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David Brown, co-founder and CEO of Techstars, shares his journey from working for a tech company to creating and founding Techstars with his friend and colleague. In the interview he explains the reason behind becoming a co-founder and co-CEO, even though 65% of start-ups fail due to co-founder conflict. He explores the positives of a being co-founder and provides insight into how to create and maintain a strong and healthy co-founder relationship.
Interview transcript below:
Banu
Hi, everyone, this is Banu Hantal, I am a leader psychologist, and today I'm with David Brown, founder and Co-CEO of TechStars. I'll just start with, can you tell us about the title at TechStars?
David
(laughter) I laughed because I thought you're going to ask me about that.
Banu
Exactly. Because the Co-CEO title is strange, you see the co-founder and CEO title often, but then we have the Co-CEO title and that's not very common. I definitely want to talk about that. But before that can you explain about TechStars and what you guys do?
David
Yeah, of course. TechStars, we call ourselves the worldwide network that helps entrepreneurs succeed. We fundamentally do three different things. We run start-up accelerators all around the world and we've been doing that for 12 years. We have 45 programs in 13 different countries. We bring in companies, 10 at a time, and over three months we help them to rapidly accelerate their business. This is partly by investing in them and giving them up to 120,000 dollars in return for a little bit of equity, so that we're partners with them in terms of helping them succeed. That's thing one. Thing two is: we run start-up weekends and start-up weeks all around the world, 120 different countries, a thousand events a year. It's a weeklong experience of what it's like to be an entrepreneur that you can also go through over the course of a weekend. And then we're a full blown venture capital firm investing out of our fourth fund, which is a hundred and fifty million dollar firm. So those are some of the highlights.
Banu
Awesome. And tell me more about that Co-CEO title and that Co-CEO relationship works?
David
So I wrote a blog post on it entitled 'Why Having Co-CEOs is a Terrible Idea Almost Always' and I have a bit of a unique situation in that I have a co-founder and my Co-CEO, David Cohen. He and I have known each other for almost 30 years now. So yes, since we were eight. Not true since we were in our 20s and we have done a whole number of start-ups together. We started TechStars together in the early 2000s. The idea was 2006 and the first program was in 2007, and we did it because we wanted to pay it forward and help other entrepreneurs be successful. And the reason the Co-CEO works, I think, is because we've known each other for so long and in those 30 years sometimes I was CEO and he was, I don't know, CTO. Sometimes he had the title bigger than mine. Sometimes we had the same title that nobody would understand. And it was only a few years ago that we decided to adopt the Co-CEOs because our third co-founder and board member, Brad Feld, just suggested it to us and said, "That's how you guys operate and while I never see it work in general, it seems to work for you". So we did it.
Banu
This is amazing! Working with someone for 30 years and you had multiple companies. And am I safe to assume some of them were successes and some of them are failures?
David
Yeah, absolutely.
Banu
So you've been together for the successes and for the failures and what is it that is so hard to make the relationship work? We always say the co-founder relationship is sometimes harder than working on a marriage. So what do you think makes you different in a way that you were able to go through highs and lows and then still wanting to do this together after 30 years?
David
Yeah, there are similarities to marriage.
Banu
Like your name?
David
And there are similarities to our name, absolutely. I think that the reason it worked and it wasn't a deliberate thing on our part, we sort of fell into it accidentally, but very, very early on, we worked at the same start-up, but we weren't the co-founder. We worked for the CEO, the founder, and we viewed him as the common enemy, but he was a good guy so enemy is the wrong term. He had dreams of conquering the world and we were implementing that vision into reality and we struggled with it sometimes and we would get together and we would talk about like "Oh God, this is happening, that's happening. What are we going to do?" So we formed this common bond, this foundation of trust, very, very early on through that shared experience, working for the same person, and I would say similar to what might happen in a strong personal relationship that led to getting to know each other really well as people. But back then we were roommates so work was fun and fun was work and we spent an awful lot of time together. At that time, neither of us were married and neither of us had children. So it all sort of blended together and we got to know each other really, really well. I think that foundation that was poured 30 years ago allows us today to be able to operate much better together. As in any co-founder relationship, it's super important to know when the other person is up or down and that they make you know that without them actually telling you so that you can anticipate that you have to take a little bit more of the load because maybe they have something going on in their personal life, knowing that they'll do the same for you when your time comes.
Banu
So do you feel like you naturally evolved your relationship dynamic or was there some intention/intentions behind it saying that, "Okay, to make this work and to make sure that we are strong, we have to do this or that"? Did you have conversations along those lines or was it organic?
David
Again, it was mostly organic. Certainly every once in a while we might have a conversation about if there is something to course-correct. But people laugh at us like we're an old married couple in that we communicate even nonverbally and in meetings and other places; I know him so well and he knows me so well that we've just figured out how to make it work without having to have a lot of communication.
