Young entrepreneurs often find themselves starting companies with their friends. It makes sense: one day you're sitting around and you realize that you have a great business idea. Next thing you know, you're all caught up in creating wireframes, brainstorming, and talking about your big plans for the future.
This is a magical time in a company's life cycle--anything is possible--but it's also potentially the most precarious time. Mainly because people don't realize how freakin' hard it is to start a company, and when there's more than one founder involved, things can get hairy pretty quickly.
I know countless examples of companies that have failed because of "founder issues." There are a lot of reasons why startups fail, but failure should reflect something wrong with the business, not something wrong between two awesome entrepreneurs. Below are four tough situations all friends who are co-founders will find themselves facing, followed by my advice for navigating those choppy waters.
1. Who does what?
Your friends generally come from two places: work or school. But once you establish your relationship, you also spend your free time with these people. This means that more often than not, friends who start companies together often have similar backgrounds, interests and skills. A tech company that has 4 sales people and no developer, though, is bound to fail.
Solution: A startup is one giant learning process. Lay all your cards out on the table and choose areas that you want to focus on. Then, each learn the skills necessary to get the job done. My cofounder and I didn't know how to do marketing, business development, programming, financial modeling, or fundraising--but we divided and conquered. Today, I'm the fundraising guy and he heads up the business development. We know when to defer to one another based on each of our areas of expertise.
2. Gauging Commitment
In the heat of the moment, everyone who was part of the initial ideation process will be excited about it. But ideas don't mean shit. It's all about execution.
If you all have equal equity, but one person does no work or considerably less work (because they are still employed elsewhere, etc.), it's not good for the company or your morale.
Solution: Ideally, work on the company for a while before incorporating to see how much work each founder puts in and how committed they are to starting the company. This is an easy way for everyone to understand how much work starting a company can be and assess how much commitment they can offer without getting into legal mumbo jumbo.
If you can't do that, have a restricted stock purchase agreement in which the shares don't vest unless the founder works for the company full time, and have a three or four-year vesting period. This aligns the incentives for all founders and means that if someone ducks out early, a third of the company doesn't walk out with them.
3. Who's the boss?
Every team needs a leader. Someone who has the final say in important decisions. Holding hands and being friends and making all the decisions together is great, but it will eventually just be everyone talking in circles and nothing will get done. In a startup, you need to move fast or you die. And having an ultimate decision-maker helps to calcify focus and goals.
Solution: Sit down and have the conversation with your co-founder(s). It's an uncomfortable conversation so they might try to back out or push the meeting back, but don't let them. Decide together who has final say for those moments when the going gets tough. It can be as cheesy as writing out pros and cons lists, but often there's a gut instinct among the group. (Look to the person who made the uncomfortable meeting happen, perhaps.)
4. Staying friends
You spend a lot of time with your co-founders... A LOT. My co-founder and I spent almost every day together in 2015 together. That's 8,685 hours. If you've ever had a roommate, you know this can be hard. Many founders split because they simply get tired of each other.
Solution: Have a policy of being completely and utterly honest to each other. Talk about any issues that you are having with one another and be upfront about it. There's no room for gossip or pent up resentment in a startup. If you feel that there's something wrong, bring attention to it and move along.
My cofounder and I call each other out on everything. For example, I've told him that his using the word "obviously" all the time can come off as arrogant; and he's told me that I'm sometimes bad at taking criticism and that I say "uhhh" a lot when I give my pitches. We know each other so well now that we understand the difference between friends butting heads and business partners offering feedback, so these conversations only make us better.
And remember to keep it civilized. You aren't calling each other out to hurt each other; in fact it's to help each other grow. You become a better person for it.
Have your own tips for navigating a relationship with a co-founder? Leave your thoughts in the comments!