Why Your Cofounder/VP Sales Shouldn’t Get A Sales Commission In Your Early Stage Startup

“That sounds like double-dipping,” I said to “Al”, the CEO of a company I am working with. Al was describing to me his cofounder’s idea of getting paid a commission for using his network to refer customers to Al’s company.

I asked, “Isn’t that what we’re paying him for?”

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“Yes it is,” Al said. “I feel the same way you do, but I just want to make sure.”

Your cofounders shouldn’t be worried about making a little extra money on the side.

There are some things that just don’t feel right for an early stage startup. Certainly near the top of the list is a cofounder trying to take extra profits in sales commission.

Al and I continued our conversation. Al suggested, “What about if I eliminated his equity and we changed him to being a consultant?”

“Then he wouldn’t be a long term fit for company,” I responded. “It strikes me we want cofounders that are fanatical about your mission.”

I felt bad for Al. It sucks when you realize that you have a cofounder that’s in it for the wrong reason.

You need your cofounders to share your passion for the company.

I’m not saying that your cofounders shouldn’t want to make money. They should want to make money.

I am saying that their priority should be the company’s success in the early days. Lining their pockets with a little extra from sales commission doesn’t line up with the long term success of your company.

Here’s the characteristics you want from your cofounders:

A. Look for fanatics.

Fanatics come in all shapes and sizes. Sometimes fanatics are extroverts. Sometimes fanatics are introverts.

Sometimes fanatics have great academic pedigrees, and sometimes fanatics don’t have great academic pedigrees.

But all fanatics are obsessed with your cause.

Fanatics are so important to have as cofounders because fanatics will not give up at the first sign of trouble. Fanatics will fight to the death for your cause.

So look for the signs that your potential cofounders are as obsessed with your cause as you are. You’ll see it in their excitement about building the company.

And…

B. Look for people that have integrity.

You need to walk away from any of your potential cofounders that show any signs that don’t have integrity.

  • It doesn’t matter how smart they are, and…
  • It doesn’t matter how great of cultural fit they are, and…
  • It doesn’t matter how passionate or fanatical they are about the business because…
  • You can’t work with them if they don’t have integrity.

You will end up with a bad result if you work with a cofounder that lacks integrity.

And…

C. Look for people that are really smart in their area(s) of expertise.

Let’s say you’re looking for an Engineering VP. You want someone that is great at what they do.

Not mediocre, but great because the level of expertise of the executive will set the level of expertise of all future hires. So you have a greater chance of hiring A level engineers if you start with an A level VP of Engineering.

You have almost no chance of hiring A level engineers if you start with a B level VP of Engineering.

Finally…

D. Look for people that are cultural fits.

Culture is actually one of the biggest determinants of startup success (Read: Why Your Startup Culture Is The Key To Your Company’s Success), so start thinking about the team you want to assemble before you bring on any cofounders.

I’m not saying that everyone needs to clones of each other. I am saying that there needs to be a shared set of beliefs that everyone on the founding team agrees on.

So, keep these four things in mind (fanaticism, integrity, smarts, and cultural fit) as you are building your relationship with your potential cofounders. And don’t be afraid to spend more time or passing on the candidate if the relationship isn’t moving in the right direction.

For more, read: Why You Need Fanatical Cofounders.

Written by

I work with startup CEOs to help them grow their businesses . I built several businesses from $0 to >$100M. Learn more at www.brettjfox.com

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