“Oh, I’d spend more than 12 hours a day with Hasan,” Jeremy told me. “Even now when we work remotely we are constantly chatting on Slack.”
“That’s great. How did you guys meet?”, I asked unable to shake the feeling we are talking about a romantic couple rather than a startup duo.
“Oh it’s funny... you know... we actually worked at the same CIBC office but we never knew each other because I was in Finance and he was in IT. So, when we met at Ela’s birthday party a couple of years ago, it was like... hey wait a second, you look familiar... and we started talking. The week after, back in the office, I ran into him at the Starbucks in the lobby and we started chatting...”
If this feels like the romantic beginning of a dating story I don’t blame you. Several times during my conversation I wasn’t sure if Jeremy and Hasan were in some kind of an open extramarital relationship. They weren’t. Jeremy and Hasan are startup founders who quit their day jobs to go all in on their startup idea.
Their story is not rare among founders but it’s not that common either. Many entrepreneurs struggle to find a suitable co-founder and it’s usually through serendipity (enter Kate Beckinsale and John Cusack).
It shouldn’t be this way though. There should be a place where founders can find their startup soulmate who shares their interests and has a complimentary skillset. This week’s idea is about building such a place.
Build a platform where founders can meet co-founders with the right skillset, personality and work style to help them build their next startup idea.
Who Is It For?
Your primary target customer will be someone who fits the following profile:
A solo founder
Most entrepreneurs looking for a co-founder will likely work on their own. A duo looking for a third person with a specific expertise is also possible but not as common.
First time entrepreneur
Naturally, you won’t say “no” to an experienced entrepreneur. They, however, are more likely to have a diverse pool of high quality of candidates to pick from. First-time founders face a different reality, which will makes them ideal candidates for this solution.
Working on a digital product or service
Digital products and services overlay a wide range of verticals in which startups operate. In my experience, most solo founders are building some form of a digital product whether it’s in the field of medicine, finance or social justice.
An informal and unofficial survey of popular startup communities shows that most members are working on businesses using high degree of technology. Naturally, I’m excluding here anyone building a traditional small business like a coffeeshop or a laundromat.
Has some professional background
A big portion of tech founders are software developers. The rest often have formal training and professional experience in a wide range of fields: marketing, project management, design, accounting, etc.
25 - 45 years old
A from the shows that most successful entrepreneurs are in their mid-forties.
At that age, however, I assume most founders already have a diverse network of contacts to draw from when searching for a co-founder. I am not suggesting to ignore the 45+ age group, only that they are less likely to need a co-founder search platform.
The total addressable market is hard to measure accurately. There is no doubt that there are millions of entrepreneurs around the world, however, not all of them will be accessible to you. This is why, we need to look at the portion of the market you can actually reach. This is your serviceable addressable market (SOM).
A good proxy of your SOM are the membership bases of popular hangout spots for founders:
A free community where founders (mostly early stage) discuss a wide range of topics related to building their startups.
A newsletter with a private community that breaks down emerging markets and trends. The founder, Dru Riley, has built a strong community of entrepreneurs, investors and marketers that support each other and grow together.
Makerpad is one of the biggest content and education platforms for no code. It recently got by - a strong vote of confidence in the future of no code.
A community for tech and non-tech makers using no code tools to build digital products.
A premium newsletter service and community founded by Sam Parr - the man behind . Recently, both publications.
If you add up the members of these communities, you’ll get 78K. This is not your SOM. It’s much bigger and here’s why:
The communities and platforms I listed above are just examples of good places to start discovering customers. There are many more like them that will bring up the membership count in the hundreds of thousands.
Not every founder you can reach is part of an online community you know about. The that in 2019 there were more than 80 startup ecosystems worldwide. In 2021 the number is certainly higher.
These ecosystems represent clusters of entrepreneurial activity. If you tap into such a cluster, you can get access to thousands of startup founders. The best place to start is by exploring incubators and other organizations that serve the local startup community.
Founders face numerous challenges when it comes to finding a co-founder. I discovered four big ones:
👉 It’s hard for founders to find co-founders with complimentary skills.
