Originally published on Mashable
Avoid the Pitfalls: Build a Business with Your Friend without Ripping Each Others’ Throats Out (The Extended Version)
(Co-founders of Strikingly, in order of appearance: Teng Bao, Dafeng Guo, David Chen)
“It is a bad idea to start a business with your best friend. It is also a terrible idea to start a business with your wife or your girlfriend. You will end up friendless, divorced, or available depending on the scenario”. -Gordon Miller
Everyone has heard this advice. Everyone. DO NOT mix business with pleasure. Because the pleasure always loses out. And most of the time, the business, does as well.
You’ve read the horror stories in online forums like Reddit and Warrior Forum. Or you may have already lived it yourself, which has left you MINUS ONE longtime friend, lover, or relative.
“I demanded him to focus on the business. I lost it and started yelling at him. He left that night and stopped returning my calls. The team started to fall apart and now I had no support. We’re still connected on Facebook, and maybe we’ve chatted once or twice via DM. But my [once childhood] friend and I haven’t spoken in 10 years”. - Mack Burnett III
From studying thousands of founders for his book, “The Founder’s Dilemma”, Noam Wasserman of Harvard Business School, found that well over 50% of startups fail as a result of co-founder conflict.
Perhaps they weren’t committed. Perhaps their work styles weren’t compatible. Perhaps they had different visions for the company. Perhaps when they argued, it got emotional and personal, and things got out of control - fast.
There can be a myriad of reasons (or just one) for these splinters in business relationships. And many of them can be avoided before commitments and promises are made.
One commenter in Quora suggested, “Find out the pitfalls and challenges as you go along. Without these pitfalls you will never grow, nor learn”.
This is terrible advice.
Under those terms: You’re friend has now blocked you from all their social media and hasn’t returned a text or call. Your significant other has left you and took the dog, the ice cube trays, and the toilet seat. Or a family member has cut you off completely.
You’ll learn your lesson?... Was it worth it?
Not to mention the pitfalls when separation happens - and lawsuits are filed.
Not only have we spoken with Strikingly’s co-founders (Teng Bao, David Chen, & Dafeng Guo) who have been in business now for 5 years (and friends for almost twice as long) - we also reached out to several entrepreneurs to get their take on how to anticipate and avoid these co-founder mistakes that have splintered businesses and annihilated relationships.
Sound dramatic? It is.
Business is serious business.
As Strikingly co-founder David said, “Whether your co-founder is a friend, your cousin, or you’re in a romantic relationship, know that things will never be the same again, once you go into business with them”.
“If you commit to a project and you don’t deliver, then friendships fall apart. But if there is no real commitment (e.g., no response to getting feedback or no real interest in the project after a few days) nothing really changes, and you go about your life”. -Dafeng Guo
Instead of committing to a new, exciting endeavor over a round of beers, Dafeng suggests you start small. As in a weekend project small.
“Work on a small project together to figure out your working style and see how [this other person] works under pressure. There are good opportunities, like a hackathon project or a 1-week side project idea. If the hackathon project falls apart and you’re not doing business together, it’s better to walk away, rather than you working on it for 6 months and realizing your visions are diverging”.
By doing this, you get some real-life insights on whether this individual will be a good partner for you, moving forward. Some of the signs that you and this individual may not be good partners?
- Lack of communication - perhaps because you’re a morning person and they’re a night person
- They crumble under pressure (e.g., don’t know how to prioritize for a deadline)
- They have little or no patience and snap easily
- They lack accountability and don’t follow through on a project
- They’re not committed (i.e., they don’t take it as seriously as you do)
This is what Syed Balkhi and his co-founder, Thomas, did before starting OptinMonster.
“We decided to work on a smaller passion project. This allowed us to really get to know each other before diving into a much larger partnership. While working together on the passion project, we realized that we really complemented each other's skill set. We shared the same core values when it comes to hard work, honesty, and care, for the customer. Since starting our partnership in OptinMonster, our relationship has only gotten better”.
MJ Demarco of The Fastlane Forum, had a different experience.
“Back in my twenties. Two of my friends and I started a business. I was 100% committed to the business. My other founders had other priorities, with our business being their 4th or 5th interest. One founder had other businesses he focused on. Another founder wanted to get promoted at his job and play sports. That left me as the only person who was busting ass and sacrificing. My partners were good people and motivated — it’s just that their interests were polyamorous, and [that] is no foundation for a good partnership. When it was clear, I didn't fight with them about it, we just agreed to dissolve the partnership”.
