In this episode of Never Too Early, Lauren Ipsen from Decibel talks with Nir Polak, co-founder and former CEO of Exabeam, about selecting a co-founder and productive co-founder dynamics for new founders. Nir comes from 18 years of information security experience. He shares the importance of complementary skill sets, and maintaining open communication and a “no-ego culture.” Lauren and Nir also discuss the significance of founder agreements, handling equity splits, and navigating conflicts and decision-making. The conversation offers practical advice for founders to ensure a successful partnership.
00:00 Introduction to Never Too Early
00:20 Guest Introduction: Nir Polak
01:10 A Funny Anecdote from Nir's Past
02:27 Question 1: How do you meet potential co-founders? Nir and Lauren talk through how to evaluate whether you should start a company with someone.
03:07 Question 2: Do you think it's more productive to be mostly aligned with your co-founder or have two founders with very different POVs? Nir talks about how it is important to find a co-founder who compliments you and makes you whole, but doesn’t mirror you.
08:55 Question 3: How do you determine who makes decisions? How does voting work? Can one person fire another? Nir believes in “one throat to choke,” and explains why this tends to make him a non-believer in co-founding CEOs.
10:57 Question 4: How should equity be set up? Lauren and Nir share their perspectives on how to set the cap table up for success and avoid corrections down the road.
15:43 Question 5: What are some questions you feel are important to align on before starting a business with someone? Nir talks through how evaluating a partner to go into business with is similar to evaluating a partner you want to spend your life with. He talks through the importance of aligning on values and addressing potential hurdles early.
18:59 Final Tips and Conclusion
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Transcript
LAUREN IPSEN: Welcome to Never Too Early, a YouTube series focused on unconventional talent insights for founders. I'm Lauren Ipsen, Talent Partner at Decibel. In each episode, we'll cover the top five commonly asked questions that we get from founders building their organizations for the very first time. It's never too early to learn from the best.
I'm super excited to introduce my guest today, Nir Polak. Nir was most recently the co- founder and CEO of Exabeam. He has 18 years of experience in information security, including executive experience setting company strategy, driving execution, building new products, and bringing them to market.
He is currently now a builder at WhiteRabbit, which is leading the way for building the next generation of cybersecurity companies. So he is one of the most qualified to answer the top five questions we get from founders that are looking for their co-founders for the very first time.
Welcome to the show. Thank you for joining.
NIR POLAK: Thank you. Happy to be here.
LAUREN IPSEN: I really appreciate you taking the time. I just covered your incredibly impressive professional background. Tell the listeners something fun about you, though.
NIR POLAK: Fun about me. I don't know if it's fun, but people won't know. I almost went to jail in sixth grade.
LAUREN IPSEN: Okay. Tell us more.
NIR POLAK: So it was April Fools’, and a friend of mine and I wanted to kind of do a trick on one of our teachers. We went on this class trip, and during the class trip, we forgot, or she forgot, one of the students. And he got stuck alone and needed to kind of have his parents come and pick him up. It was a whole fiasco on that.
So we, April Fools’, thought that we were going to do something funny. So we wrote a letter from the principal that literally fired her and we signed it with the principal's signature. Now, we – we’re not that stupid. So we use the sister of my friend to do that. But, long story short, police investigations. It was a lot of fun. So that was my fun story.
LAUREN IPSEN: Oh my God. That is a fun story. Where did that leave you after? How did you get out of the debacle?
NIR POLAK: Oh, we just – we came out and just said, “Hey, it's us.”
LAUREN IPSEN: Cool. That's a fun one. Thank you for sharing. I love it. Okay.
So today, Nir and I are going to chat through a couple of different components to how you should pick your co-founder, and co-founder dynamics, and the best way to ensure that you're set up for a successful marriage. It's something that comes up a lot, and so I think it'll be really beneficial for our founders to go deep on.
So I'm going to start with the questions that I get, and then hopefully towards the end, we can cover some questions that you think are helpful to align on, and we'll go from there. Does that sound like a good plan?
NIR POLAK: Sounds great.
LAUREN IPSEN: Cool. Let's start with how you can meet other potential co-founders. And once you do meet people that are interested in potentially starting something and passionate around the same area, then how you evaluate whether or not they could be a good fit for a coworker or a co-partner.
NIR POLAK: Last company I did. a company called Exabeam. we were three co-founders, one that I knew very, very well, because I hired him to our prior company. So I got a chance to work with him for, probably, I want to say, seven years prior, so we had a lot of working relationship. And – but one that we did not know, and I got reference to him through a common person.
So I didn't need to do a lot of various datings to find the co-founder. We kind of found somebody out of the gate that kind of, like, worked really well. But what do you do? You're looking first – one is you're looking to complete kind of who you are. So you're not looking for people that are like you. Okay?
You're looking for people that, you know, are going to add value in whatever lane they're running, if it's technology, if it's product, if it's research. If it's the CEO, what do they bring to the table? But what you're relying on is, you're relying on values and perspective of the world, and, you know, So you're going on dates. You just spend a lot of dates with them.
