What the Starling/Monzo spat tells us about cofounder relations
As one of UK fintech’s closest guarded secrets came out this weekend, the spat between two of the UK’s most successful challenger bank founders and one-time cofounders — Starling’s Anne Boden and Monzo’s Tom Blomfield — has revealed plenty of ugly truths about the stresses of building a company and finding the right cofounder.
In an extract from her upcoming book, Banking On It, serialised in The Sunday Times, Boden describes how Blomfield launched what she calls “a coup” in 2015.
It’s important at this stage to note that this excerpt is only one side of the story, and the battle lines are already starting to be drawn.
Passion Capital partner and Monzo investor Eileen Burbidge posted the cryptic tweet below on Saturday. Blomfield has stayed quiet so far, but his side is likely coming now that Boden has broken her silence ahead of the publication of her book.
asking for a friend: how much of a book has to be true for it to be categorised as non-fiction? 🤔🙃
— Eileen Burbidge (@eileentso)
October 24, 2020
Putting the juicy, insider-y drama of it all to one side, are there some real lessons to be learned from Boden’s story, especially as it pertains to one of the trickiest decisions an entrepreneur is likely to make: picking a cofounder?
What to look for in a cofounder
As many as 65% of high-potential startups fail as a result of conflict among cofounders, according to Noam Wasserman, a professor at Harvard Business School who studied 10,000 founders for his 2013 book The Founder’s Dilemma.
Most founders will tell you that they see more of their cofounder than their spouse during the early days of starting a company, and the relationship can feel a lot like a marriage, sometimes with even more stress added to the mix.
This is why it is so important to be measured and thoughtful when picking a cofounder, and not relying on gut feel or chemistry alone.
“That autumn the tight-knit team expanded, thanks to the addition of Tom Blomfield, who joined as chief technology officer (CTO). Tom and I had known each other since long before I started Bank Possible (later renamed Starling). I had helped him out by advising on one of his previous ventures, GoCardless,” Boden wrote.
“We had lost touch when he went to America, but then he contacted me out of the blue one day. Tom said he’d heard a little about my project, which he thought sounded exciting. I invited him to join me at a meeting and, less than 12 hours later, he was the newest member of the team. At the time I was delighted. I had worked with him before and trusted him.”
Trust is a key word when discussing cofounder relationships, especially for Boden who had founded the business with her own money and had a clear vision as to what a modern, digital bank should look like.
Establishing and maintaining trust with your cofounder is vital in the long run, so making that call after just 12 hours of consideration may have ended up being a decision Boden regrets today.
This is easier said than done of course, and much ink has been spilled on how to find the right mix of technical and business nouse, but really the relationship between cofounders is just that: a relationship, and no relationship is an exact science.
So what should you what to look for in a cofounder?
Michael Fertik’s ten pieces of advice from a 2011 Harvard Business Review article still rings true and some really resonate against the backdrop of Boden’s revelations.
Fertik puts a “complementary temperament” at the top of his list, as well as having similar working habits, total honesty and matching visions for the company.
Boden admits in her excerpt that her and Blomfield made something of an odd pair from the start.
“Investors just didn’t seem to be able to get their heads around me and Tom. No one could see further than the pairing of a thirty-something bearded hipster type and a fifty-something former member of the banking establishment, which to them appeared as an odd team,” she writes.
Where Boden saw a technical founder with many complementary skills to mesh with her own experience in the business of banking, she may have missed a few red flags as the relationship soured during that fraught fundraising stage in 2015.
“If possible, it’s best to work with someone you’ve known for a while or with whom you’ve collaborated before,” Fertik advises. “Easy familiarity helps conversations move quickly and allows trustworthy cooperation. This does not mean you need to work with your best friend of many years. Doing so presents its own risks. But a long-term relationship can help you leapfrog the learning curve of the close collaboration, which can sometimes take years to develop.”
That being said, you don’t know how a relationship will pan out until you meet some difficulty.
“There’s an important caveat here: in a cofounding relationship, you don’t really know the other person till the worm turns. That means you won’t see the full colour of your partner until something in the business or one of your personal lives goes (very) badly. If you haven’t been through the crucible together before, be prepared for what she may be like when you do,” he adds.
Spotting the signs
Boden admits that she might have missed Blomfield’s ambitious streak early on. “Perhaps if I had been less trusting, I would have seen that Tom was always eager to be chief executive. Of course he was — he was an ambitious, clever, young entrepreneur,” she wrote.
That Blomfield was ambitious shouldn’t have been surprising to Boden though. He had already had a stab at founding a company in GoCardless and she had worked with him for long enough at this point to see the signs. Nor should this ambition be a fatal quality. The key missing ingredients were transparency and trust, and something in writing wouldn’t have hurt.
“If you do decide to add a cofounder, it’s critical to have an in-depth agreement on what you’re both expecting in a ton of detail,” Amanda Daering wrote in a Medium post this week. “Talk about what strengths and weaknesses you bring. You’ll need to be explicit about how decisions will get made and who is responsible for what. An attorney should draft an operating agreement detailing as much of this as possible including what happens if someone wants out.”