Navigating Co-Founder Dynamics

Intro 00:01
Tim, welcome to Startup Success, the podcast for startup founders and investors. Here you’ll find stories of success from others in the trenches as they work to scale some of the fastest growing startups in the world. Stories that will help you in your own journey. Startup Success starts now.

Kate 00:17
Welcome to Startup Success. Today, I am in studio with Tim He who is the founder and CEO of Cherrytree. Welcome, Tim. It’s great to have you here. I’m excited to get into this topic, to set the stage. Can you give the listeners an overview of Cherrytree?

Tim He 00:39
Thank you. Thanks for having me.

Kate 00:17

Tim He 00:39
Sure, the context is a couple years ago, I co-founded a company with five co-founders, which, as you know, is a crazy journey. And so I’ve kind of seen the ups and downs of all different types of co-founder relationships. And then people started reaching out to me to get my advice and my thoughts on things. And so I started writing a newsletter, which is the bulk of what makes up Cherrytree. And once I started writing the newsletter, more people started reaching out to me for personalized advice. And so that’s how I got started, with private coaching for co founders as well. And so now the company as a whole is the free newsletter for more basic questions. Maybe you’re just getting started, and then one on one coaching, if you’re in a tricky situation or you need something a little bit more advanced than a 500 word email, excellent.

Kate 01:31
We have not covered, you know, in depth, kind of the co-founder dynamics on this show, and there’s a lot of information out there about it, and I’ve talked to investors. Some are like, there has to be a co-founder. There has to be two founders. And others are like, we they hate co founders. It sounds like you have direct experience with this. You know, as a part team of a founding, team of five. You said, or six? Yeah, five of us. Five of you. Okay, so there are five of you. Was the outcome successful? If you don’t mind me asking.

Tim He 02:07
So the business was not successful. COVID kind of took us out. We were in the real estate business, but the relationships, we are all still best friends. We all see each other whenever we can, over the holidays, and actually since then, a bunch of us have started other side projects here and there, or referred each other to different roles. And so it’s worked out in that regard, great.

Kate 02:28
Okay, well, that is good and it gave you a lot of fodder for your current role, exactly any other startup experience.

Tim He 02:36
I mean, there’s a ton I’ve been in all sorts of different industries, like coffee and AI and real estate with my own company and a different real estate company. So I’ve been a part of startups, either as, like an early member or starting my own, for nearly 10 years now. And so I love this space. It’s really exciting. But I’ve also done the big corporate, sort of global corporations, and that whole thing, I might prefer startups.

Kate 03:03
Yes, they’re pretty dynamic, yeah, okay, so let’s get started, like, at the beginning, if you are two founders and it’s the early days of a startup, like, what do you see? Like, is it important to have an agreement like, written out, is it okay just to trust each other? Like, what do you recommend?

Tim He 03:27
This is, well, we’re getting touchy right away, but that’s a good question. A lot of co-founders, myself included, of I’ve made this mistake before, too, and it’s like you, you and your best friend from high school are, you know, working on an app together. You trust each other. Your families know each other. You think there’s no point in like, making some like, legal stuff. You don’t have lawyers. What are you gonna do? Like, find an online template? It feels like it’s too much, right? It feels like you’re questioning the friendship and you’re questioning the trust. But really, it’s to protect it. There are a lot of things in a co-founder relationship that you can’t control. For example, God forbid, like one of you gets hit by a bus. Well, what happens then? That’s not your fault. You’re not screwing each other over, but you need to have these things in writing beforehand. And so when I tell my clients that, and when I tell them like, Well, what happens when you bring on investors and you want the best for each other? What happens when you hire early team members? All of these things have to be ironed out. And so I think a lot of times, the reaction against the founders agreement is disproportionately skewed towards the co-founders screwing each other over, but there’s so much more to it. And so for that reason, I think having an agreement, when you have a little bit of traction, when you’ve committed to building this company. When you’re just talking about an idea, maybe that’s premature, but when you’ve committed to building it, that’s a really good time to start looking at co-founders agreements and seeing how. You can get different things on paper.