You go out and drink and you talk about life, and you talk about their childhood, and you’re just wanting to get to know them as a person. And then you do just a lot of back channel references.
So you asked, where do you find these people? So, that's an interesting question, because I did not need to go to Seek, but I'll tell you what I'm doing now for these companies that we're building is, we're looking for a typecast of people, depending for what position. And we're going to offer them a founder position in one of our ideas.
So we literally have someone like you, Lauren, that is searching for talent, and we kind of have a typecast. What are the companies, what positions, how do they look like, like, from a career trajectory. And then we start dating them, and we figure out how it goes.
LAUREN IPSEN: Yeah. Cool. I've been doing a lot of that, obviously, as I'm sure you can imagine. And it's always really interesting to see. I mean, some founders, I'll connect them with advisors or folks that we can infuse into their fold in a fractional capacity. And then over time, they start to build rapport and start to get more excited about what they're building, and then maybe lean into more of a full-time co-founder-type role.
It's such a difficult one, especially when it's one individual that came with this idea, and then someone else, where you're wanting to give them founder equity or the same incentive and energy around the long-term vision for a product. But how do you do that when you weren't the one that initially thought of it, and all of these types of things?
So it's a difficult thing to pattern match and to marry people around an idea when it was one individual's idea, I have found.
NIR POLAK: I think that people, I think, put too much, I would say, weight into the idea itself. A company is much more than an idea.
LAUREN IPSEN: Yeah.
NIR POLAK: An idea is something very thin. You know, companies change. Their strategy changes. Even when you have the idea that doing ideation, validation, validating the idea, bringing that to a strategy, to a minimal viable product, understanding how to go to market against that, there is so much to do than just an idea.
A company is a combination of a team, an opportunity, and an execution. And I think the idea is somewhere in the opportunity, but it's not – there's so much more in there.
LAUREN IPSEN: Yeah.
NIR POLAK: And I think somebody bringing the idea is great if – I don't know. My last company I did, the idea was mine because I came up with it.
But would I say that, kind of, like, my co-founders felt that the company is less theirs than mine? I don't think so. We founded it together, and we jumped on the journey together, with the ups and downs.
And the difference between an employee and a founder is a founder is not employed by the company. Maybe it is on paper, but it's their baby. It's a much bigger responsibility than just kind of, like, being an employee. And that's what you're looking for. It's not necessarily somebody that came with it. I think that people that think the idea is everything? It's just the beginning of pulling on a thread.
LAUREN IPSEN: I think that's really cool. I think that's the difficult part to vet for, right, is trying to vet for people that are going to treat your baby like their baby, right? And really adopt that baby and take on ownership as a legitimate parent, to continue to just exhaust that metaphor.
One thing you spoke to that I want to dive a little deeper on is finding individuals that can complement your skill set, so – or complete you. I have a lot of founders in our portfolio that come from companies that, they've worked together, and they immediately start hiring great people that they've worked with in the past. But then it's a lot of like-minded individuals that are working on a problem together, and so not a lot of challenging of ideals, ideas, or different perspectives.
So my question for you is: Do you feel that it's more productive to have founders that are like-minded and really aligned on all of the same things, or to have someone come in that has a very, very different perspective than the initial co-founder?
NIR POLAK: Yeah. So I think that there's an element – again, what you want to align on is, you want to align on the working behavior and your values of what you want your baby to be, and how you want the interactions to take place, and conflict resolution to take place. But conflict is healthy. You do not want kind of, like, “yes” men all to each other.
You kind of need that yin and yang. You do need to bring that different perspective and capabilities. And I think people that work with each other in the past are great, you know? Kind of like – I've seen multiple companies that that founding team is now on their third founding, kind of a third company. And it's the same founding team over and over again, and they complete each other super well. They're very different than each other, but they all respect each other.
I don't believe in just a Kumbaya. Kumbaya doesn't create a good company.
LAUREN IPSEN: Yeah. Yeah. Cool. So differing perspectives is great, but there's a difference between, you know, having different perspectives and also just being able to work together and respect each other and create synergy in a dynamic working environment, right?
Talk to me a little bit about – I mean, the equity side of things comes up often. So how do you determine who makes the decisions? How does voting work? Can one person fire another person? Let's just assume, unfortunately, because these things do happen, that in this situation, things have hit the fan, and we have to come to some resolution and determine who's going to be the driving force for the company.
NIR POLAK: So there isn't, like, one formula, but I can give guiding factors a little bit. One is, everybody has reverse vest. And it's a four-year. It's enough time to kind of build time. There is a cliff. It's a one-year cliff. It's very important, all these different things.
And, now, what we've done in our last company is we've created what's called a founder agreement, which was a document that we kind of all agreed on what would be the working relationship? Who could fire whom? How would that go? And the last company was me and another guy that knew each other very well. We had a third that we knew less. And what could happen? And, you know, would we push him out at one point? How would that look like?
So what we did is we created a way where all of us report to the board. And they don't report to me as a CEO; they report to the board, just to put comfort for people. To kind of say, okay, it's gonna be us and the investor that's gonna make a decision, yea or nay. Same way that the board has control over the CEO itself, kind of hiring and hiring the CEO.
