Not Every Essential Person Is a Co-Founder
Every co-founder should be essential to your company, but not every essential person needs to be a co-founder.
This is the part founders often get wrong when they are just getting started. They meet someone who could be extremely valuable and immediately try to turn that person into a co-founder. Sometimes this is because they think they need a co-founder. Sometimes it is because investors or startup culture have made them believe solo founding is a weakness. Other times it is because the person is so good that the founder assumes the only way to make the relationship serious is to give them a co-founder title and double-digit equity.
An essential person can meaningfully increase your probability of success. A co-founder has to do that while also taking founder-level risk, ambiguity, ownership, and downside.
Essential People at SpaceX
Recently, I saw a story about Elon Musk recruiting Tom Mueller to join SpaceX. Mueller was coming from a stable job at TRW and wanted two years of salary put in escrow. If the company failed, his salary would still be protected.
Musk agreed, but Walter Isaacson writes that this caused him to consider Mueller an employee rather than a co-founder. Musk later put it bluntly: asking for two years of salary in escrow was incompatible with being a co-founder because "there's got to be some combination of inspiration, perspiration, and risk."
It would be a mistake to judge Mueller for wanting security. He was not necessarily wrong to want those things. SpaceX was extremely risky. Musk himself estimated that the company had a very low probability of success. Mueller was not independently wealthy like Musk and had a reasonable reason to want protection.
Tom Mueller was an essential person at SpaceX. But that does not mean he needed to be a co-founder. He became employee number one, led propulsion, helped build the engines that made the company work, and stayed for almost twenty years. In the process, he became a billionaire. At the start, Mueller wanted salary protection and Musk wanted founder-level risk from anyone claiming the founder title. The relationship worked because they found the right structure.
Work with Essential People (and maybe Co-Founders)
If you're starting a company, your goal is not to find a co-founder. Your goal is to find someone who can contribute in a way that only they can.
Some essential people will be co-founders. Others will be early employees, executives, or investors. What matters is not the title. What matters is finding the right structure for the relationship.
If an essential person is more motivated by cash and stability, you should not pretend otherwise. Provide them with the cash and stability you can. If you cannot provide enough of it, they may not be a fit for your company right now. But that is different from saying they are not valuable.
Not every essential person needs to be a co-founder.