We hang out in homogenous circles. Developers know other developers but few marketers; marketers know other marketers but few developers. This is totally normal, as we tend to meet and hang out with people who have interests and experiences similar to ours. As a result, our networks are a poor place to look for people with skillsets and talents widely different than ours.
Adora Cheung has a solution for this problem. In her for , she suggests that if you are a non-technical founder, it may be worth the effort of spending some time in a technical field (i.e. a software company). The idea is to meet people with technical skills, which may become co-founders.
You may have already spotted the problem with this approach: it takes too long and it gives you no guarantees you’ll actually meet the right people. Even if you do, bringing your relationship to a position of starting a venture is a long shot.
Imagine you work for the accounting department of Snap. There are tons of excellent developers that work for the company but your job doesn’t give you many touchpoints with them. You could reach out to them but since your jobs have no overlaps, it will be an awkward experience.
👉 Founders are unsure what skillsets to look for.
Building a company always requires you to learn on the job. As a founder, you will have to learn certain skills yourself but for others you’ll have to hire. The questions is: what is worthwhile learning you need to do yourself and what skills should you hire for?
This problem is bigger than it appears. Putting together a team with the wrong skillset is why startups fail (number one is failing to find a product-market fit). quotes Nouncer’s founder who wrote: “This brings me back to the underlying problem I didn’t have a partner to balance me out and provide sanity checks for business and technology decisions made.”
👉 Finding a founder with the right personality and work style is hard.
The other less tangible aspect putting a strong team together is the ability of its members to work well together. Ultimately, it comes down to personalities, understanding each others’ work styles and communication.
Large corporations spend millions building strong teams. The process starts with the hiring: many companies ask new candidates to complete personality and work style tests to determine compatibility.
Early-stage single founders almost never do this. As a result, many go with their gut feel. Sometimes it works, often it doesn’t.
👉 Founders need help with the legalese of bringing on a co-founder.
Few early-stage ventures have the money to hire employees (especially highly-skilled ones). Even then, founding partners that bring critical skills and commitment will be looking for some ownership.
At this point many founders realize that 1) they will need to register their business as a corporation and then sign a shareholder agreement. Registering a business is easy (at least from my experience in the US and Canada) but a solid shareholder agreement is a different beast. Even picking a free template takes some understanding and editing, which always turns out more complicated than it seems.
The problems we delved into above are real and urgent for many founders. You can solve them by building a platform that helps founders discover partners with the right personality, skillset and interest. For simplicity, let’s call the solution FounderMatch.
To ensure a close product-market fit, FounderMatch will have to have features addressing at least some of the urgent problems above. This is what they could look like:
1️⃣ Live search and filtering of member profiles.
This is the must-get-right feature. You can fail at almost everything else and still have a solid value proposition if you get the search and filter feature right. After all, people will sign up for this main purpose - to search and find other founders.
2️⃣ Personality-based matching algorithm.
As part of the registration process you can require each user to complete a personality test. It can be as simple as answer basic questions about their work preferences or as involved as a .
The idea here is to obtain information, which can be used to identify key personality and work style trends. Based on this user-specific meta data, the algorithm can recommend member matches. You can design the matches to be displayed as percentages. They could read something like:
70% work style compatibility;
Alternatively, you can go more subjective (and entertaining):
This feature will not only be fun to use but it also solves an urgent problem - finding a co-founder you have high chances of working well with.
3️⃣ Founder endorsement score.
Some founders I spoke with brought up a valid concern: how do you make sure the founders on the platform actually have the skills and traits listed on their profile.
You can tackle this challenge through peer-based skill endorsements. Borrowing from LinkedIn, members can recommend other members for skills like web development or writing. Members can also endorse others for personality traits like punctuality or work ethic.
To make sure endorsers have some skin in the game, their profiles (as endorsers) will be visible on the other people’s profile. The idea is to prevent members from endorsing each other for skills they have no knowledge about.
4️⃣ Icebreaker events and mastermind groups.
To increase serendipitous connection among members, you can organize random icebreaker sessions. Members that sign up for the icebreaker will be randomly assigned for a video chat with other members. Each chat can last 10-15 minutes before they can opt in for another random match.
Once the community grows large you can run several icebreakers throughout the week.
In addition to the icebreakers, you can also organize mastermind groups. They can meet over Zoom on a regular schedule to discuss challenges and successes founders are facing.