Kate 05:01
Excellent. I think that’s important to note. I like how you use the example too of like childhood friends, their families know each other, and even they, like you said, can run into circumstances outside of their control that a founder agreement would help with. And we’ve all watched the startup movies you know that show how important those agreements are. So that brings me to my next question. You mentioned childhood friends. Have you found is it better to look for a co-founder of someone you’ve known in different type of setting, childhood, college, whatever, or two people that maybe were referred to each other from colleagues that don’t have a pre existing relationship.

Tim He 05:49
Yeah, it’s a very good question, but I think it’s the wrong question to ask.

Kate 05:54
Ooh, okay, good, tell me why.

Tim He 05:57
And so everybody says, Don’t be don’t go into business with your friends, or don’t do business with family, and everybody’s like, it’s just a lot cleaner if things go wrong. I think there’s two caveats. Number one, whether you have an existing friendship is not nearly as important as whether you can build a friendship as co-founders. I’ve seen friends become co-founders and stop being friends. I’ve also seen strangers become co-founders and then best friends. I’ve also seen friends become co-founders and become better friends. That was the case for me, and so it doesn’t really matter what the prior relationship is, as long as in the very early days, you can compress a lot of that context and relationship early on, it doesn’t work. Where you have two strangers, you start a company together, and you’re still kind of strangers, you’re kind of co-workers working on a project together that definitely doesn’t work. And so a lot of people are on the fence about starting a company with friends or family. I tell them, it’s kind of like Sky diving. People say, Don’t go skydiving. It’s very risky, you know, it’s it’s expensive, it’s risky. It could turn out very, very terribly. But when you get better at it, when you practice and you’re experienced, and you take the right steps and procedures, you make sure your safety is in place, your gear is in place, then it can be really fun and exhilarating, and it’s a really great experience. And people get licensed, and they do over 10,000 dives. They do it over and over, and that’s the only thing they want to do. And so that’s the analogy I like to give.

Kate 07:38
I like that analogy, and I like how you framed it. It’s more about not how you’ve started, but the relationship while you’re building the startup. So for those listening, what are some things they can do to build that rapport, build that strong relationship with their co-founder? Because people work on marriages, they work on relationships. I never people talk about working on the co founder relationship, but from what you just shared, I’m thinking they should be.

Tim He 08:12
Yeah, there’s a lot of similarities, actually, between working on friendships and marriages and co-founder relationships. Just because it’s a human relationship, a lot of times, people over complicate things because it’s a business or professional. And in a professional setting, we have different boundaries. We have different boundaries with your coworkers than you do with your friends. But I think being a co-founder kind of blurs those lines, and so you kind of want to lower your boundaries than being with a co-worker. I’ll give you an example with a regular co worker. I might, you know, we can still be friends and friendly, but I wouldn’t call them at 1am to rant about something that’s bothering me. I wouldn’t, you know, I wouldn’t tell them about my parents pissing me off or anything like that, right? That I would rent to a friend about, maybe I am having a tough situation with my partner. I would talk to my friends about those things. And I think with your co-founder, you have to slightly and slowly let them in on these types of things in your life. They don’t have to be super dramatic, like the examples like, they could just be like, I’m watching this new TV show recently, and maybe it’s not something that you think is super important or significant, but letting each other in on other parts of your lives, outside of the company, is really important for building context as to understanding how each other think, what types of food you like, where you grew up, what type of books or movies do you enjoy? Gives a really good paints a really good picture of who you are as a person. Sometimes we treat those facts as trivial as you know, boring, small talk that everybody brushes past. But these are things that your friends know about you, and they know that about you for a reason. And so if you are. Are co-founders with somebody, and you’re just starting out. Instead of only talking about work, 24/7, maybe just grab a coffee and or a beer or whatever, and go for a walk and just track talk about everything outside of work. That really brings people together.

