Are you looking for the right cofounders to launch your startup with? Finding cofounders requires balancing diversity with compatibility, choosing professional contacts over friends and family, and establishing clear team structures from day one. According to Noam Wasserman in The Founder’s Dilemmas, business partners introduce complex decisions that solo founders sidestep entirely, but building the right team can provide diverse perspectives and resilience.
Understanding how to find cofounders means recognizing that your choices will shape everything from decision-making speed to your company’s blind spots. This article breaks down three key considerations when looking for business partners: building diverse versus homogeneous teams, selecting cofounders from your network, and creating effective leadership structures.
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Find Your Cofounders
Noam Wasserman, author of The Founder’s Dilemmas, claims both solo entrepreneurship and cofounding with a team have pros and cons to weigh as you decide how to proceed. But, he writes, you should be aware that cofounding introduces a cascade of additional decisions and potential challenges that solo founders don’t have to navigate. We’ll explore how to find cofounders for your new business and the three factors you need to consider: forming a homogeneous team versus building a diverse one; cofounding with friends and family or with existing professional contacts; and managing the tradeoffs that come with building an effective team structure.
Overcoming Homogeneity for a More Diverse Skill Set
Wasserman writes that it’s common for founding teams to be homogenous in terms of ethnicity, gender, and experience. This is because founders believe it’ll be easier to establish rapport and manage potential conflicts among people from similar backgrounds. However, Wasserman advises against this natural gravitation toward sameness. He argues that an overly homogeneous team can lead to blind spots due to a lack of diversity in skills and perspectives. A diverse founding team, on the other hand, provides the platform for robust decision-making processes, more creativity, and potentially greater resilience in the face of startup challenges.
| Understanding Groupthink: Causes and Consequences Wasserman warns against assembling an overly homogenous team because such teams are vulnerable to cognitive blind spots. This risk closely resembles a phenomenon known as groupthink, which occurs when a group prioritizes consensus over the critical evaluation of ideas. In groupthink, people suppress dissenting views to maintain harmony and avoid conflict. This dynamic can discourage independent thinking and lead members to self-censor, especially in organizational settings where agreement is valued over debate. Homogeneous groups are particularly susceptible to groupthink. When a group already lacks diverse perspectives due to its homogeneous composition, the few dissenting viewpoints that might emerge face powerful suppression through groupthink dynamics. This creates a dual barrier to effective decision-making: 1. External barrier (Homogeneity): Different perspectives don’t naturally exist within the group due to its members’ similar backgrounds and experiences. 2. Internal barrier (Groupthink): Any potentially diverse thinking that does manage to arise within the group is actively suppressed through social pressure and conformity demands. For example, let’s picture Horizon Investments, a fictional tech company with a homogenous leadership team: seven partners who graduated from the same three elite business schools, belong to similar socioeconomic backgrounds, and share nearly identical political views. In 2023, Horizon’s leadership decides to expand their offerings to Southeast Asia. Most partners agree, but one, Jeremy, raises concerns about the market there, citing potential political instability. The others quickly shut him down, and he learns to keep contradictory viewpoints to himself. Meanwhile, the expansion to Southeast Asia goes ahead. Six months after Horizon launches their product in Southeast Asia, several countries in the region experience the political turmoil that Jeremy anticipated. Horizon’s homogeneous leadership missed warning signs that didn’t fit their shared mental model. And because they reinforced a groupthink dynamic, Jeremy and others aren’t likely to express dissenting opinions going forward—which leaves Horizon open to similar risks in the future. |
Who to Choose as Your Cofounders
Wasserman recommends looking for your cofounders from your network of pre-existing professional relationships. He says this is beneficial because you already understand each other’s work styles and capabilities, which can streamline the early stages of collaboration. You’ll also avoid the tricky personal ties we covered in the last section—making it less complicated to part ways if the business demands it.
(Shortform note: In addition to cofounding with people you already know or have worked with, you also have the option of meeting your partners through a cofounder matching program, such as the one offered by Y Combinator. These programs typically begin with an application process where founders outline their skills, experience, and business vision. The program coordinator then uses this information to identify potential matches based on complementary skill sets, aligned values, and compatible working styles. For instance, a technical founder might be paired with someone who has strong business development experience, creating the balanced “half-and-half mix” that often characterizes successful founding teams.)
