The Three Types of Cofounder
There are three types of cofounder:
- Legitimate cofounders, who have invested blood, sweat, and tears, and time, treasure, and talent, toward building their companies from day one;
- Honorary cofounders, who are granted the title by the legitimate founder or cofounders as part of a strategy to leverage the reputation of a prominent individual to raise capital, secure coverage, or otherwise add strategic value; and
- Shameless liars, who are usually early employees but sometimes employees who are quite far from being among the first. They independently lay claim to being cofounders to elevate their status and advance their own interests.
Over the years, I have asked and interviewed some entrepreneurs about the latter.
There are two prevailing schools of thought:
- Those who position themselves as cofounders may have backroom support, provided their track record was excellent and they don the title respectfully.
- On the other hand, the very act of exaggerating their role in the history of the company for personal gain is viewed as a personal assault.
Consider what Trip Hawkins, founder of Electronic Arts (EA), had to say on this topic:
Ramsay: Many entrepreneurs in this business work within founding teams. Did you? Were there any cofounders of EA?
Hawkins: No. A company is either founded by one person, who then hires the early employees, or there is a group of cofounders who work together to found a company on an equal level and who take equal risks. If there is a cofounder, then there cannot be a founder.
Every company must hire employees, but being an early employee does not make you a founder. I have been the founder of three companies, but none of my early employees from 3DO claim to be cofounders. Since I left EA, some individuals have wanted to position themselves as cofounders.
But the facts are that I spent a decade entirely on my own to develop the foundational ideas. I funded the company's first year entirely myself. I was the only one there when I incorporated the company and opened the first office. And I made offers to the early employees and paid their salaries, and in some cases, I even made personal loans so they could buy stock.