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Jana Nevrlka - Cofounding The Right Way: A practical guide to successful business partnerships

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Jana Nevrlka Cofounding The Right Way: A practical guide to successful business partnerships
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Jobs & Wozniak, Page & Brin, Ben & Jerry... any list of successful companies seems awash with cofounders who are a match made in business heaven. The benefits are obvious: by combining resources, knowledge, expertise and motivation, cofounders can often build something far more successful together compared to going solo.

And yet... two-thirds of startups fail because of disagreements between founders. Why? Because cofounding isnt as simple as drawing up an agreement and shaking hands on it.

In fact, there are seven steps required to build cofounding teams that win and last. Cofounding The Right Way will take you through these steps, one simple step at a time, from finding the right cofounders all the way through to structuring your team, splitting the equity, making sure everyone stays motivated and documenting it in your cofounding agreement. Is a partnership even right for you in the first place? Thats Step No. 1!

Get your cofounding team right, and youll be in the best possible position to handle any challenge thats thrown in your direction. Get it wrong and not even the best business idea will be able to survive.

Foreword by Mike Moyer, author of Slicing Pie.

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COFOUNDING THE RIGHT WAY First published in 2018 by Panoma Press Ltd 48 St - photo 1
COFOUNDING THE RIGHT WAY First published in 2018 by Panoma Press Ltd 48 St - photo 2

COFOUNDING THE RIGHT WAY

First published in 2018 by

Panoma Press Ltd

48 St Vincent Drive, St Albans, Herts, AL1 5SJ, UK

www.panomapress.com

Book layout by Neil Coe.

Printed on acid-free paper from managed forests.

ISBN 978-1-784523-28-2

The right of Jana Nevrlka to be identified as the author of this work has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.

A CIP catalogue record for this book is available from the British Library.

All rights reserved. No part of this book may be reproduced in any material form (including photocopying or storing in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication) without the written permission of the copyright holder except in accordance with the provisions of the Copyright, Designs and Patents Act 1988. Applications for the copyright holders written permission to reproduce any part of this publication should be addressed to the publishers.

This book is available online and in bookstores.

Copyright 2017 Jana Nevrlka

DEDICATION

To Leni

ACKNOWLEDGEMENTS

Before writing my own book, I never understood the purpose of the acknowledgements section. Well now I do. As with so many other things in life, great things are scarcely, if ever, an individual effort. As an author, I learned by my own experience that without the great support, guidance, cheerleading, critical reviews and constructive feedback of others this book would not have happened.

And appreciating the collective effort I want to thank all the great people who helped along the way directly with this book or indirectly by shaping my knowledge and experience or being the role models on my path. Thank yous go to:

To all my clients as working with their teams helped me to develop and fine-tune the 7 Cofounding Steps.

To the Slicing Pie Family: Mike Moyer, Maxine Chow, Deborah Griffiths, Roger Rohner, Mario Erni, Jetse Sprey, Eric Kuenzi and Salvatore Iacangelo.

To the Swiss Startups Club the organising team with Anja Mihaldinec and Daniela Cerva and all the members from whose stories I could learn.

To the WYDR team Matthias Doerner and Timo Hahn who asked me to implement the first Slicing Pie dynamic equity split for their team in Switzerland and were kind enough to share their learning throughout its application.

To the Balboa team Paco Savio, Erich Zuger, Timo Klein; the Impact Hub team Stefan Honnegger and Niels Roth, Daniel Leu, Rory Passey and many others who shared with me their cofounding stories and experiences.

To Mindy Gibbins-Klein, the Book Midwife and Panoma Press team.

To the beta readers for their invaluable feedback and expertise: Abhik Mukherjee, Christos Vakalopoulos, Dolly Delaney, Elvira Boeck, Fiona Flintham, Gareth Robinson, Karina Storinggaard, Katerina Klezlova, Lenka Nevrlkova, Nicole Menten, Rajesh Durbal, Richard Pemberton and Sascha Humbeli.

Special thank you to:

- Richard Pemberton for the multiple rounds and levels of support.

- Nicole Menten for the input on team dynamics and organisational psychology.

- Paco Savio and the Remolino team for the design gift.

To all the great teachers of Rotterdam School of Management, Erasmus University and Masaryk University, especially to Prof. Dr. Roel de Lange, Dr. A. van den Brink, Prof. Dr. Ellen Hey, Ronald Poppe, Joep Elemans, Stef van der Velde and Julie Johnson.

To my work colleagues whom I learned a lot from Jiri Fiala, Emil Holub, Radka Nenickova, Martin Licenik, Edvard Rinck, Joost Vreeswijk, Alex Wijnen, Thijs Heijenrath, Luc Hautvast, Danny Loa, Krista Koeleman, Theo Elshof, Mudit Kapoor, Guillano Demon, Robin Errico and many others.

To my previous business partners for the successes and failures from which I learned so much.

To my family without who I would not be who I am, get the chances in life I got and have the courage to never stop learning, exploring and believing.

DISCLAIMER

I am a strong believer in looking at the big picture, solving issues holistically and combining knowledge across disciplines. This book summarises the main choices that you need to make as a cofounder and combines business, legal, finance and psychological insights and know-how. It is not meant to be a comprehensive academic guide in any of those disciplines; it is a bouquet selection of relevant bits and pieces that you, cofounder, can practically apply and use.

It is not possible to provide one universal formula that will be applicable to all. Nothing in this book should be interpreted as legal or tax advice; its objective is to raise awareness of the potential legal and tax issues that are inherent in business partnerships. It cannot and is not meant to provide individual legal or tax advice.

FOREWORD

Whatever you call them cofounders, partners, employees or anything else your startup team is simply a group of people trying to figure out if they can turn an idea and a vision into a real, actual business that serves customers and provides reliable cash flow. Unfortunately, people arent perfect. As a species, were pretty darn good at a lot of things, but we lack one essential entrepreneurial skill that would ensure our success: we cant predict the future. If we could, things would go a heck of a lot smoother.

Even the cleverest business idea and the clearest vision cant change the fact that the path to success, if it exists at all, is utterly unknowable. Sure, we can plan and project and promise and pretend we know whats going to happen, but even the brightest among us is going to be wrong. The only thing that never changes about a startup company is the fact that its always changing.

When the changes come, relationships will be tested. Some people will rise to the challenge and move boldly forward, others will follow willingly and still others will cringe and recoil. Good feelings ebb and flow. Some people treat challenges as opportunities, some treat them as defeat. Even those with the best intentions can find themselves at odds with one another.

Cofounder conflicts are extremely common in startups and many are insurmountable ultimately leading to the demise of the company. Even the companies that do survive can be hindered by irreconcilable differences among founding teams. If your company is going to fail, its better if it fails because your original idea or vision was flawed. If it fails because of founder conflicts you will be forever haunted by that gnawing feeling that it would have worked if only

Whats interesting, however, is how easily conflicts can be resolved or avoided altogether. Choosing the right team and setting up systems that accommodate changes can allow founders to navigate start-up turmoil remarkably well. While there may be many reasons why your startup could fail, there frankly arent that many reasons why your relationships will fail, and this book will help you mitigate problems as they inevitably arise.

In , Jana introduces Slicing Pie, an equity model I invented to help teams create a fair equity split in the face of extreme uncertainty. Over the years Ive heard countless stories of not only how the model allowed the team to easily avoid equity split conflicts, but also how paralysing the process was

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