Three Types of Cofounder

There are three types of cofounder:

  1. Legitimate cofounders, who have invested blood, sweat, and tears, and time, treasure, and talent, toward building their companies from day one;
  2. 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
  3. 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.

Interviewing Entrepreneurs

Most startups, especially small enterprises, are immensely personal endeavors. Entrepreneurs feel the tremendous weight of every decision. While the right moves at the very least bring about one more day in business, a single wrong move can spell disaster for the people involved.

And, yet, startups are treated by outsiders, especially the financial press, politicians, and critics, as paths to equitable returns, engines of innovation, or symbols of corporate greed. When interviewing founders, one should remember what they, as human beings, have sacrificed, or will sacrifice, for not just success but their dreams.

Here are some of the best questions to ask entrepeneurs…

  • How has the startup impacted your family, social life, or relationships? Have you become more cognizant of the quality of life needs of your employees?
  • If you sold your company today, what would be the tone of that conversation? What would you want to gain? What would you want to avoid losing?
  • Many entrepreneurs are forced to leave their companies. How would you feel if you found yourself in that situation? What would you do?

But the most revealing question could be quite a bit simpler: "How has your day been?"

I have asked these questions in my interviews. One of my favorite answers was given by Ken Williams, cofounder of Sierra On-Line. The answer was unexpected, to say the least.

Williams: […] It was also a problem for our family. There were no private schools, and the public school in Oakhurst, where we were based, was rated among the lowest in California. None of our children's peer group seemed interested in college. We had moved to Yosemite in 1980, but by 2003, it was clearly time to leave if we wanted the company to succeed—as well as our family!

Ramsay: With a family of your own, were you more cognizant of the more human needs of your employees? Did this influence how you thought about "the Sierra way"?

Williams: The sad truth is that I was not much influenced by family. Both Roberta and I are workaholics. If I'm awake, I am generally at my computer. I have been retired for 13 years, but I still try to write some code every day.

My philosophy of business has always been that business is war. You need to decide if you want to win or lose, but there isn't an option to just show up. To beat the other guy, you need to get there sooner, hire better people, work harder, start earlier, focus on every detail, and have all of the luck you can get. I can't remember ever taking my sons to a baseball game. I never coached any team for the kids or went to a PTA meeting. I prided myself on trying to go weeks without small talk with my secretary.

We were young, and wild parties did occur, but these were exceptions. At Sierra, my "business is war" attitude generally prevailed, and anyone who needed family time didn't understand the problem.

As an aside, there is truth in retirement. The most self-honest answers come from those who had time and distance to reflect. Ken Williams has been retired for more than 20 years, exposed to the elements on his yacht. Working founders, however, are still living and breathing "in the moment," unaware of their blind spots and charging toward what could be only the illusion of destiny.

"Jeff Stibel wrote […] that entrepreneurship is a disease. I have the disease, and part of the disease is not seeing the world for what it is."
Jason Rubin, cofounder of Naughty Dog and vice president of content at Oculus VR

Gamers at Work reveals the risks and emotional complications in entrepreneurship

How Gamers at Work can benefit students

Ramsay: Gamers at Work is first and foremost a business book. The Entrepreneurial Management Center at San Diego State University has a copy in their library. Wagner College, one of the top private business schools in New York, has a copy in their library, too. I think the book would be perfect as a teaching tool for founders, a reference that bridges the gap between professional managers and founders, and a resource for game developers who should understand the how and why of the decisions that might one day affect their employment.

Read the full interview at VentureBeat ›