It’s best to find this out earlier rather than later, during a short term project, and not when relationships and real revenue are on the line.
DON’T CROSS THE STREAMS
Do you remember that line in Ghostbusters, where Egon warned against crossing the streams? What would happen if you did? It would be bad.
You’ve decided to run the company with this individual.
Think of “crossing the streams” as you and your co-founder(s) stepping on each others’ toes by NOT CLEARLY defining what each of you will be responsible for within the company.
As Wade Foster of Zapier remembers when him and his co-founders first started, “we experimented with several different partnership models. One path seemed super intuitive but after about 6 months of effort it was clear the devil was in the details. Everything we thought was intuitive wasn't”.
Let’s get into the foundational building blocks your partnership will need to cement in stone, before all other business decisions are made. Otherwise your company is likely to crumble, and bury you in its rubble.
WARNING: Do not skip over these discussions with your co-founder(s). If you feel uncomfortable talking about this, then how on earth can you honestly and openly discuss other issues that are guaranteed to come up in a new business? It’s better to tackle this now, and establish an open communication, rather than 6 months down the line with your lawyers in the room and civility out the window.
The Same Page Don’t figure out the plan as you go along. We’ve talked about this. It’s a terrible idea.
You have one goal, but your co-founder has another.
Get on the same page. One mind, one drive.
As Teng states, “All of you need to believe in the same mission for the greater goal that you have for the company or product. The goal needs to be made as clear a possible in the very beginning to prevent any conflicts”.
Money’s on Your Mind
Who gets what and how much? Does someone get a little bit more than the others because that person came up with the idea?
After the founders of Strikingly solidified that they were moving forward following their YCombinator success - via the advice of YCombinator mentors - they signed a standard contract of an equity split between all 3 partners.
Done. Uncomplicated and straight to the point. Now it’s a passing thought in the grand scheme of all the other pressing priorities you have.
The Ground Rules
Techstars has helped launch over 1,000 companies. They’ve seen every combination of co-founder teams imaginable. This is what the founder and co-CEO, David Brown, advises all his co-founders to do:
- Talk at the very beginning about how you’d approach conflict when it comes up. Are you both open to hearing criticism?
- Have a conversation on what you’d do if you disagree (and there is no 3rd member of the founding team). Whose point of view prevails?
- Make sure you carve out time to solicit constructive feedback and don’t take it personally (e.g., is there anything I’m doing that’s driving you crazy?)
Sound awkward to talk about? Possibly. Either way, get used to it. Your co-founder career will be riddled with these types of discussions.
Know your Role “Everyone should explicitly know their role in the company”, says Teng. “If there is an overlap in the skill sets between founders - let’s say both of you code - one does front end, and the other does back end”.
If both of you are good at marketing - one can handle product and the other can work on paid ads.
If you’re an introvert, and your co-founder is an extrovert - you handle behind-the-scenes work while your partner handles press and sales.
Overall, don’t lie to yourself. Be honest about your strengths and where you can contribute the most. Honesty, on where you can add the most value to the business, will help push the needle forward - amicably.
Before we jump into probably the hardest part of being in a partnership, let’s assume some things are already solidified in your relationship.
- There’s an underlying trust and respect between you and your partner(s). No argument can be settled if this isn’t in place.
- You’re all self aware. As Dafeng says, “Some people don’t even realize they’re being emotional (I’m not being emotional, I’m passionate!). Be aware of the situation so you know if you need to walk away or back off, and regroup at a later time”.
The One Principle that Rules Them All
“I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel”. -Maya Angelou
“You can’t take it back”.
“Once you hurt someone with your words you can’t undo that pain. Before I say anything”, says Dafeng, “I will think twice. And that’s my truth”.
This mindset is how the co-founders of Strikingly approach heated discussions with each other. Here are a few of their takeaways, on how they’ve approached finding the appropriate solution to a dilemma:
- There’s no need to tiptoe around confronting your co-founders. If there is, that would hurt the relationship. Be transparent with any concerns you have with each other.
