STARTUPS PULSE - How to not break up with your cofounder?

Marc Lore's Wonder Raises Another $600 Million Clay's $1.5 Billion Valuation Spurs Employee Tender Offer with Sequoia How to not break up with your cofounder #startups, #entrepreneurship, #cofounders, #venturecapital, #businessgrowth, #investmentnews, #founderrelationships

Episode Transcript

(00:00):
Welcome to Innovation Pulse, your quick no-nonsense update covering the latest in startups and

(00:09):
entrepreneurship news.
Wander has acquired Grubhub for $650 million, raising its valuation to over $7 billion,
while Clay hits a $1.5 billion valuation, offering share liquidity.
After this, we will dive deep into maintaining healthy co-founder relationships and their
critical impact on startup success.

(00:33):
Wander is a food hall startup that has rapidly expanded its reach by acquiring Grubhub for
$650 million and securing an additional $600 million in funding, elevating its valuation
to over $7 billion.
The company, led by CEO Mark Lohr, focuses on delivering meals from 30 different restaurants

(00:56):
within 30 minutes, all from a single location.
This innovative model promises high guest satisfaction and aims to maintain unit-level profitability.
Wander's unique approach involves packing multiple restaurant concepts into a compact
space which allows it to generate higher revenue per square foot compared to traditional restaurants.

(01:22):
This efficient setup also reduces rent and labour costs.
The company plans to double its physical locations from 46 to more than 90 by the end of 2025,
primarily focusing on the Northeast, including expansion into Philadelphia and Washington,
D.C.
In addition to its core food delivery service, Wander is developing proprietary technology

(01:45):
to enhance operational efficiency and is exploring new business avenues like selling ovens and
food to business clients, such as stadiums and hotels.
Clay, a sales automation startup founded by Karima Meen, has gained remarkable traction
since 2022, achieving a valuation of $1.5 billion and expanding its workforce to over

(02:11):
150 employees.
The company's technology aids salespeople and marketers by automating their go-to-market
strategies using AI, attracting clients like OpenAI, HubSpot, and Canva.
In a unique move, Clay is offering its employees with at least a year of tenure the opportunity

(02:33):
to sell some shares to Sequoia, an existing investor providing them with financial liquidity.
This decision aligns with a means vision of sharing the company's success with its contributors,
a strategy that also included a community around allowing customers to invest at Series
B valuations.

(02:54):
Sequoia sees this initiative as a testament to Clay's unique culture, although it anticipates
that many employees may retain their shares, expecting future appreciation.
Amin hopes this approach will inspire other startups to offer similar liquidity options,
underlining Clay's commitment to collective growth and shared success.

(03:16):
Now, pivot our discussion towards the main entrepreneurship topic.
Alright everybody, welcome to another enlightening episode of Innovation Pulse, where we dissect
the DNA of successful businesses and unpack the strategies that make them tick.

(03:37):
I'm Donna, joined as always by my brilliant co-host, Yakov Lasker here, ready to dive
into today's fascinating topic.
Donna, we've been getting a lot of questions from listeners about co-founder relationships.
Specifically, how to make them work long term when so many startups implode because the founders
just can't get along.

(03:59):
Such a critical topic, Yakov.
I've seen the statistics, they're pretty sobering.
In fact, some suggest that co-founder breakups are even more common than failure to find
product market fit.
That's saying something.
Absolutely, it's easy to focus on the business mechanics, but the human relationships driving
everything are often the true determining factor of success.

(04:21):
Today, we're going to break down seven key principles for building co-founder relationships
that actually last.
Love it, lay it on me.
What's principle number one?
Equal partnership.
This is fundamental.
Now this doesn't mean co-founders need identical backgrounds or skill sets.
In fact, complementary experiences are usually better.

(04:44):
But it means equal equity splits from day one and matching salaries when financially possible.
That makes so much sense.
I've seen startups where one founder has 60% and the other has 40%.
And there's almost always this underlying tension.
Even if it's justified by experience differences, it creates this power dynamic that can slowly

(05:06):
poison the well.
Exactly.
And here's what's interesting.
Even when there are dramatic differences in experience or age, like a decade of difference,
equal partnership sends a powerful signal that you're in this together.
It removes potential resentment before it can take root.
Right.
And it prevents the I'm doing more but getting less narrative that can develop.

(05:29):
So that's principle one, equal partnership.
What's next?
Principle two is that good relationships aren't set and forget.
They require intentional maintenance.
Successful co-founders make time for each other.
Regular one-on-ones that can run overtime if needed.
Shared meals.
Travel accommodations that maximize conversation opportunities.

(05:50):
Hmm, almost like dating advice, but for business partners.
I like how practical this is though.
Booking an Airbnb instead of separate hotel rooms when traveling, having designated times
to connect.
These seem like small things, but I bet they add up.
They absolutely do.
One particularly effective practice is keeping a shared document where both founders write

(06:13):
their thoughts and feelings weekly, both positive and negative.
Making it a habit to document frustrations prevents them from festering.
That's brilliant.
Basically creating a safe space for honest communication before issues become deal breakers.
So principle three.
Don't get attached to titles.
Many founding pairs start with traditional CEO-CTO splits, but the most successful ones

(06:38):
aren't dogmatic about these roles.
They organize based on what works, not what looks normal to outsiders.
Oh, this is interesting.
So some founding teams might even move to co-CEO structures if that better reflects
how they actually operate.
Precisely.
The point is to label what's working well, rather than forcing your partnership into

(06:59):
conventional boxes.
Your internal clarity about responsibilities matters far more than how your business cards
read.
Makes sense.
I imagine this flexibility also helps with principle four, which I'm guessing is about
playing to each person's strengths.
You're reading my mind, Donna.
Principle four is working on what you care about most.

