Why two alpha males can’t lead a startup as co-founders

Apple Computer founders Steve Jobs and Steve Wozniak. Photo credit: Alumni.berkeley.edu

I was talking to Asha Jadeja, the wife of late Rajeev Motwani, a mentor to Google founders Larry Page and Sergey Brin, while she was visiting Delhi from Silicon Valley.

A touchy topic which came up during a conversation on entrepreneurship: can two alpha males be co-founders in a team? Should they hold 50 percent each? How does she deal with such scenarios in her portfolio?

Asha quickly replied: “It’s a recipe for a disaster. While mentoring we quickly recognize who is an alpha male.”

There is always one leader

During conflicts, boards generally prefer an alpha male over the meek one, who in times of conflict might be given the golden boot.

“It’s important for investors to date the entrepreneurs multiple times and identify the alpha male. Purity of thought comes from only one,” adds Asha, an investor in Indian startups such as Lookup.

Two people driving the same horse in different directions can be a problem, say co-founders and entrepreneurs alike.

Take any globally successful company. One clear name (in brackets) is known in industry circles as the alpha male of the startup:

Apple – Steve Wozniak and (Steve Jobs)
Microsoft – Paul Allen and (Bill Gates)
NetFlix – (Reed Hastings) and Marc Randolph

Friends and 50:50 equity. Does it work?

Some investors advise that a founding team of two friends should hold a 49:51 ratio of shareholding when starting off. Most people advise allocating equity based on each person’s contributions. However, among friends that rarely happens and they often end up splitting equally. There lies the problem, say some.

“I would advise going to the extent of 45:55. Ultimately, the veto power should lie with one person,” says Deepinder Goyal, co-founder and CEO of Zomato.

Deepinder, however, adds a caveat that there has never been a time that he has had to use his “veto power.” “With me and Pankaj (Chaddah, the other Zomato co-founder), often we end up supporting each other’s point of view. There is a camaraderie,” he says, built from years of knowing each other.

As former colleagues at Gurgaon-based Bain Consulting, Deepinder and his co-founder (also college junior) Pankaj Chaddah used to collect food menus of restaurants and would pin them to their soft boards. The offline collection took an online shape in 2008.

“I am not in favor of co-founders being brought in together at networking events to start a business together,” he says.

Choose equity or business success

Equity split talk is unpleasant, but needs to happen

Have a co-founders agreement