Someone (let's call him L) once told me...
Being in a startup founding team is like being in a marriage, and just like any marriage, there will be disputes, misunderstandings and times of heightened conflicts.
L couldn't have been more right. I don't always agree with him, but this is definitely one of his best advice. His words of wisdom are also very much in line with Noam Wasserman's book - The Founder's Dilemma (a quick overview of the book can be found here). Resolving issues within founding teams is more important than finding customers as unresolved conflict between founders is one of the top reasons for startup death.
Types of Marriage
There is the "arranged marriage" where founding members are put together in a particular circumstance — such as winning a hackathon or startup weekend with aspiring individuals/complete strangers — and the "chosen marriage" where co-founders band together believing that the other person is "the one". Regardless of the kind of marriage you're in, the struggles are very real and it's essential to start off on the right note. There are definitely strategies to bring a bad start back on track but that's for another day.
The prenuptial agreement a.k.a founders' agreement needs to be created earlier rather than later. Many teams might say "Let's just work on this now and leave that for later", however, starting this discussion earlier does not mean that there is mistrust amongst the team members. In fact, it signifies that each member views this as a real venture, and believes that the business is one that's worth persevering for, even without immediate funding. This also helps prevent the situation in which some members are deeply invested in the startup while others are part of the team "just to learn" or to "see how it goes". Ideally, every member of the team should start with the same level of motivation or there will be dark days ahead.
The crux lies in balancing the time spent on validating the business idea and on gradually building up the prenup. Rules for decision-making, understanding the motivations of each team member, equity split and vesting arrangements, and deciding on the CEO are some of the key points that you can include in the agreement. Once this is complete, your team will be able to count on the constant reminder that despite the fact that the journey will have its fair share of conflicts, every member has agreed to work through them together.
When deciding if your partner is suitable as a husband/wife, you assess how life would be with the person in a long run. It's easier to imagine life with a spouse because of the way we have seen our parents, other families and even movies portray the dependence and partnership between couples. However, when it comes to the right co-founder, many are tempted to pick their best friends or family members without the slightest clue of what it really means to be co-founders.
Coming from a family where my father had most of his brothers work with him, it was heartbreaking to see how certain unpopular decisions caused strain between the founding team, common friends and other family members.
I'm not saying you should walk out there and find just about anyone to build your startup with! In fact, it's best that your co-founder is someone you have worked with. You can properly assess how working with him/her would be like as you would have had a good sense of his/her work ethics, communication style and moral ideology.
Having co-founders with different skill sets will also introduce diversity to the team and reduce problems in decision-making and overlapping responsibilities. Assigning the primary roles of each founding member early helps to reduce role confusion and potential tension. Be mindful not to set isolated responsibilities as it will lead to everyone working in their own silos.
There are great companies built by close friends such as Apple (Steve Jobs and Steve Wozniak), so it is possible that your startup might actually beat the norm. It is also important to remember that no matter how hard you try, divergence might still happen in future even between the best of co-founders (Steve Wozniak eventually left Apple).
Your startup should evangelise being dynamic and all about the team, but you will need someone to carry that CEO title. This should definitely be decided unanimously as a team. If there are conflicts about this at an early stage, it'll be very difficult to build momentum or even hire your first batch of employees.
So, who is the most invested in the startup? Who made the greatest contribution and will continue driving the vision? That might be one way to make the call on who is the best fit for the leader. While most startups have a natural tendency to crown the idea originator the leader, that should not be the sole basis for choosing him/her as the CEO.
It is okay if you are unable to come to an agreement on the prenup or a conflict ends the marriage. Engaging in these discussions earlier means that you care for each and every founding member. Finding out that your team is unable to work together at an early stage helps create new movements in everyone's lives — new ideas will spark and new teams will form.
Just as every startup runs its own experiments, we as startup founders should also view our life as such, and take every event that happens as a valued lesson.