(07:20):
Successful co-founders adjust roles based on three factors.
What each person is uniquely good at, what they enjoy, and what the company needs at
any given moment.
That's such a natural approach.
If I care deeply about something, and my co-founders lukewarm about it, I should probably take
the lead on that initiative.
Right.
And this creates an environment where you're both consistently energized by your work.

(07:45):
For example, one founder might handle sales in the early days because of their people's
skills, but later their technical co-founder might step in when building sales systems
becomes the priority.
I love how this keeps things fresh, too.
So neither founder gets stuck in a lane they've outgrown just because that's how we've
always done it.
Exactly.
Now, principle five is fascinating.

(08:07):
Zoom out to solve problems.
When you're stuck on a specific issue, move to the abstract level.
What does that look like in practice?
So instead of debating a specific employee request like a sabbatical, successful co-founders
ask broader questions.
What kind of company are we building?
What are our principles around time off?

(08:28):
Is this compatible with our ambitions?
They solve for the pattern, not just the instance.
That's powerful because it takes personal feelings out of difficult decisions and creates
consistency.
Plus, I imagine it prevents the different answer depending on who you ask problem that
can happen with co-founders.
Precisely.

(08:48):
And when co-founders feel misaligned, that misalignment gets amplified through every layer
of the company.
Putting out to codify thinking in company principles creates a shared reference point
for future decisions.
So principles five down, two to go.
What's number six?
Focus on opportunities before problems.
Many co-founders find their one-on-ones devolving into problem-solving sessions which can feel

(09:13):
draining and defensive.
Oh, I've definitely experienced this.
Meetings become all about putting out fires and you never get to the exciting forward-looking
stuff.
Right.
This is simple but powerful.
Structure your discussions to start with the good stuff first.
Successful co-founders intentionally begin with opportunities, wins, and exciting possibilities

(09:36):
before tackling problems.
Because startups win on upside, not just by fixing what's broken.
Exactly.
And actually, focusing on positive opportunities often makes the problems seem smaller in context.
It's a complete mindset shift.
I can see how this would completely change the energy of the partnership.
What's our final principle?

(09:56):
Shared values make everything easier.
This is perhaps the most fundamental.
Co-founders can have dramatically different backgrounds, ages, or expertise levels.
But aligning on core values is non-negotiable.
Like what kinds of values are we talking about?
Things like valuing speed over perfection, believing in individual contribution, preferring

(10:18):
transparency, giving people autonomy, having similar ambition levels, or shared dislikes,
bureaucracy, hypothetical planning without action, needless meetings.
That resonates so much.
You can disagree on tactics, but still be aligned on the deeper why behind decisions.
Precisely.

(10:39):
And interestingly, many successful co-founders admit they didn't explicitly discuss these
values before partnering.
They got lucky.
But for those actively seeking co-founders, having deliberate conversations about values
should be priority one.
This is all incredibly insightful.
Looking at these seven principles, equal partnership, intentional relationship maintenance,

(11:04):
flexible titles, working on what you care about, zooming out to solve problems, focusing
on opportunities first, and shared values.
There's a clear thread connecting them.
What's that?
It's all about preventing resentment before it can take root.
Every principle addresses a common source of co-founder tension before it becomes toxic.

(11:25):
That's brilliantly observed, Donna.
And there's one final point worth mentioning.
Despite all the challenges, having a co-founder who's as motivated as you are dramatically
increases your chances of success compared to going solo.
And frankly, it's more fun too.
Building something meaningful is hard enough.
Building someone alongside you who shares the burden makes the journey not just more

(11:48):
successful but more enjoyable.
So for our listeners thinking about their own ventures, whether you're in the co-founder
dating phase or already deep in a partnership, how might you apply these principles to strengthen
your own working relationships?
Maybe start with that shared document to capture thoughts and feelings weekly or restructure
your one-on-ones to begin with opportunities instead of problems.

(12:12):
Or have that values conversation you've been putting off.
Sometimes just naming what matters to both of you can create powerful alignment.
Absolutely.
Well, that wraps today's deep dive on co-founder relationships.
Remember folks, the strongest startups aren't just built on brilliant ideas.
They're built on resilient partnerships.
Until next time, keep innovating, keep communicating, and remember that relationships are the ultimate

(12:38):
competitive advantage.
This has been Innovation Pulse.
I'm Donna.
And I'm Yuck of Lasker.
Thanks for listening.
As we wrap up today's podcast, we've explored Wonders' strategic expansion and impressive
valuation in the food delivery sector alongside Clay's innovative approach to employee liquidity

(13:01):
as well as the crucial elements of maintaining healthy co-founder relationships for startup
success.
And don't forget to like, subscribe, and share this episode with your friends and colleagues
so they can also stay updated on the latest news and gain powerful insights.
Stay tuned for more updates.