Banu
And that's pretty awesome. You mentioned that there was a time you were higher in the hierarchy and there was a time he was a higher in the hierarchy; did you feel that there were ego tensions playing a role or you were comfortable with each other enough?
David
Well, it's interesting and I think it's a very relevant point. I meant when I said I was higher in the hierarchy or he was, that I had a higher title or he had a higher title, but the way we treated each other was always as equals, one hundred percent. And that's the reason why we adopted the Co-CEO title, because if you're going to act that way, you might as well call it.
Banu
I see. So you were saying the title seemed that there was a hierarchy, but in reality, the way you treated each other and the way you worked with each other, it was a relationship of equals, there was no power gap between you.
David
Exactly. I think also it was all formed in that first we were employee one and two at the same start up and then we did our own start-up together. We were equals on the cap table and so there were just so many ways that we forged this relationship as equals, that even if the titles were hierarchical because somebody had to be CEO, we didn't naturally feel that way or act that way.
Banu
Interesting.
David
One interesting thing when we adopted it though, finally, one of the reasons we have the hierarchy titles was because we thought, well, you don't want to have two CEOs and the employees feel they have to go to each. And so when we finally did it at TechStars, we adopted some rules around making sure that there wasn't sort of playing mom against dad kind of scenario and the rule was you only need one "yes". That if either of us said yes, that was good enough and it's our responsibility to sort that out and communicate on the back end because we didn't want to slow the organization down by having people feel like they have to go to two people to move forward on a decision. But there was a corollary to the rule that we were also worried about, so the corollary is you only get one no and know that we communicate. So if I say no, you can't go to David to see if he's going to say yes and vice versa.
Banu
Yes. And how was the reaction to when you first decided to adopt the title in the company? Were people confused in a way that you had to put these roles for that?
David
I would say not at all and I think it's because we always acted that way. And I think the reaction was more "Done". People refer to us as 'The Davids'.
Banu
"The Davids"? (laughter)
David
People go, "I have to go ask 'The Davids'" and they might need either of us. We do have separate responsibility, we don't exactly do the same thing within the company and so people generally know who to come to.
Banu
I see, so you guys were lucky to have found each other and I think also you did something you really like so that you have this awesome co founder relationship but it doesn't work for everybody. Did you see cautionary tales of where the co-founder relationship actually made or broke the relation and the start-up?
David
Well, it happens all the time. We were talking off camera earlier about the study that says 65 percent of companies fail because of co-founder issues. Not because they run out of money, not because they had a terrible idea, not because they couldn't get customers, but because of co-founder issues. And we see it all the time, about one in every class when we run our accelerators, has a co-founder breakup. That's one out of 10 and that's just during the three month period, it happened within the course too. So it's significant enough that we want to spend time helping with that. And I think my number one piece of advice on the cautionary tale, as you describe it, is invest the time to get to know your co-founder personally. You don't have to be Co-CEOs that's not necessarily for you, that's for us. That's not important but you do have a co-founder and they have a personal life; maybe things aren't going well at home, maybe a loved one is sick, maybe they're down for financial reasons or something else. Really understanding where they are will help the relationship tremendously. Don't think of it as, you know, work is work and home is home. If you don't know the home impacts work, you're fooling yourself. It is absolutely connected.
Banu
Yes. So are you saying it has to go beyond work relationship and you have to build a relationship with the person?
David
Yes, it is very much like a significant other. You have to have a date night. Might not end in the same way, but is the same.
Banu
Nice. I actually have my clients go on dinner dates. I do get them together other than in work settings so that they sometimes build or rekindle their relationship.
David
Yes and do you ask them not to talk about work?
Banu
Yes, definitely. That's more about talking about their relationship. This is a conversation they have about the way they relate to each other, how they feel in that relationship.
David
Exactly. I think it's incredibly important and I can't imagine any better preventative medicine towards a co-founder relationship.
Banu
Another thing that comes up very frequently is the co-founders were friends before they started the company. Sometimes I feel they have a harder time to communicate than the co-founders that know each other from a work setting but they don't have a strong friendship before they begin. This is because they are worried to damage their relationship or hurt the other person, so they're not really communicating. Did you observe that they have difficulties when they are friends before? Do you think it's an advantage or disadvantage?
David
So I think it can be both. I think it's an advantage because you know the person on a personal level and so when we're saying you should go have a life dinner and talk about these things, they already have that coming in, which I think is a huge advantage. And we've seen some great founders coming through our programs that met in the sixth grade and have been friends ever since. The disadvantage is if the start-up is hard and if you don't get along with your co-founder and you have a breakup, that can infect your personal relationship too and so there's probably a dynamic that keeps you from having a hard conversation at work because you don't want to damage the friendship and that's probably not a good thing. You want to be able to have somebody that you can have that hard conversation with. All right.
Banu
Awesome. Thank you very much.
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