- In the beginning, you may find yourselves having heated fights, and of course you take it personally. It’s natural. But you get over it. And the process of getting over it is realizing that the company’s progress matters more than your personal squabbles. You know where the business needs to be, what you need to do, so accept that it’s not meant to be personal.
- The worst thing you can be is passive aggressive because it can drag out for weeks, if not months - and have long-term effects. Talk about a business killer that hurts productivity for you and the business.
- Do your best to keep your emotions out of it and use data to prove your point. This is how to convince each other. It’s not personal opinion, but statistics and facts.
- If you can transform your frustration into something productive, be it - into product ideas or an alternative suggestion - do it. Focus on the task at hand and make the end goal clear.
- If there’s a disagreement between co-founder(s) about how to move forward on a particular project, 9 times out of 10, the final decision should defer to the person with the most expertise in that area - which you should have already agreed on.
A confrontation between partners is inevitable. Avoiding an EXPLOSIVE confrontation is all about self-awareness and having control over your emotions.
If you find yourself losing control, walk away to get your mind straight before walking back into it again. There can be many rounds of a discussion before a resolution is reached. So it will be good for you, to know your limits.
When we asked Ross Simmonds how he let go of residual feelings after an argument with a colleague or a co-founder, he says that he “stayed focused on [what would be] best for the business, and removed all feelings from the situation”. “To let go”, Simmonds explained, “I go into the scenario with that perspective and it makes it easy to stay focused on progress rather than feelings”.
“As a single founder, I felt like I was carrying a weight that I couldn’t share with anyone”. -Alex Turnbull of GrooveHQ
There is a heavy burden that many solo founders carry with them, often silently, weighing them down at all times.
There are the strains of making heavy decisions that not only affect you, but your staff. From all the decisions you have to make in one day, your brain is fried - where even making the simplest decision like, “what should I have for dinner tonight?”, is too much. You have problems that you feel you can’t discuss with anyone else.
You feel lonely. Depressed. It’s as if gravity is pushing down on you and you’re exhausted all the time.
Doing it on your own can hurt you mentally and emotionally, and lead you down some dark paths.
From all the caveats that people mention in regards to going into business with your friend, know that this heavy burden comes with solopreneurship.
Is solopreneurship doable? Of course!
Though we’re still going to name a few of the perks of going through this journey with another:
- Big decisions can be analyzed and looked at from different perspectives - whether you’re the pessimist or optimist, realist or dreamer - looking at it from all perspectives will help you come to the best solution to move your business forward.
- If you’re working late at night, at least you’re probably not alone.
- Everyone has their role, and their team of specialists, to accomplish particular tasks. When “fires” happen in the company, and you’re a solopreneur, all the questions come to you. With co-founders, depending on the scope of the problem, it goes to the best person, and team, to handle it..
- And the most important perk? You’re never alone. You have someone to pull aside and talk to when it starts to get heavy. You have someone to talk about your frustrations and your worries. And they can empathize because they’re going through the same thing.
Sometimes just talking (or screaming) it out - putting it out into the world (without particularly looking for an answer to your frustration) - having someone who can empathize with what you’re saying, is enough to ease your mind, so you can move forward and avoid those dark holes.
Let it out woman. Just let it out...
IT ALL COMES DOWN TO THIS
Now you have an idea of what you’re getting into - the good, the bad and the awkward - if you decide to go into a partnership with a friend, relative, or a lover.
And you have an idea of how to navigate troubled waters as they come and go.
Because they will come, but hopefully will pass...without casualties.
Now I’d like to end this piece with a statement from Michael Pozdnev. In a 16-year business partnership he had with a friend, it had led to: depression, overwhelming self doubt, and panic attacks. After finally splitting from this partnership, it led him to building iwannabeablogger.com that today receives over 100 comments per blog post and well over 1K blog post shares. Michael’s advice:
“Surround yourself with people who believe in you. As soon as you feel you’re being accused of something you didn’t deserve, it is the first sign that you have to break up with that person. You and your cofounder should be bound by common values and goals. Evaluate honesty, not only in your work and contributions to your joint business, but also the efforts of your partner.
But most importantly, be happy and healthy”.
Cheers to the co-founders of today, and of the future. We hope to never find your “co-founder horror story” in a Reddit group forum.
Have you built a business with a friend, family member, or lover? Did we miss any tips that have helped you? Leave a comment down below.