They say early discussion within the founding team members, on critical aspects such as roles and responsibilities, split of shareholding percentage, crisis management scenarios, is the key to building successful founding teams.
We believe what it essentially does, is open up the channel of clear communication and that’s the basic fundamental requirement of building any good product, right? Why founders must must enter into founders’ agreements before starting off, is something which has been much spoken about. There is a lot of literature on the whys and hows of getting into a founders’ agreement. In fact, as opposed to the trend of us having to convince founders to enter into founders’ agreements in the past decade, we now see a reverse trend of founders proactively seeking advice on these matters.
How having a founders’ agreement helps in discussions with investors eventually, showcasing good corporate governance standards by setting out the cornerstones of board principles, shareholding rights inter-se founders, and most importantly, vesting/reverse vesting arrangements, is well appreciated in the ecosystem today. When it comes to solving for scenarios of actual exit by founders and strategizing such exit in a way that is beneficial for both leaving founders, remaining founders, and most significantly the organization, we have been immensely benefitted by well-documented initial understandings of founders.
So here are a few basic tips on how to make the founders’ discourse more meaningful, result oriented and candid:
Start with a questionnaire. This helps in having and maintaining an objective approach towards what all needs to be discussed and decided upon. Especially when founding team members are related or come together, having known each other/ been friends for long, the questionnaire helps in putting on the game face, while keeping the emotional quotients at bay. The questionnaire need not be a long one. It could be simple enough to cover elements of each member’s vision for the product, expectations in terms of professional, personal and commercial outcomes and thought processes on what happens if the venture doesn’t work, for any or all of the members.
Schedule and set up a meeting/discussion time. If you have these important conversations in bits and pieces, you may often miss out on documenting important thought notes. Setting aside dedicated time to do just this also helps in focusing on the discussion more. One of the ways to save time though would be to float the questionnaire through a simple survey or google forms before you meet and sit to discuss. That way, everyone would have spent time individually in being prepared, thereby reducing the stress of thinking on the feet.
Choose your ambience. Having the discussions in a neutral environment, for example a meeting room in a co-working space or a private lounge area, gives away the right messaging from the very beginning, that the founders mean business. However, choosing the ambience is also a function of what one wants to achieve out of these discussions. While a private set up (instead of cafeterias, restaurants) helps in being discreet and maintaining confidentiality, each members needs to be comfortable in the chosen ambience for upholding the spirit of free and open conversations.
Hear out. For people coming together for the first time, this is extra critical. When you are prepared, you also want everyone to listen to everything that you have to say. As important as that might be, it is also important to give a chance to the other members to lay out their points. Respect each other’s personality traits and gear yourselves for working with each other because if not anything else, this most certainly will lead to building trust.
Discuss, don’t decide in the first meeting. This really is a no-brainer. The first meeting must always be reserved for understanding each other’s thought processes and allowing the safe space for everyone to be candid instead of being under the pressure to say yay or nay right then and there. If needed, reconvene, rediscuss and then proceed.
Do let us know if you find this helpful.