When it comes to starting a business, there is a perennial poser: are two heads better than one? For brand consultant Andrew Bradley, the answer was obvious.
“I never wanted to do it on my own,” said Bradley, 48. “I knew I needed someone with a complementary skill set to mine. I’m a creative person and I needed someone who could talk the language of business.”
Through a friend, Bradley was put in touch with Brian McGurk, and the duo set up the Bradley McGurk Partnership 15 years ago.
“It was like speed-dating, but it worked,” said Bradley. “I’m an unstructured, ideas person. Brian is much more process-driven.”
A decade and a half on, and the relationship is still flourishing. It is also strictly business.
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“We weren’t friends to begin with and we’d both agree that we’re not friends now,” said Bradley. “We have different social circles and different interests, but it works and I wouldn’t change it for anything.”
Despite the marketing sector taking a hammering, fee income at the brand development agency, which employs 10 people, has risen 17% in the past 12 months, to €1.5m.
It has not all been plain sailing but, when tensions arise, Bradley and his Newry-born business partner draft in a chairman to help.
“The chairman’s role is almost that of a counsellor,” said Bradley. “But tensions arise less and less the longer we know each other. It’s all about understanding the other person and learning what buttons not to push.”
According to the recent Startup Genome Report, a US survey examining the performance of technology start-ups, businesses of solo founders were found to take three times longer to reach “scale stage” than those based on a founding team of two. Co-founded businesses were twice as likely to pivot — identify and respond effectively to changes in the marketplace.
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Balanced teams, with one technical founder and one business founder, raise 30% more money, have three times more user growth, and are 19% less likely to scale up prematurely than technical-heavy or business-heavy founding teams.
Jonathan and Jason Ruane, brothers from Sligo, discovered the value of complementary skill sets early on. They set up a webdevelopment business, part-time, aged 17 and 18. When they went to college, Jonathan studied commerce and Jason took up computing.
The brothers pursued careers with multinationals — Jason with Intel in Israel and Jonathan with Procter & Gamble in London. When Jonathan came back to Dublin in 2009 to start Eventovate, a developer of software for hotels, the first person he hired was his brother because he wanted a partner with technical skills and someone he could trust.
“Starting a business is not easy, and you need someone as committed as you are,” said Jonathan. “In the beginning I would have considered another co-founder. Now I know how hard it is, I wouldn’t do it with anyone else.”
The company’s performance seems to back up at least one of the claims of the Startup Genome Report: it recently secured €700,000 in venture capital.
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The greatest advantage of having a co-founder has little to do with money. “You have someone to bounce ideas off,” said Jonathan. “If you have an idea for your product, you can’t go to your investors and say, ‘What do you think of this?’ They don’t want to hear it. A partner is far and away the best person to talk to.”
Enterprise Ireland (EI) encourages start-ups to have more than one founder.
“It’s a very lonely place to be,” said Ray Walsh, an EI specialist in internet start-ups. “Yes, you need one person to be the CEO, but the CEO drives the company. [Other] stakeholders share the risk and drive the company forward better than the employees.
“This kind of collaborative approach is much more prevalent in newer entertainment, media, internet sectors than it is in the older, more traditional sectors.”
There are pros and cons to the joint approach. On the plus side, investors like to see a balanced management team, according to Eibhlin Curley of Dublin City Enterprise Board.
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“It’s hard for one person to have every business skill, so having a business partner can make sense,” she said. “A business partner can share the workload, help with bouncing ideas off someone, and you can cover for each other if you are on holidays, sick or having a baby.”
On the other hand, tensions can arise where the workload or contribution is not shared evenly.
“As the business evolves, there can be differences of opinion in the direction and strategies that lead to irreconcilable differences and to the business breaking up,” said Curley.
She urges anybody considering co-founding to put thought and discussion into their potential partnership or ownership agreement. Curley also advises a “business pre-nup” agreement, covering what happens should either party decide to leave the arrangement.
However, not all agree that two founders are better than one. Mark Suster, an American venture-capital investor, is wary of the mythology in Silicon Valley surrounding co-founders, driven by the successes of Google and YouTube.
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Suster says he spends his time “as a marriage counsellor” with start-up founders who do not get along.
Worse still, where business pre-nups do not exist, the outside investor can end up with a partner walking away “with a free ride on 50% of the equity” of your business. Co-founders might even impede the ability to raise investment, Suster has found.
“We look at a company, we see four co-founders, two gone. The two [who are] left have maybe 12% equity, having raised angel funding,” Suster told delegates at an event at Stanford University.
“If I put in venture capital, that [founder stake] will be diluted to 8% and, after another round, diluted to 5%, and I have got to top you up with stock options.
“You know what? I prefer not to get involved. Ultimately, I prefer a stable environment with a passionate leader, willing to share equity and share decision-making, but with divorce clauses.”
When Agata Stoinska set up her photographic studio business D-Light Studios, catering to film and TV crews, in Dublin city centre two years ago, she thought she needed a co-founder.
“I had met a friend of a friend who was experienced in business and was going to come in on the venture with me on a 50-50 basis, but at the last minute he pulled out,” said Stoinska, 33.
At the time, it seemed like a disaster. In retrospect, Stoinska is glad.
“I thought I needed not only his financial investment, but the benefit of his business experience. In the end I managed to do it all myself,” she said.
After only two years D-Light is breaking even. “This way I don’t have to give half of any profits to a co-founder,” said Stoinska.
Her advice to those thinking of going down the co-founder route is to choose extremely carefully.
“Don’t just go for the person with the money, go for the person who will give you ongoing support and fill up any weak sides you have,” said Stoinska. “Be even more careful choosing a business partner than you would a husband.”