A third option is live streaming video chats with guest speakers or members. Yes, this is a shameless theft of Clubhouse’s idea but then if Twitter can do it, why not you too?
5️⃣ Help with shareholders’ agreement.
You can address the legalese problem in three ways:
You can create shareholder agreement templates that members can customize on their own; You can offer members the option to book legal counsel through the platform to help them with their shareholder agreement (may be you offer discounted rates); You can outsource the service completely to an office you work with and receive referral fees.
There is a fourth option: don’t do it. Offering some legal help can give you some edge but it’s not a major selling point.
The Value Prop
Your value proposition is about your product solving specific problems for your customers. Usually, they hide themselves in the forms of jobs your customer needs to do or pains she has. Here’s how FounderMatch’s features address the specific problems we identified.
All good business models have strong moats or defense mechanisms. They come in the form of features that add high value and are hard to copy. In the case of FounderMatch, you can build three moats:
Platforms are natural communities, which in turn are natural moats because no two are alike. A strong community will harness connections between its members that will build a network delivering value higher than the sum of its parts.
As is often the case with good communities, people join for the product and stay for the people.
The democratization of technology has made it a weak moat. Even with patents, smart people figure out how to deliver the same value in a different way. RIM held a patent on the Blackberry keyboard. Apple made the keyboard digital and the patent irrelevant.
But why did people switch to Apple in the first place? The experience. It remains the one true feature no one can copy 100%.
UX goes beyond customer service and glass-like display boxes. It’s about the overall experience your customers get from using the product. Below are some ideas how to do it right:
Design user journeys within the platform that stand out for being intuitive. Every step and prompt has to make sense. Good workflow design makes the app fall into the background and enables the user to focus on what they are doing. Use gamification to reward desired behaviour and make the use joyful. A member messages someone for the first time? Shoot the fireworks to celebrate. A user gets an endorsement? Help them share the good news. Such mini celebrations increase dopamine, which forms positive subconscious associations with your product. Develop tools that enable natural and meaningful interaction between members. It should be extremely easy to message, endorse and connect with someone. At the same time, it should be extremely easy to stop someone from doing so if you don’t want them to.
You can develop a proprietary algorithm to match users based on the meta data from their onboarding survey. The algorithm by itself is not a moat though. The unfair advantage comes from how the algorithm, the data and the user behaviour come together.
The best way to reach your target market is to find out where it hangs out. Below are some of the channels you can connect with founders and digital creators:
Incubators are organizations that help early stage founders validate a product-market fit and gain some traction. You can approach an incubators’ management by offering some value to their startups. It could be in the form of free coaching or training seminars on finding a strong co-founder, product-founder fit and building strong teams.
Many incubators welcome these kinds of activities because they offer extra value to their members.
There are hundreds of groups and communities where founders and makers hang out. I mentioned some of them in the Market section of this report.
While many of them are paid, some are free. A good place to start is . The group has over 20K members who are predominantly independent makers of digital products. Technically not a community or a group, is also a great place to connect with makers. As the site is primarily a place for founders to launch their products, you have to approach Product Hunt strategically. Connecting with founders who have already launched a successful product won’t make much sense. Instead, you can find products on the margins and reach out to their makers. As always, your approach here is to help and offer value. At no point should you be selling them or get them to subscribe. Your goal for reaching out is to help and thus create awareness and drive word-of-mouth. No code communities are also a great place to connect with potential customers. Their members are usually solo developer building digital products. You can start by joining some of the communities on Facebook or join a private community like .
Reaching founders in various groups and communities is more like a hand battle. You can take a more mass approach by sponsoring a service founders subscribe to.
Newsletters focusing on business news, productivity, no code and technology are good places to start. You can reach out to their creators and ask about their sponsorship terms. , , and are some of the more popular ones. You can take the same approach with podcasts. , and create content for the startup community and are super popular with indie founders and creators.
Word of Mouth
Needless to say, you can spread the word by sharing what you are building with your own network. Besides the obvious social media approach, you can leverage the word of mouth by giving access codes early members can share in their network. This approach will work well only while you are in private beta or you build the platform to be by-invitation-only.
