Co-founders are the foundation of the games company. They decided to become entrepreneurs because it was their choice to participate in building something new. To bring their own personality into what they are building. The company exists because the co-founders wanted it to exist. At all the stages of the company’s journey, they can play the role of a living example of why the company was started.
Often times, some co-founders can feel that they have been left behind and that they aren’t getting a say in how the company that they started is operating. Here are a few ways that these issues can come up and what are the best ways to deal with these issues. At the same time, the idea would be to not leave a single co-founder behind.
It starts with a Cap Table
At the very early stages of the company, the founders build out a list of how the ownership in the company is structured. I’ve seen two types of setups.
Equal ownership We at Next Games started the company in a way that each of the four founders had 25% ownership in the company. Our philosophy was that we’d work more effectively together as a group when the ownership and future payout would be equal. This changed later as me and one of my co-founders invested our own money during our seed round. This changed the balance in a way that the two of us owned a bit more. But still, the setup was clear that we’d start with equal ownership, and later on, the two of us deciding to take on more risk.
Who joins first, gets more equity This comes up in a lot of cases where there are more than four founders, where the split is uneven. It’s based on the timing of when you joined the founding team. As an example: The first two founders get 22%, then the following two get 16% and then the next joiners get less and less. This model works well because you can “hire” talented people and give them a meaningful piece of equity. And they get to become co-founders.
Not having a fair share on the cap table can cause resentment later on. With equal ownership for each founder, there shouldn’t be any resentment, since you are all getting the same rewards at the later stages of the company’s journey, through dividends, or by selling your shares when an exit happens.
Founders not scaling as fast as the company
The early stages in a startup are dynamic. All the founders sitting in one room, having daily stand-ups together, hearing out feedback and reaching clear decisions where everyone is heard out. When the games startup starts to embark on the venture route, the company starts hiring people.
At this stage, members of the founding team will start building their own teams, expanding to operate in their core skill areas. The technical co-founders will take on the role of CTO or VP of Tech, with teams of their own.
By definition, the goal of a venture-backed startup is to scale. Scaling well is not easy. When you have rapid growth, it’s hard to grow your skills at the same pace. What can often happen is that the founder’s role will become less ambiguous. There will be more expectations on performance and skills. If the co-founder can’t scale at the same pace as the company, they’ll eventually lose oversight, control, and position that they had in the early days of the company.
The founders who aren’t able to scale will need to step down into less managerial roles. Because the company is scaling, the manager spots will be filled with outside hires, who have a track record that meets the expected performance and skill criteria.
How to keep the co-founders involved
I’ve often been in a situation where I’ve observed co-founders working on their company. Often times, the co-founder who is the CEO gets to have the final say. What then often happens is that the other co-founders aren’t getting asked for their opinion.
Most of the time, there isn’t a lot of transparency to what was said and decided, and the other co-founders might start growing resentful. As the company grows, all the co-founders can’t be involved anymore in all of the decisions.
In these situations, it helps to be an outsider. I’ve often had one-on-one’s set up with all the co-founders separately so that I can coach them. My aim is to help them to see the benefits and abilities that they can have their roles as co-founders, even when they’re not at the top anymore. These roles, when not in the management of the company, should include many aspects of leading by example.
Show that you care Even if a co-founder isn’t part of the decision making, or they don’t have a team of their own, they can still lead by example. The co-founder should look after the people to their left and right, showing them why the company was started in the first place. When the co-founder walks into a room, people will want to hear what they think about things, and what should happen next.
Activate them Training and mentoring juniors is an obvious task for any co-founder. They can also pick up tasks here and there, especially on topics that relate to strengthening the company culture, that are well suited for a co-founder.
Enable them Help them figure out, from deep inside, how they could contribute to the company on things that matter most to them. If they’re very skilled at deconstructing games, maybe they should start writing internal blog posts on interesting games that have just coming out. Or if they are found of arranging events, why not activate the local gaming scene by hosting events at the company premise?
Listen to the co-founder Discover what role they should play in building the company. If they feel that they are being left behind, discover where? Did they use to do something that they aren’t allowed to do anymore? Help them find their meaning as the company grows.
For companies to stay strong, people at the top should ask how the co-founders can remain an important part of the company story. By being curious about the co-founder’s needs, interests and concerns, the co-founders will see that they not being left behind and will come to a leading example for the whole company.
It’s time we stop leaving co-founders behind and utilize their dreams to build great games companies. As the next step, I’d suggest you to subscribe to my newsletter where I’m sharing more on building successful gaming startups.