When it comes to conflict resolution, or kind of which idea, the best idea needs to win. And that really depends on ego. And if your – one of your allies has to be no ego in order for that to work, and then accept ideas that are not yours. And say, well, that is something you're getting – you're probably right. And that needs to have a – that goes back to the values and the culture. You need people that are like-minded on that, that won't have the ego to do that.
And then in the end, as the company grows, now you're not a founding team, it is a lot on the shoulders of the CEO. It's like, you're starting to hire more executives, and they make the decision. And, you know, that's how it goes. It’s not a dictatorship, but that's – they have the responsibility.
LAUREN IPSEN: Totally an aside, but what's your perspective on co-founding CEOs?
NIR POLAK: I don't like it.
LAUREN IPSEN: Yeah, I don't either. Elaborate. Tell me more.
NIR POLAK: Look, there could be a situation where you have somebody that owns all the go-to-market side of the house, customer-facing, and somebody that owns every side, but there still needs to be one decision-making. You can have office of the CEO, but you're going to have conflicts. And if these people get along great, then great, but when they don't, you're going to have issues.
I'm a believer in one throat to choke. That's how it goes. And that's why, when things go well, it's a team win. And when things go bad, the CEO screwed up.
LAUREN IPSEN: Yeah. What have you seen is most common from an equity standpoint? Let's say it's a co-founding CTO and, you know, a founding CEO. Even split? What feels right?
NIR POLAK: Again, it's what feels right. There are two views here. There is the view that it's common split, half/half, or third, third, third, whatever that is. And there's a view that’s, look, in the end, is who's going to have much more responsibility, and kind of going to have much more burden? CEO will have more, head of Engineering will have slightly less, and then you head of research, even slightly less than that. So that's kind of how it goes.
But I am not, let's say, religious about this. But I'm also not religious about kind of like, I think, if you win together, you win together, and you're working together. I also think it's important, though, when you're doing these dates and kind of figuring out it, it is a long journey. And, as you said, you're talking about a minimum of four years together.
It's important to also meet the spouses and the families to kind of really make sure that everybody understands that this is – they're going to give their life and soul to that because that's where the equity comes into play, so.
LAUREN IPSEN: Are there any questions that you think are really important to align on? You talked about bringing in family or meeting other key stakeholders.
But talk to me a little bit about the most important things that you think founders should be aligning on from a value standpoint, questions that they should feel similarly about.
One that comes up a lot is when to sell, if we sell. Those types of things, I think, would be helpful to cover.
NIR POLAK: You're looking for people that view the world in similar ways. Well, you know, for us, it was no ego. It was super important to kind of be able to –for all the founding team, is because you just want the best ideas to win. And you need to create an environment that does that.
The second thing was with regards to open communication. So just everything is on the table all the time, and we talk about it. The third was kind of teamwork, like always kind of believing in, we're doing things together. There's no this, they, him, her, that. There's us.
And the only – what you want to do is like, when you're hiring an executive, you want to do a lot of back channels.
So you're not asking for references from a founder. That's meaningless. LAUREN IPSEN: Yeah. Yeah.
NIR POLAK: You want to go back, and you're sending a Lauren to say, hey, Lauren, I want the somebody that reported to them, somebody that was a peer of them, somebody that managed them. And then you want to know exactly how did they interact? Not at the good times – when the shit hit the fan.
What do they do? You know, what do they do in stress? How does it look like? What is your view about responsibility? What different political issues they may have faced in their career, and how do they defuse those? That's what you're trying to figure out. And you want to do like five or six of those, of different folks along the career to kind of calibrate.
LAUREN IPSEN: I totally agree. Someone talked to me about how references are like your Instagram story or your own personal reel and how you want to be perceived. And then back channels are the photos that you're tagged in that you want to untag yourself from sometimes, right? So back channels are where you really get to the core of who these people are as executives.
NIR POLAK: And what you want to do is you want to confront the feedback you received with the founder. And you want to see how do they interact once they've been confronted with this.
LAUREN IPSEN: Yeah. Cool. I think that's great. Any other final tips, learnings of founder dynamics that you think are really helpful?
NIR POLAK: A journey of a company can be very long. But selling or not selling, there's always opportunities along the way, and you want to make sure that you're aligned on them when the opportunities arise. But everybody has their span. Some people are okay from zero to one, and others from zero to ten, and others from that.
And in the beginning, the founding team is just doing the zero to one. And they may not fit later on. They might not like what they've done later on. And it's important to kind of keep that in perspective all the time. Because one's a founder, you still need to do the right thing by the company at every stage.
So you kind of need – I wouldn't call it divorce, but you kind of need to separate sometimes when the time is right.
LAUREN IPSEN: Yeah. Cool. This is all incredibly helpful. Thank you so much for joining and for sharing your insights. And I appreciate how candid you were too. I know that some of these things are not the easiest to work through. And I know it'll be super helpful for our founders to learn from your direct experiences.
So, thank you so much for joining me on the show. NIR POLAK: Thank you for having me.
LAUREN IPSEN: Lovely to have you. And thank you all for tuning in to Never Too Early. More to come soon.
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