Avoid Cofounding With Friends and Family
Wasserman cautions against starting a venture with friends, family, or romantic partners. Founders with deep personal connections may find it challenging to deliver hard truths to one another—leading to nepotism or gaps in accountability. Moreover, he warns, conflicts that emerge from business relationships can sometimes take on personal undertones. If you do cofound with family or friends, Wasserman advises compartmentalizing those relationships—keeping friends and family in separate departments or under different reporting lines.
| The Advantages of Family Business Ventures While Wasserman cautions against cofounding with family or friends, there are some clear advantages and famous success stories of such enterprises. For instance, starting a business with family members can create strong foundations for company growth and longevity. Many of today’s largest corporations—including Walmart, Dell Technologies, Nike, Koch Industries, and Mars—began as family enterprises. Moreover, the trust and commitment inherent in family relationships creates a cohesive team dynamic that’s difficult to replicate with non-relatives. Family members typically demonstrate stronger dedication to long-term success, viewing the business as a generational legacy rather than simply a source of income. Additionally, when family members share the same values and vision, decision-making and strategic planning become simpler. After all, family members often have a shared history, upbringing, and set of personal experiences that naturally create common perspectives and priorities. This has a real effect on how the business operates day-to-day, creating a consistent company culture and operational approach. Family members who inherently understand each other’s expectations and standards can maintain this consistency across different departments and through various business challenges. Finally, the management structure in family businesses is usually more relaxed and less formal compared to bigger companies. This means they can make decisions faster and adapt more easily to changes in the market. |
Build Your Team Structure
In addition to choosing the right cofounders for your business, it’s critical that you establish the right team structure with your cofounders. Wasserman identifies three dilemmas founders face in establishing that structure: assigning titles, dividing labor, and delegating decision-making authority.
Assigning Titles
Wasserman notes that founders often assume senior roles in the company—with the person who conceived the original idea assuming the title of chief executive officer (CEO). While this might seem appropriate at the outset, it could become less conducive to success as the company grows and matures due to the varied skill requirements of different growth stages.
Initially, writes Wasserman, the start-up phase often demands vision, risk-taking, and out-of-the-box thinking—all attributes commonly associated with founders. Therefore, it might be fitting for the ideas-driven founder to lead as CEO during this phase. However, as the company grows and establishes itself, different leadership competencies may become paramount. For example, the company might require more focus on operational efficiency, process management, human resources, financial control, and stable growth—skills that a founder-CEO may not possess or excel at. That’s when it may be time for another cofounder with the requisite skills to step up as CEO, or the company may bring in an outside hire.
| Beware the Cult of the Founder Some experts have noted that founder-CEOs who people perceive as visionary or unique often present problems for their companies as the firms grow from startups to well-established businesses serving multiple stakeholders. In the tech world, there’s a phenomenon called the “cult of the founder”—a culture that elevates startup founders to near-mythical status, often attributing a company’s success solely to their creative vision and willingness to break rules. For example, cults have sprung up around founders like Apple’s Steve Jobs, Microsoft’s Bill Gates, and Facebook’s Mark Zuckerberg. This belief in the genius founder has frequently led investors to pour money into enterprises with ill-conceived business models or incoherent paths to profitability, based on little more than the charisma or salesmanship of the founder-CEO. In fact, one study showed that companies led by their founders rate lower than those with other leadership structures on a host of management criteria—including setting intermediate growth targets and rewarding talented employees. The study further noted that founders tend to have an unrealistic view of their own weaknesses, leading them to make poor strategic and tactical decisions. |
Dividing Labor
Wasserman points out another common dilemma you’ll face on the cofounding path: how to divide labor among founders without creating rigid silos. Assigning clear roles is appealing—for example, you might make one founder the CEO responsible for strategic decisions, another the chief financial officer (CFO) handling financial matters, and a third the chief operating officer (COO) overseeing daily operations. This enhances each founder’s focus and accountability while minimizing overlap and confusion, ensuring that each area of the business has a dedicated leader driving progress and making informed decisions based on their expertise.
