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Starting Up With a Friend

Starting Up With a Friend

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Published by Dmytro Shteflyuk
It seems like a fool-proof plan: start up with a close friend. You’ll get along (obviously), and you’ll get to share the exciting, fantastic, scary experience of starting up with someone you care about. It’s not a bad idea, but there are a few caveats that you should be aware of before you proceed.
It seems like a fool-proof plan: start up with a close friend. You’ll get along (obviously), and you’ll get to share the exciting, fantastic, scary experience of starting up with someone you care about. It’s not a bad idea, but there are a few caveats that you should be aware of before you proceed.

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Published by: Dmytro Shteflyuk on Mar 13, 2009
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05/10/2014

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Starting up with a friend
What could possibly go wrong?Posted on March 11, 2009by
Daniel Tenner
in Start-ups It seems like a fool-proof plan: start up with a close friend. You’ll get along(obviously), and you’ll get to share the exciting, fantastic, scary experience of starting up with someone you care about. It’s not a bad idea, but there are a fewcaveats that you should be aware of before you proceed
1
.When I started my first company with one of my closest friends, I expected thingswould go very well between us. We understood each other in ways that wouldtake years to build up (and did take 10 years). We
knew
each other, and we
knew
we could rely on each other. We were prepared to have many surprises along theway — starting a business is always going to be a scary adventure.What we weren’t prepared for wasthat the main problem would come from us andthe dynamic between us.
What happened, in brief 
I’m not going to go into all the details of what exactly went wrong, for a numberof reasons (among them, it would be a one-sided account and inherently unfair onmy friend and first cofounder). The long and short of it is, we had differentexpectations about the business. I left my safe, comfortable corporate job to work
 
on it, so I
needed 
it to succeed, or else I would find myself back in the corporateworld. By contrast, my friend had already started several companies and wascomfortably well off, so he didn’t have the same expectations and requirements.It turned out we have a different definition of “the business isn’t working out”. Forme, it was working out if it was making enough money to cover my expenses. Formy friend, it wasn’t working out unless it was making enough money to also addto his existing wealth and thus justify the time and effort which he poured into it.Both those views were correct, but because we
knew
that we understood eachother, we didn’t realise that our views were different until that difference hadgrown into a huge misunderstanding.This core divergence of views could have been resolved easily if we’d knownabout it and discussed it ahead of time, but we didn’t know about it, so it festeredand turned into dozens of other misunderstandings, so that by the time it finallybecame clear what our main divergence was, much of the damage was alreadydone and it was entangled in a huge mass of emotional misunderstandings
2
.This almost cost us our friendship. We got through this thanks to the help andmediation of another very good friend, who helped us to communicate to eachother how we felt, so that we could move forward together rather than againsteach other.I’m glad to say the mediation worked, and we’re still friends (perhaps evenstronger than before). Nevertheless, I learned some important lessons from this.
1. