The co-founders of BlackBuck decided not to write a formal agreement from the beginning. However, they took the time to clarify expectations of responsibilities and role allocation. The focus on these decisions has allowed their launch to evolve exponentially. Between July and December 2015, they grew from three sites with three customers to 54 cities with 50 customers and the team grew from 35 employees to 250. In less than two years, they developed a technology platform and set up a network that completely revolutionized India`s truck industry. By the end of 2018, BlackBuck has grown to more than 2,000 sites and has served more than 10,000 customers. What decisions can be made by one person and which decisions need a consensus between the two or the founders? Most founders make decisions based on their experience, roles and expectations. Sometimes the outlook doesn`t coincide. The absence of a decision-making route can lead to conflict. For example, a technical co-founder could set a one-year target for product development, while a company-oriented co-founder wants to assure investors that the product will be ready in six months. Who has the right to repeal which decision, given that the decisions concern the same pool of resources? Co-founders who have a relational approach assume that all co-founders are invested in the same way in the outcome of the company.
A relational approach to the allocation of the co-founders` capital ratio: for example, a person may believe that three hours of work on a given task means that they add an X value. For others, a unit of time is not worth much, if at all, if it does not work. “As a person from the company, a unit of time is not worth a dollar to me” without results. She adds: “I always look at the result – what capital – was created, from which I can deduct future dollars. What is each founder`s commitment to the company, given future external opportunities that could conflict with current roles and expectations? If a founder leaves, do other founders have the right to buy non-rights shares, or do they return to the common pool? One of the first decisions the founders must make is the legal form in which the company must operate. Because founders often set up businesses without consulting lawyers, they pay higher taxes and are subject to large debts that could have been avoided if they had structured the transaction as a limited liability company or company (“CSR”). Now, as a VC, I help start-ups create their version of the future. The best startup teams systematically focus on known strangers, it`s a mountain they know you have to climb, but you haven`t found your way yet. Unfortunately, a lot of teams do the simple things and don`t focus on hard games.
Our research sheds light on what Robin has learned in the hardest way. We look at the time that founding teams spend discussing their share fractions, and we find statistically significant differences between teams that split rapidly – without serious dialogue about personal uncertainties and expected contributions – and those with longer, more robust dialogue.