I was reading from one of my favorite blogs today authored by Seth Godin. Seth has an uncanny way of describing something that hits at our core, and does so with very few words. For those of you that do not know Seth, here is a link to his blog.

What follows below is a copy of what he published today.  Give it a quick read and I’ll hit on the topic I wanted to cover after.

“Just imagine how much you’d get done

Eric and I have been doing a lot of presentations lately and meeting a lot of great entrepreneurs, soon-to-be entrepreneurs, developers, investors, and other people looking to get into the world of startups. After pretty much every presentation I’ve been asked the same question by one or more people in attendance: how did you guys meet and what’s it like working with a co-founder.

Eric addressed the former question in his last post, however I’d like to talk about the latter. Having been the sole founder/CEO of two previous startups, I can tell you that I’ll never do it again. Here’s why:

Workload

Founding and running a startup takes a ridiculous amount of effort. You can easily put in 18 hour days, six to seven days a week; there is literally no end to what needs to be done, what can be made better, problems that need resolution, etc., etc. On top of all that, you’re running out of money (at least in the early days), the market’s changing, competition is popping up, etc. Point being, you need to make progress, and fast! On the one hand it’s arguably too much for one person to handle. However, the far more compelling argument is the simple reality is that two good co-founders are capable of far more in terms of workload and speed than a single co-founder. I like to think of it as a 1 + 1 = 3 situation.

Blind spots

You may be super smart, super creative, just a downright born-and-bred entrepreneur, however we’ve all got blind spots. Given the amount of things you need to focus on – big, small, near, and far – it’s very easy to become over committed to your own ideas or just straight up not see something that’s happening in the market, with your competitors, your customers, product, team, etc.. A good co-founder is going to be there to challenge your ideas and expose you to things you never would have thought of on your own. This is a good thing! Startups are painful enough as it is; you don’t want to spend months of effort and a pile of money only to find out that the course you plotted was a bad one.

Relationship

The relationship you build with your co-founder is probably the most important and valuable aspect of having a partner. Why? Most startups don’t end up doing whatever it was they set out to do. You’re likely going to be wrong, a lot: about what your product is, what your customers want, how they’re going to use it, how to make money, etc. You’ve got to be able to pivot and adjust on these learnings, and the basis for doing a great job at that and still making forward progress is a strong relationship focused on building a successful business, not simply a “great idea”.

Motivation

Startups are super stressful. As Reid Hoffman (Founder of Linkedin) said, it’s “like jumping off a cliff and having to assemble a plane on the way down”. There are going to be big ups, big downs, problems with people, technology, and all sorts of other stuff, all of which is going to happen each and every day! You need someone who’s living the same reality, that can provide a different perspective, get you out of your mental rut, and back on course towards changing the world.

Fundraising

I’ve often heard that aside from market (i.e., does one exist), a strong team is usually the number one thing venture investors are looking for. Further, they want to know that what you’re proposing is more than a one-man-show, that it’s a highly functioning machine of diverse, talented folks pursuing the same goal, not one superman with an idea. It’s just a bigger hurdle to get over as a sole founder. Good investors know what startups are like, and they know the benefits of investing in a company that has more than one guy at the top.

Team

Having a good co-founder helps in both the building and management of a team. When you’re building a startup team, you’re simultaneously trying to get the best possible talent while paying the least possible compensation (money and stock). Having a partner who has prior experience in startups not only means you’ve got a rolodex, but it also sends a message that this is more than just one guy’s (potentially crazy) vision, that this thing has a life of it’s own, that this is something a potential hire could get behind.

Further, no matter how good your team is, there are going to be people problems, big and small. Just like everything else, having someone there to offer a different perspective can mean the difference from a total blow up and keeping things moving in the right direction.

Agility

Finally, agility is a key by-product of a functioning partnership. Again, it’s the 1 + 1 = 3 situation; there’s simply no way you would be as agile, or as effective on your own. You’re both putting in 18 hour days, six to seven days a week, most likely spending more time together in close quarters than you are with your family or significant other. Chances are, neither one of you really tolerates sitting still, or leaving a problem unsolved. Now, if it was just you sitting in that room there’s a good chance you’d get stuck in ye olde “analysis paralysis” mode. However and since you’re both stuck in the same room together, it’s likely you’re going to bug the crap out of each other until the problem is solved. We call that progress.

These are just a few of the observations I’ve made since Eric and I teamed up earlier this year. No question we get on each other’s nerves and have some heated arguments from time to time, however we recover, move forward, and are stronger for it. No doubt we’ve got a long road in front of us, however I can definitely say I’m never again going to go it alone.

Starting a business is all about balance.  When we focus on creating a new company, we often begin by creating a product and then we focus on how to make it viable.  Although making a product can be very fun and challenging, making money can often be real work.

Recently, I was reading an article entitled, “6 Lessons From the Startup CFO – Mark Macleod.”  The article seems basic at the outset, but what he ascribes to are the factors that do in fact determine the success of your business. BTW, having a great CFO helps too.

Give the article a read, and let me know what you think.

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Funding a startup is tough business.  I have written in the past lots of articles on what to say as well as what to include. Additionally, I wrote a piece back in Feburary entitled: “Startup Business Plan — How an Investor will Evaluate “Your” plan.”

Today, I’d like to include an article penned by Cynthia Kocialski on what not to say titled “How to Lose an Investor Before You Finish Speaking.”  Now, as an investor in many businesses, I can echo much of what she is saying in this piece.  Always remember, investors are very skeptical.  As much as they want to find good places for their capital, they too recognize that finding the places to not put their capital is many times more important.

If I were about to present to an investing group, I’d work hard to measure up to both of the articles referenced and linked to above.

On another topic, stay tuned to some big announcements coming soon… (teaser)

Startup funding is all about the deal. As with many disciplines of finance, choosing the right terms for your startup can go in many different directions. Along with valuation, I cannot think of a single term more significant than the “liquidation preference.”

I’m a big fan of Fred Wilson, and recently he weighed in on the topic. Understandably, he takes the position that most benefits the investor, but are there other points of view?

Give the article a read “Here’s Why You Need A Liquidation Preference.”

Should the investor deserve a priority position in getting funds back? Should the upside and downside of an investment be married? This would never exist in a public market, is it fair in a private, non-liquid one? Would you choose a different source of capital if your preferred investor demanded the “preference?”

Consider the following:

1) You run the business

2) You presented the business plan

3) If successful, the negative affect of the preference is greatly diminished

4) Or, What if the VC gains Board control and forces a sale at a price that you are uncomfortable with?

5) And, What if the company is sold before you have time to complete your plan?

I’ve been on both sides of the table as an investor and an entrepreneur, and I have some pretty strong opinions here, but I’m going to hold back and respond via comments. So…what say you?

Great interview conducted by 37signals with Chris Wanstrath, CEO and Co-Founder of GitHub. This article is part of 37signals’ “Bootstrapped, Profitable, & Proud” series which profiles companies that have $1MM+ in revenues, didn’t take VC, and are profitable. This is a must read if you’re thinking about starting a business in the tech/web space anytime soon.

Get the full article here.

Raising capital for a startup is tough business. Most entrepreneurs spend the majority of their time thinking about product features, market fit, team building, launch strategy and on and on. The big ugly that sneaks up is of course, funding.

In the past, a startup would begin by hitting up friends and family. Next, the move would be to open a round for angel investors, and hopefully still later, nail a fat check from the venture capital community.

So what’s new? Looks like there is a growing trend toward eliminating the notion of rounds and maintaining an open offering. What?

Read more here…  ”How to raise money with no lead.”

So what do you think?  Will it fly?