liquidity event happens. Or let's say that you see the business model for your startup being direct to consumer. But your co-founder thinks that going wholesale would be the better route. You know, these are differences in opinion. They are misalignments, but they're not irreconcilable. But it's better to have all of this stuff agreed upon and be on the same page from the very beginning as opposed to having it surprise you and be blindsided by it later on.

Glenn Nishimura

The second misalignment, and probably the most dangerous and the most insidious, is a misalignment in values and I'll give you an example of this. There was a company I've worked with a few years ago where there was one male employee who would habitually make sexually suggestive remarks toward two of his work colleagues. So he got hauled in in front of the co-founders a couple of times, told obviously “this is not acceptable. You're making people feel uncomfortable. It goes against our values. Change.” This person did not change! It was very clear that this was hard wired into this person's character, and they would continue to do it. One co-founder said, “there's no way we can keep this guy on. It's making everybody uncomfortable. It's going to give us a bad rep. We should let this guy go.” The other co-founder on the other hand, said, “we're not going to let him go. Like it's just locker talk. It's not a big deal. Besides, he's a really big contributor to the company and we need him to finish off this project. We should keep him.” That is not a conversation that you should be having. There should not be that kind of a misalignment in values. It should be very, very clear what you need to do. But the fact that these two are on completely different pages and the fact they were in completely different books, if not completely different libraries, in terms of how to approach this, it was really surprising that this other person would actually even think for a moment that it was OK to keep this person on. But that's what can happen.

Glenn Nishimura

That's why you need to get an idea at the beginning about whether there's a value alignment or a value misalignment because this type of situation will happen and you want to ensure that both of you are are thinking the same way. Another mistake that's often made is what we call duplication bias. And this happens a lot when you look at somebody's resume. You look at someone’s past experiences and past successes and you assume that they'll be able to duplicate that performance at your company. But again, no guarantees, and there's way too many variables. So let's say that your potential technical co-founder grew the subscription startup from 0 to 50K in MRR in 18 months. That sounds great. Are they going to be able to do the same for your company? Maybe. But probably not. Why? A completely different economic environment right now. It's a completely different team of people, different tools, different culture, different processes, different systems, different everything, perhaps. And all of that I'm sure, was a factor in how successful this person was. So it may not entirely have been him. It may have been all the other variables as well. So don't assume that past performance will equal future success. It applies to mutual funds and financial investments, and the same thing with people as well.

Hessie Jones

OK, I think there's one more about stage fit, especially if you're recruiting somebody that came from, let's say, a Series A funded company and they're going to start early stages. Tell me the ramifications of hiring somebody from that age.

Glenn Nishimura

Again, we can get caught up in what we call shiny candidate syndrome. We're impressed by people when they're well spoken, articulate, they dress well. We tend to like them more and then same thing applies. And again, when we look at someone’s resume, we see a big name, a big company, big projects, lots of successes, under budget, beat project timelines, all those things. Those are things we want to hear? And we're swayed by them, unfortunately. But we never think “are they going to be able to replicate this situation for me?” What often happens is someone who does those types of projects and has worked at a big company like that, they're not a good fit for a smaller stage startup that’s still getting their processes together. They don't have the same tools, they don't have the same resources, the same size of team. And so they may get bored, or they actually might find it quite difficult. So you have to think to yourself that whether or not that that type of success is replicable in your company or not.

Glenn Nishimura

It's a good place to start. But I certainly wouldn't hire someone based purely on the fact that they worked on these big projects at these big companies.

Hessie Jones

OK. So let's assume that you have chosen your co-founder. Everything is humming along Hunky Dory and then two years down the road, you start to realize that like he's doing some things that annoy you and you've had the discussions. There are things that like over time, you're getting these signals that things just aren't working anymore. What do you do?

Glenn Nishimura

I grew up in Japan and one piece of advice that I remember my grandfather gave me was that you can't carve rotted wood. And it's a striking idiom because it reminds you that sometimes something is so far gone, it's beyond repair. Maybe it's a person's character. Maybe it's the dynamics of this co-founding relationship, but the point is spending any more time or effort on it would be fruitless. So just move on. The important thing here I think is to not immediately start looking for another co-founder to fill the void. I think a lot of people would tend to do that. You need to take the time you need to pause, do some reflective work, do a little post-mortem on the. You have to understand what went wrong. Were there danger signs that started to appear? Did I see them? Did I do anything about them? Did I try to address them or did I ignore them? Take those learnings and help to improve your search for another co-founder again. Otherwise, you're going to be repeating potentially the same mistakes all over again.

Hessie Jones

So we have one last question and this is just going to be more of a recap. So from your perspective the things that we need to consider, social agreement. Right? Making sure that you're hiring for a life partner and everything that, comes along with that, making sure you're as much of a fit with them as they are with you.

Glenn Nishimura

Very much so.

Hessie Jones

Hiring for bad days. What else did I miss?

Glenn Nishimura

Again, I would take a very structured and filtered approach with this. So don't just start having random lunches with people or random zoom calls with people. Do that questionnaire first. Cast a wide net, see what the responses are to those, and then take a subset of those and then start having some phone conversations or whatever with them. Time is valuable here and going out for lunch is really expensive. So I would keep that toward the ones on your short list, but make it a filtered approach. Start with that questionnaire first, then start having some some phone conversations or zoom calls. Then from a subset of those, start meeting them in person. Maybe do an audition, maybe work on a small project or something and see what they're like to actually work on a project with. Then towards the end bring in your spouse, bring in your life partner, bring in your siblings, just as a just as a final seal of approval.

Hessie Jones

That sounds great.

Glenn Nishimura

And seeing lots of people. This is like buying a house. You get more perspective. The more houses that you see, right? So don't make a decision after the second person or the third person. See lots of them before you decide. See them all in parallel. That way you have a fresh idea in your mind.

Hessie Jones

Perfect. Thank you, Glenn.

Glenn Nishimura

My pleasure. Thank you.

Hessie Jones

So that's all that we have time for today and I want to thank Glenn so much for taking the time to share your wisdom with us. If you in our audience have any ideas for topics that you want us to cover, please e-mail us at communications@altitudeaccelerate.ca. We are currently accepting applications for both our investor readiness and incubator program, so please go to our website altitudeaccelerator.ca for more details. This is tech uncensored. I'm Hessie Jones and we will see you next week. Until then, have fun and stay safe.