[SwellJoe]

My co-founder and I met online working on an Open Source project together, but we certainly aren't strangers who met just to start a company. We'd been working together for years, but had only met in person once before starting the company (and twice before applying to YC, post-YC we get together weekly and communicate daily via email and bug tracker).

It can definitely work, but I'd suggest working with folks on projects (Open Source or school or whatever) for a while before partnering up. It's hard to know how well you'll mesh and how much they'll hold up their end of the bargain. Make sure you can compromise, even in the face of disagreements. And make sure you trust the others judgment so that you don't have to discuss every little thing. I almost never have discussions with my co-founder about any specific details of implementation. We discuss goals and objectives, and then go back to our respective offices and do the jobs we said we'd do in the way we think is best. If it turns out to be wrong, we'll hash it out, but that's so rare that it's not worth taking the time up front to figure it out on every little detail.