(Shortform note: Some experts expand on Wasserman’s ideas, writing that role division should align with each founder’s natural strengths and passions. This is because people perform significantly better when their responsibilities match their skills and interests, creating a more energized and effective leadership team. These experts recommend mapping each founder’s unique skills and interests to appropriate responsibilities, seeking complementary rather than overlapping skill sets among founders, and striving for balanced workloads to prevent burnout and ensure equity in time commitments and compensation among the founding team.)
However, Wasserman warns about the potential pitfall of siloing—a situation where company leaders overly compartmentalize their responsibilities and focus solely on their designated area without thinking of the impact on the company as a whole. Silos can make founders lose touch with the broader goals of the company. For example, if the chief technology officer (CTO) is too focused on perfecting a product’s features without consulting the marketing team, they might miss aligning these features with market needs. This lack of collaboration often results in limited communication across departments, reducing the company’s big-picture thinking while slowing decision-making and problem-solving.
| How to Break Down Silos: Lessons From the US’s War in Iraq Siloing isn’t just a phenomenon in private sector startups; leaders in governmental and military organizations also have to overcome the challenge of departmental heads losing sight of the overall mission. These leaders’ successes provide a roadmap for how private sector leaders can do it too. For example, in Team of Teams, General Stanley McChrystal discusses the organizational and operational challenges faced in 2004 by the US Joint Special Operations Task Force in Iraq as it attempted a counterinsurgency against Al Qaeda. He writes that one of the main obstacles the task force faced was siloing, in which teams functioned in their own spheres, coordinating with their commands but not with other teams. To change the organizational culture of silos, the task force adopted a policy of “extreme transparency,” or wide information sharing, that provided everyone with an unvarnished, real-time view of the organization. McChrystal created an open-office environment at the task force headquarters, where his staff cc’d a wide range of people on emails and took most calls on speaker phone to “normalize” the sharing of information. His staff also created a daily Operations and Intelligence briefing, or O&I. Anyone who was invited could connect to the meeting via laptop from anywhere, from embassies to FBI field offices to staff at Fort Bragg. The meeting was an unfiltered discussion of the task force’s successes and failures, where everyone could see how problems were being solved and conflicting information was being reconciled. McChrystal writes that the O&I saved untold time by eliminating the need for people to get clarification. While there was a risk of information falling into the wrong hands, the task force never had any leaks, and sharing information saved lives. |
Establishing Decision-Making Authority
Wasserman emphasizes that it’s not only vital for startups to determine who will be making which decisions—but also how those decisions will be made. He notes another tradeoff that founders have to face: committee-style, consensus-driven leadership or a top-down structure with a strong CEO.
Initially, he writes, startups often adopt a committee-style approach where decisions are made collectively with everyone having a voice. This consensus-driven method can foster a sense of camaraderie and equal say among the founder team, encouraging diverse thoughts and ideas. It also has the potential to reduce conflicts, as no single person holds all the decision-making power. However, consensus-driven decision-making can also be time-consuming and may delay important decisions in instances where a unified agreement is hard to achieve.
While startups often start with the consensus-driven approach, as they grow, they might transition to a top-down decision-making structure. In this model, a strong CEO or leader often carries the responsibility of making final decisions. This approach can lead to swift decisions, maintain momentum, and ensure the organization’s forward movement in line with the CEO’s vision.
| CEO Dictatorships: When Corporate Governance Fails Wasserman’s ideas about decision-making in a company speak to the issue of corporate governance—the system of rules, practices, and processes by which a company is directed and held accountable to its shareholders, management, customers, suppliers, and the broader community. Unfortunately, as a company transitions away from committee-style governance, CEO dictatorships can develop in which excessive executive power undermines the organization’s checks and balances. This happens when boards of directors fail to maintain effective oversight, allowing chief executives to consolidate control and make decisions that bypass proper scrutiny. Partly in response to some of the perceived excesses of overly powerful CEOs, some companies have moved back toward a more consensus-driven approach. Notably, Tim Cook, who succeeded Steve Jobs as CEO of Apple, has shifted the company’s leadership style. Under Jobs, Apple was known for its strong, centralized decision-making approach. However, Cook has introduced a more democratic, consensus-driven strategy that aims to foster greater collaboration and inclusivity within the company’s leadership structure. |
Discover More About Finding Cofounders for Your Startup
To learn more about how to find cofounders that’ll make your startup succeed, check out the following Shortform guides:
