Blog Post

Founding: A Neverending Freight Train


I had breakfast last week with Doug Renert, cofounder of Tandem Entrepreneurs, which represents a great new model for a startup service-provider. When Doug pointed me to this cartoon on their site, I laughed. It illustrates a very genuine founders’ state of mind :

You’re so focused trying to get past the current crisis (like fundraising!) that you don’t see the next challenge coming down the rails (hiring–with all that money you’ve just raised!).

This is the sort of founders’ pitfall that Tandem wants to help you with: load-balancing so you’re less like to drop one of your spinning plates.

If you’re thinking Tandem sounds like an incubator, you’re right, only it’s further up the food chain — though not so far as the professional investors you’re used to hearing about. The three man shop doesn’t have enough money to be a real VC, and they’re more hands-on than traditional angel investors.

What Tandem offers is a bit like out-sourced sweat equity.

For a comparably modest investment (typically starting at $850,000)* the three partners in Tandem will put their experience in coding, sales, marketing and deal-brokering to help you put in place those first (often very heavy) building-blocks that form the foundation right on top of your “grand vision” like: landing your first customer, or establishing your first channel partner. A lot of founders have trouble with those two. Or, say, getting your beta code up to a real “scaleable” place prior to launch. You might not have the time or funds to recruit the engineers you need do that for you, so Tandem’s in-house gearhead will.

So, if Y-Combinator vets ideas and business models, then where Y-Combinator hands-off on a startup, the guys at Tandem “pick-up.” In fact, Doug says Y-Combinator has fed Tandem some of its clients.

Anyway, I like this model. It seems a welcome hybrid in an environment where sweat is needed as much as equity. One of the biggest problems in the startup trade today, Doug explained is that “everyone wants to be a founder, and no one wants to be an employee!” Much as F|R would like to celebrate this founders-gone-bonanza trend, it does present a practical problem.

It’s nice to see someone out there, from the service side, who is truly placing a premium on both sweat and equity! (I’ve never actually seen a VC with his shirtsleeves rolled up, have you?)

We’ll hear more from Doug in coming weeks, he’s volunteered to write for us, so stay tuned. Meanwhile, check out the Tandem site, and let us know what you think of it.

* We originally wrote this was a “tiny investment…as low as $100,000.” Doug has since corrected to me on this point. While Tandem could, and might, do a single investment as low as $100K, the firm’s model is to make sequential investments totaling just under $1 million in its clients, typically be spread out in three installments. Sorry for the confusion