Keep an eye on the following metric for early signs of success:
The success of any platform depends on the number of users. There are two reasons for this:
Platforms are networks. Their value increases as a function of their size. The more people are on the network, the more connections they can create among each other and the more value is generated for its members. Facebook remains popular for a simple reason: everyone’s on it. High subscriber growth also means an initial sign of a product-market fit.
Monthly Active Users
A high growth of subscribers is great but a high number of monthly active users (MOU) is even better. You want an upward trending number, especially if you are experiencing high growth.
A solid and growing MAU takes the validation of a PMF a step further: it confirms that users are engaged and derive value from the service.
Moreover, engaged users are more likely to become paid customers.
Customer Acquisition Cost
Put simply, this is the money you spend to turn someone into a paying customer. Customer acquisition costs (CAC) usually include marketing, advertising, promotions and business development expenses directly related to getting subscribers. You simply add them up and divide them by the customers you acquired.
On their own CAC doesn’t tell you much. You have to look at them in conjunction with the customer lifetime value.
Customer Lifetime Value
CLTV is the revenue you receive from a subscriber while they remain a customer. You want your CLTV to be higher than CAC. This means you are generating gross profit and you could potentially have enough money to cover your overhead costs.
FounderMatch can generate revenue in one of three ways:
commission from services provided by others on the platform.
Of the three options, the first one is probably the most sensible choice for FounderMatch. While virtually all social media platforms rely on advertising, they make this model work because of their huge memberships (billions in the case of Facebook).
As for option three, it’s a great option if we fundamentally rethink the business model. If, instead of finding co-founders, FounderMatch is a place to find paid advisors, then charging a commission for the transactions taking place through the platform will make total sense.
The scenario below assumes a subscription model and shows one possible scenario of the future. I’ve calculated the expenses as percentages of revenue to arrive at average margins SaaS businesses.
There are two other benefits to building a model like this:
If built dynamically, you can run sensitivity scenarios on your assumptions (i.e. subscription fees, growth rates, expenses, etc.) and determine the impact on your numbers. If done right, it forms a solid basis for the budget of your business and potentially a forecast you can share with future investors.
👎 Look at Elon Musk - he does it all as a single founder.
👍 When he started he did have co-founders - first his brother and then Peter Thiel along with few others when building PayPal.
👎 Founders will never pay for this. They have Twitter and Indie Hackers to find co-founders.
👍 They will pay as long as the app solves their problem. Twitter and Indie Hackers are great places but chances of finding a co-founder there are needle thin.
👎 Once a founder finds a match they will leave the platform.
👍 Not if they continue to receive value. This is the idea behind the ice breakers, masterminds and building a strong community. Users join to find a co-founder and stay for the experience.
👎 You’ll get a whole bunch of people who are scammer or not serious.
👍 You’ll definitely get some of those. By having peer endorsements and member recommendations, the good ones will rise on top and the bad ones will sink to the bottom.
How to Validate
Start by validating the problem. To do this you need to know your ideal customer. You already have the basis of a customer persona and where to look for her. The next step is to connect with solo founders and discover:
How are they getting jobs done they are not experts at? Are they looking for a co-founder? How are they going about it? What are they looking for in a co-founder? How did they decide to look for those specific skills in a partner? What is important for them in a potential partner?
If your directional interviews reveal there is an urgent problem, then you need to validate your solution. Do it by building a landing page with a mock-up version of the platform. Share it in the founder groups you joined and the founders you interviewed in the previous step and get their feedback. Keep track of how many signed up. If it’s a high percentage (30%+) your solution may resonate.
Reach out to the subscribers and interview them by asking:
What feature grabbed their attention? What’s one feature on the list that’s a must-have? What’s one feature they would add to the list?
At this point you can make a bold move and see how many would actually sign up on the spot. Observe their responses and see how many would actually go through with it. You can send them a link to collect their payment information and explain that they won’t get charged until you launch.
Another skin-in-the-game test you can do is to ask them to share the landing page on social media. Keep track of how many do.
Naturally, these tests work best with interview subjects that say they like the product. It’s a way to gauge how serious your potential customers are about signing up for the service.
Once you have enough supporting information, you can build the first MVP and prep for more tests.