Kate 10:15
I think that’s good advice, because it also helps with managing, you know, what? If you know what’s going on with each other, it helps you kind of manage what’s going on with the company, and you’re going to be spending so much time together, you kind of can have a pulse. Like, okay, they mentioned they’re going to be out of town at their, you know, parents, 50th wedding. And, like, right? You know, there’s a better dynamic there. There’s more things to build trust on. I guess it sounds like no. Are there areas that you caution co founders about? There

Tim He 10:53
are so many. I think I’ll give you a few unconventional ones that you know kind of defy what people expect because of these movies and these viral stories, we think that distrust is a big risk factor in early co founderships, but I don’t actually think that’s the case. Those are the stories that make the headlines, but most people aren’t going to, you know, screw over their co-founder. I think for most people, over-trusting is actually the issue. I think especially when you’re friends, it’s easy to trust that they understand you, trust that they are an expert in their field, trust that they know what’s best for the company, because you them want to, because they’re your friend. And I’m not saying don’t trust them or or, you know, be skeptical, but I think when you are so close, it’s easy to neglect a lot of conversations that should be had, because you trust that they understand you, they you trust that they have your best interest. You trust that they align with your vision or where you align with theirs, but a lot of times, small misconceptions and disagreements can bubble up over time and just lead to unnecessary headache, because it takes a lot more time to backtrack, especially when nobody’s at fault, nobody. There’s no malicious intent, there’s no sabotaging. There’s just two people with different opinions who trust each other because they are friends, and that sadly causing a lot of arguments. And then that’s when the co-founders start to blame each other, like, I trusted you. How did you do this? Why did you do that? You know you trusted me. I’m sorry I did that. I’m guilty. And that’s when things start falling apart.

Kate 12:38
Okay, so you don’t over like, overly trust I get we were saying, then do you, like, overly communicate, so that things aren’t based on assumption? Is that what you’re kind of recommending, okay, to avoid that. Okay, you don’t just think, Oh, he’s my friend. He’s known me forever. He knows I’ve got this pitch. You explain what you’re doing for the pitch like you would someone you haven’t known forever,

Tim He 13:05
exactly. And maybe sometimes that’s annoying. Maybe the over communication can get a bit tedious, but it definitely is better than regret.

Kate 13:14
Yes, okay, other things you see in healthy co-founder relationships.

Tim He 13:21
Yeah, actually, I talked to a co-founder the other day. Her name’s Madeline, and her co-founder’s name is Ben, and she said that at the bottom of their emails, if she’s the one answering, she’ll say from Ben and Madeline, and if he’s the one answering, he’ll say from Madeline and Ben, and it’s just one of those small things that add up, and it’s, it’s one of the really wholesome ways they show up for each other as co-founders. And I wonder, when I tried to dig deeper about why they do that, why they do certain things, she kind of just said, I don’t know, we’re just weird like that. And she just kept resorting to that. And so she even apologized for it. She was like, I know, I’m not deflecting, you know? I want to give you an answer. I just actually don’t know. And I think that is very healthy in itself, because startups are weird. Entrepreneurs are weird. Founders are rude. You don’t become a founder if you’re not a little weird, or at least a little crazy, right? And so, and so, and if you are a founder, you’re not offended by that. It’s actually a compliment, right? And so if your partnership and your co-founder aren’t a little bit weird as well, it is really hard to match the pace and the dynamic and stress of a startup. Plus, you know, when you, let’s say, you have a best friend or a significant other, you start to make your own little words and languages. Yeah, I know. I’m sure there’s a linguistics term for this, but whatever that is, it’s actually a really good sign that you’re close and you can communicate in ways where it’s like a mental shorthand, you know, where, from an outside perspective, they might not get it immediately or. Or ever, but it just makes total sense for you guys. I think when you have that, when you spot that, that’s a really good sign of a healthy co foundership.

Kate 15:09
Yeah, that sounds pretty special. Is it also helpful if each co-founder has their own role, like I’ve seen it a lot, where one co-founder is kind of like the engineer, product, you know, working with the development teams, and then the other founder is more like the business, marketing pit investor, and they each have their clearly defined roles. Does that help or does that and where, what’s your experience?

