Is it Time for Founders to Co-operate?

One thing most entrepreneurs hate is inefficiency. Inefficiency is what they exploit to beat larger competitors. So why is the distribution of resources to help businesses start up so damn inefficient?

When you start a company, typically your biggest challenge or need is to find the people who will help you build your product and help you find customers for it. So you go looking for money from investors and accelerators so that you can pay for people to do these things.

But you need the help now. Not the months from now that it will take to go through the investor/accelerator screen. And you typically need part of a really skilled person’s time, not the full time of someone more junior. So why not cut to the chase and just get the people you need without the money?

So where do you find these magic people? From the founder community.

Founders come from many backgrounds and are typically strong in one particular area. One founder might be a wizard at UI, but need help on engineering, product development, marketing or sales. Another might be the world’s best salesperson but their time is wasted until they have a product built.

If only there was a mechanism to trade equitably between founders then this would be a cinch. Because often it won’t be a one-to-one relationship where the one needs what the other has and vice-versa. Founder A will need the skills of Founder B who needs the skill of Founder Z and so on. Put these different skills together though and you have a formidable team.

Well, there is. It’s called a co-operative and its structure is used world-wide to equitably and sustainably find a way for people to work together for a common goal. Some of the largest “companies”  in the world are co-operatives. In Canada and elsewhere there is a long history of people working together to get a better deal together than they would divided.

So what’s great about getting what you need to move your company forward, while helping other founders succeed? Other than the obvious gratification, by doing it through a co-op structure, net proceeds can be used to build long-term capacity for the member partners. 

It’s very inefficient to build sales and marketing capacity each time for each company for instance. A co-op could have a dedicated account manager who calls on all of the big companies in Canada on behalf of all member companies, both present and future. This long-term relationship will save each founder company months in trying to get in to meet the right person. It will also help educate the largest companies in Canada of the need to work with the country’s innovative startups to help build Canada’s market future. There are many other areas where capacity could be built that could be leveraged by each start-up.

But capacity is about more than resources to help you succeed, it’s also a cushion to stop your fall. We all know the statistics about company failures. And when you fail there is no E.I. for entrepreneurs. Everyone makes money off you all the way up, but when you fail, it’s crap sandwich time. There is a thriving ecosystem of horse-traders all making a buck of hopeful entrepreneurs in the founding process, but nothing going to how to invest in you if you fail.

A co-op, on the other hand, can re-invest its funds in giving full-time jobs to member partners to work off their debts by working full-time for member firms in the co-op, getting them back on their feet until they are ready to start their next venture. It could even invest some money in living quarters for those who really fall hard or who want to bunk near the nerve center for creativity.

It’s about recognizing and empowering the fact that some of us have chosen being a founder as a long-term career, one that will have ebbs and flows, but that has some consistent themes and milestones, including some times working for others. Then it’s about finding a way to even out the highs and the lows and make the practice of honing our skills more efficient. It’s also about building a brain trust of knowledge and resources that can be leveraged any time its members need  it.

So how to get started? Well, a co-op like any other organization needs bylaws and articles. I should say, a co-op especially needs those things. These cover details like classes of members, determining how to credit members for their work and at what rate, how members can receive services in return, and what fees (e.g. in terms of equity, percent of revenue) a member would have to commit in order to become and stay a member.

As custodian of this idea, I’ve reached out to the Co-operatives Association of British Columbia who have generously donated lawyer time to help the first 10 to 15 founders who form the co-op. I’ll be one of them, but only one of many. That’s how co-ops work. One member equals one vote.

If you’d like to join me, sign-up at Founder Guild and let’s get started finding a better way.