As a founder of a startup, you’ve probably been told that it’s important to find co-founders and that eventually you need to go full time if you want your business to grow. But many struggle with how and when to make these leaps. Asking someone to join you on the journey sounds like the biggest sale you’ll ever make. Raising the stakes by letting go of a job that feeds your family sounds even harder. Yet every founding team has done it.
I recently sat down with Chris Miano, founder and CEO of MemoryFox, who is just on the other side of these two big moves, with enough time passed to see how it turned out. MemoryFox is a marketing platform for nonprofits and small businesses to help them leverage community- and user-generated content, especially video. Miano’s lessons apply well beyond MemoryFox.
Q: What were the biggest problems you had as a solo founder?
You don’t know what you don’t know. You lack the maturity, honesty and humility to negotiate those unknown waters. It’s easier to recognize your strengths and weaknesses with a little overlap of others.
Without co-founders, I didn’t have a full business. By a full business, I mean coverage on each of the fundamental pieces: product, sales and operations leadership. I was missing B2B sales. When I was in the U.S. Army, I sold things by convincing, but B2B sales is a specific, process-oriented journey. I tried to figure it out by the seat of my pants. I had a hard time growing a first cohort of sales.
While people loved our product, a board member complained that we were only doing sales tests. He said, “You have a people problem. You don’t know how to sell.” It’s important to get feedback from people who’ve done it before. They see things that are unknown to you. When my co-founder Josh came aboard, he built collateral, systems, tools, channels and a funnel.
Q: How did you find your co-founders, Jon and Josh?
I started by engaging a few hiring agencies, but I wouldn't recommend that for finding co-founders. When you're adding those original team members, trust is at such a premium. It's so personal. It's hard for agencies to find you someone like that — no knock on them. Now that we're further along, we've been working with a hiring agency with much better results.
Josh Parrish, my vice president of business development, came from my personal network. I’d worked with him at a previous employer. Don’t be afraid to tell your co-workers about your personal mission. You never know how it will come back to help. When I left that employer, I was one of the first people Josh reached out to.
Jon Rich, my chief product officer, came from an introduction by the owner of a software development firm we had worked with. You probably already know the people who’ll introduce you to your co-founders.
Q: How did you know the three of you would fit to make a solid team?
I invited them to consult first. We tested each other and kept equity out of the conversation until they’d proven they can be part of a team. It’s important to see team fit.
Q: What did you expect when you started seeking co-founders?
I paid too much attention to what should be on a resume. I’m in Buffalo — there are few former Facebook developers here. There are lots of good salespeople here who sold SaaS or could make the leap. I looked for grit, which is so cliché. I needed someone who could build a system from the ground up and deal with co-founders constantly picking at them. They should bring a commitment to building systems that supersede people.
Q: What did you learn from “dating” co-founders?
I was lucky. Jon liked the mission enough to stay on, and he earned equity for a discounted rate. With Josh, I had to convince him over beers a few times and really talk through it.
Be honest and allow them to figure out if they’re a fit — only they know that answer. You can help them. I’m good at reading people, but if you’re not, find an adviser. Hiring is a specific skill you need to have. Start new hires as a consultant, and if they’re awesome, you can do something special. If they’re not a fit and you’ve already hired them, it’s traumatic. One bad hire can tank a business early on.
Q: How did you decide to make them an offer?
Pre-revenue, a salesperson is a big risk. I'm good at saving money, so that was not the issue. I realized I shouldn’t be so stubborn; I could take little leaps. For example, MemoryFox would never work if I was growing sales myself. I had to fire myself from sales.
Josh got a couple of competing offers – that’s a good sign. It took a little negotiation. This is your co-founder. You want them to be happy. They will go through difficult times on this journey, so the offer needed to be fair.
Q: What did "fair” mean to you?
As a founder, that person is taking a big professional risk in joining a startup, and he deserves to be compensated with part of the upside. I wanted to lock him into a future, or he’d be resentful. No founder can give their first co-founder the money he deserves for quite a while, so you need a clear vision. If I am hiring a new developer and can’t pay market rates, then I have to sell him on the equity. With a co-founder, I try to win a partner, not protect my interests. I can do that by vesting the equity where we set up a clear plan to earn ownership over time.
Q: How did things change after all three of you signed?
It was immediate. Josh looked through the lack of sales collateral and imagined the sales process. He quickly saw all the inefficiencies that I deferred and plugged all the holes. This is a good way to validate whether to hire someone: ask her, “Look at our funnel (or lack) and tell me what you would do?” What questions does she ask? Where does she look? What’s her analysis?
After signing my co-founders, I was surprised at how much better my quality of life was. They raised my confidence – in the business, yes, but also enough for me to convince my wife, who was pregnant at the time, to go full-time with MemoryFox.
Q: How did you know you were ready to go full time?
I didn’t want to leave my job until I had a funnel to revenue at MemoryFox. I lacked the bandwidth, didn’t know what I was doing and couldn’t sell myself to others. Josh structured all of that. Suddenly I could visualize sales. If I put X dollars in ads, I could see Y dollars return. Then we started to project. Once you can project then you feel the momentum. Your projections aren’t just a means to getting through a pitch but are real insight.
That’s what convinced both me and my wife. I was about to be a father and was already a husband. It had to be real. Then I knew why I should take money from investors. If I lacked faith in it, how can I expect others to?
Q: How did your first day go?
Now, Josh and Jon were on the team with me. I went through every single prospective customer that we could find. I looked at their websites, found points of contact, uploaded them into HubSpot and sent cold emails. Two-thirds of the marketing directors from a big nationwide nonprofit received email from me that day. It may have gone to spam, but the learning started.
As a founder, I needed to know my customer up, down, left and right. What do they literally look like? How do they do their job description? Now that I had time to research for six hours and just hammer, I learned so much that first week full time, and we got sales.
As a founder from the Army, I have developed the ability to be motivated by goals and energy, not fear. Energy said, “You have the minimum viable product, now go sell.” I was motivated by excitement.
Q: What does your family think now?
It can be tough, but the flexibility of having your own business comes with a lot of perks. My schedule is much more flexible, and I make sure to spend as much time as I can helping at home and with the kids.
MemoryFox has a good runway from pre-seed funding, and I had to convey that to my wife, who isn’t in the startup world. She’s familiar with milestones for regular businesses. For example, if you’re not breaking even, that sounds like failure for a regular business. In a startup, it takes a year to break even, and then you might hire another person at a loss runway. I had to learn how to say that to my family. I recommend celebrating your milestones together and sharing the energy and momentum. Otherwise, all they know is you’re not breaking even.
Q: What would you most like other founders to know?
One hundred percent of choosing co-founders is about being honest with yourself. You need the humility to recognize your strengths and weaknesses, which are the same as the company’s at the start. Fill the holes and get to the next level.
There’s art and science to everything. On the science side, we look for revenue and vanity metrics on the decision to go full time. The real thing is the art – that is energy and confidence. That sounds like, “To get to the next level, I need to do this.” Only you know that. You need to be decisive when it happens, or you lose the moment.
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