Should You Call Yourself a Co-Founder When Recruiting?

Deciding whether to name yourself as a co-founder, especially when recruiting, can be a nuanced decision. Traditionally, a founder is the individual leading a startup operationally, with full control and no equity-sharing. Conversely, a co-founder is someone involved from the outset, often sharing equity and contributing various skills or financial investments. It's essential to navigate these roles thoughtfully to reflect your business's reality and to foster an environment of mutual respect and cooperation.

The Roles of Founders and Co-Founders

A founder often owns and controls the entire operation alone, employing team members on salaries with no shared equity. In contrast, a co-founder shares equity and typically contributes specialized skills or significant resources to the startup. This distinction helps clarify the levels of commitment and ownership from the start.

However, it's worth noting that you can approach this duality in several ways. For instance, you could title yourself as "a founder" or maintain some flexibility in your branding. The goal is to accurately describe the roles each person plays while aligning with the overall vision of your business.

Flexibility in Titles

Titleing in startups is more than just a formality. Titles serve as tools that enable individuals to carry out their responsibilities effectively. In the early stages, having multiple business cards or alternating titles isn't uncommon. The key is to ensure that titles reflect the roles people actually perform rather than just their perceived importance.

Alignment of Interests and Titles

Aligning your interests with early hires is crucial. Titles and recognition go hand in hand. By ensuring parity or being clear about roles, you demonstrate significant value to team members. For instance, if you're recruiting a CTO who is contributing significant value but not receiving a salary or equity, it might be appropriate to call them a co-founder. This not only justifies their contribution but also sets a precedent of mutual respect and shared success.

Communicating the Roles

Communicating roles openly is essential. It’s comforting to know that you’ve done a good job with the business legwork, but it's also crucial to have a clear understanding of your project's status, particularly in terms of product development. If a new hire, especially a CTO, is not receiving a salary and is providing significant value, the title of co-founder may be appropriate. However, it’s always best to ask the new colleague what they desire. This approach sets the tone for mutual respect and fosters a cooperative environment.

Creating a Founders Charter

Beyond legal agreements, having a Founders Charter can provide a broader framework for your business relationships. This document should address key aspects of your partnership, such as job responsibilities, decision-making processes, and strategies for unforeseen circumstances. While legal documents outline the legal aspects, a Founders Charter can address more intangible yet crucial issues, helping to prevent conflicts and ensuring that both co-founders feel valued and involved.

Foundation issues, such as the division of equity, decision-making, and exit strategies, are critical. Additionally, the charter should also cover less tangible areas like what happens if a co-founder departs unexpectedly or if the business unexpectedly becomes highly successful. By preparing for these scenarios in advance, you can mitigate potential disagreements and ensure smoother business operations.

Conclusion

Deciding whether to call yourself a co-founder often depends on the roles and contributions of those around you. Early-stage businesses can benefit from a flexible approach to titles, but clarity and mutual respect are key. By ensuring alignment and open communication, you can build a strong and cooperative partnership with your co-founders or new hires.