Tim He 15:40
I think when the alternative is chaos, doing that to get clarity is a good place to start. But I don’t think that is the best way to do things. And so with that example right, like in the beginning, the technical co-founder kind of has all the power, because they’re building the product. Without a product, you don’t have a company, But at any sort of scale, the business co-founder starts to take over. They’re usually the CEO. They usually make the final business-wide decisions. And so even if the technical co-founder is involved in those meetings, they don’t tend to have the final say, and that can be really frustrating, because they’ve just built this product, they’ve just talked to a bunch of users and did a bunch of testing and fixing stuff, and then now all their power is just vanished. And it’s a trend that is very common because, you know, technical and non technical co-founder pairs are very common. And so that’s why we see a lot of technical co-founders leave actually when they’re done vesting or when they’re done building the product. But whoever the next person is, they’re never going to fill the shoes, they don’t have the contacts, they don’t have the vision. And for the non technical co-founder, for the business co-founder, that’s a huge emotional hit as well, because they’ve just lost their co-founder, their friend. And so what I think works a lot better is still have your clearly defined areas of ownership, but work on things together. And so, for example, investor meetings usually fall under the domain of the business co-founder. But I think when a technical co-founder is involved by maybe answering more technical questions or building a demo or even just showing up to present and zoom in on a little bit more technical aspects of the company, that shows investors that these people are aligned, but also it it helps both co-founders have a better picture of what they’re doing. And then, on the other hand, a lot of non technical co-founders think that they can’t get involved in the product because they can’t code. That’s not true because you can talk to users. You can build documentation for non technical users, you can build wireframes or demo videos of a user potentially clicking around through the app. You can do all sorts of different testing and experiments. And so there’s, there’s a lot of ways for everybody with different backgrounds, regardless of what it is, to work together. And so when you do that, you kind of start to see each other’s blind spots. And also, it’s just a lot of fun, because you get to show what you’re good at. You get to show them this product that you build. You get to show how good you are at building pitch decks or selling things. And it’s just a fun experience overall, but it also creates a better context and environment where your involvement is not just done after one thing, the technical co founders involvement is not done while once the MVP is built, and on the reverse side, the business co founders, involvement is not done once they raise their funding. And so you just keep, keep building that relationship.

Kate 18:51
I like that so much, because so many times it’s not done that way. And like you said, it actually becomes more siloed. I’ve seen this where, like the technical founder, they have their little world with engineering development, and they’ve got their agenda, and then the business and it normally starts clashing. That’s when the culture issues happen. You’re right. The tech co-founder usually leaves. There’s bad blood. I love the idea of both being involved in the other I think it would be great for the, you know, business one to talk to customers, you know, see product iterations, get ideas, and then awesome for the technical one to go out on pitch meetings, come to board meetings, that kind of thing. I think anyone listening should really take note of that, because I could bet that would help prevent a lot of problems in startups.

Tim He 19:48
Because when you do that, you get asked the question, well, whose priorities matter more? So you have x dollars in funding. Do you put it towards paid advertising? Do you put it to. Words hiring another engineer, right? Don’t know exactly. And so if you can’t clearly define whose priorities matter more, then you’re in a clash, in a tug of war.

Kate 20:10
Yes, now I’m gonna ask you a tough question here. What about married couples that are co-founders? I personally have worked in that environment years ago, and I hated it because we all felt a little intimidated because their relationship had that extra layer of, I don’t know, like specialness. Maybe it was because the wife wasn’t that strong in her role. So we felt like we couldn’t speak freely about her. Just the dynamic was tough, but can it work?

