Cofounder Roommate Agreements
I recently on twitter saw this graphic that looks like it’s from the YC office of how companies die. I have no idea if it’s real, but from experience it does seems relatively representative of how companies die, especially at the seed stage. One of the reasons YC is so successful is they’re great at dealing with that 96% or whatever that is very solvable that kills companies.
But, what if you’re not in YC?
I think every founding team should have a “roommate agreement“ (or equivalent) for how you’re going to operate your company.
A normal roommate agreement might answer:
Who does the dishes and takes out the trash?
Who’s responsible for cleaning and when?
When are we quiet?
What if I want to bring a significant other or friends home?
A cofounder roommate agreement is similar, but answers:
How do we fire one another and under what circumstances?
When do we pivot vs double down and why?
How do we resolve conflict?
Who does what roles (sales, investors, engineering)?
How do we make hiring decisions, raising decisions (the big stuff)?
What are our goals in 5-10 years? Is it a big exit or a profitable side business?
What if one of us needs to quit? What are good reasons for doing that?
How do we revise this periodically?
Anything else that’s important for decision making
It’s shocking how few cofounders talk about this stuff, let alone put it in writing. Just like a normal roommate agreement, you should write it down (maybe even sign it). Not because it’s legally binding, but because it enables you to have a shared framework for most major decisions that are already agreed on, and helps a ton with those 95% of things besides other that kill companies.