Tim He 20:47
Interesting? So you were reporting to co founders who were married? Yeah, yeah. I mean, from the team perspective, they shouldn’t really bring the marriage into making business decisions, because that’s their own thing to deal with. But if you’re talking about from the co-founder perspective, again, it’s the skydiving analogy. Because when you think about the journey of being a co-founder, imagine a staircase. And if you’re listening, I’m going to try to give this to you as visually as possible, but imagine a staircase, and at level one is when you decide to become co-founders. And at every step up from there, there’s a level of sacrifice that’s either more or different than the previous level. So for example, when you decide to become co-founders with this person, you sacrifice the ability to become co-founders with anybody else. And then at level two, when you decide to build this company, you sacrifice the ability to build every other company you could have, and also some of your free time, some nights and weekends and maybe some early mornings. And then, let’s say you ship a product and you’re getting some early traction. Maybe you sacrifice your full time job to go all in on this company. Maybe you sacrifice some of that financial stability, or maybe you’re not quite there yet, but you sacrifice some time with your friends, you sacrifice some weekend trips, you sacrifice some bigger purchases so that you can spend more money on the business. And so what happens a lot of the time is the company is progressing. You’re getting more and more users or traction or revenue or funding, and requires a bigger sacrifice from the co founders. But at one point, for whatever reason, one co-founder decides that the sacrifice isn’t worth it anymore. Maybe they can’t quit their job, maybe they have a mortgage or kids or elderly parents that they have to take care of. Maybe they can’t sacrifice their nights because they’re taking care of their three month old. Whatever the reason is, it doesn’t have to be bad intent, but they just decide that the sacrifice isn’t worth it. That’s when the company and the CO foundership is really tested and strained. Yes, when you’re married, though you’re willing to sacrifice a lot more for that person. Oh, that’s a good point. Plus a lot of the typical sacrifices don’t apply because you’re still spending time together. You’re making a lot of big financial decisions together, maybe you have whatever you know your personal financial situation is. A lot of those sacrifices don’t seem nearly as big anymore. So there are some benefits to co-founding with your significant other, but on the downside, if it goes bad, then you risk also damaging your romantic relationship.

Kate 23:43
Right, right. You know that was helpful. I liked the staircase the way you laid it out a staircase, because you can really see that as you take each step and sacrifice more the potential for issues in any co-founder relationship. I mean, you could, you mapped them out really well, super helpful. We’re actually coming up on time. I can’t believe it. I always end the show with, you know, advice for startup founders. You’ve given so much around the co-founder relationship and some really important things that founders should think about. Any last advice you can leave the audience?

Tim He 24:24
Yeah, (15:56) in the beginning, the technical co-founder kind of has all the power, because they’re building the product. Without a product, you don’t have a company, But at any sort of scale, the business co-founder starts to take over. They’re usually the CEO. They usually make the final business-wide decisions. And so even if the technical co-founder is involved in those meetings, they don’t tend to have the final say, and that can be really frustrating, because they’ve just built this product, they’ve just talked to a bunch of users and did a bunch of testing and fixing stuff, and then now all their power is just vanished. And it’s a trend that is very common because, you know, technical and non technical co-founder pairs are very common. And so that’s why we see a lot of technical co-founders leave actually when they’re done vesting or when they’re done building the product. But whoever the next person is, they’re never going to fill the shoes, they don’t have the contacts, they don’t have the vision. And for the non technical co-founder, for the business co-founder, that’s a huge emotional hit as well, because they’ve just lost their co-founder, their friend. And so what I think works a lot better is still have your clearly defined areas of ownership, but work on things together.I think a lot of times when we talk about co founderships, I tend to focus on how bad it can be, what can go wrong, what do you have to watch out for? Because those are the types of people and the types of situations where they come to me, but I also get to see a lot of the magic and the beauty of how good it can be, what your relationship could look like when everything is perfect. And I think there’s a lot of advice that only applies to certain situations, but one piece of advice that applies to everybody is that a good co-founder relationship isn’t 50/50, it’s actually 60/40, but both of you are trying to be the 60.

Kate 25:09
I like it. I like that a lot. That’s great, awesome. Where do the listeners go to find out more information about Cherrytree? Where can they find you and your resources?

Tim He 25:22
Yeah, I’m, I’m pretty active on LinkedIn, yeah, and then the Cherrytree newsletter as well. I can find everything on my LinkedIn, from the newsletter to how to schedule time with me, to some funny memes and posts as well. So everything is on LinkedIn.

Kate 25:39
Awesome. This was so helpful today, and so fun to talk to you about a topic we haven’t really covered in depth. So thank you for being here.

Tim He 25:47
Of course, and thank you for having me. Thanks.

Outro 25:50
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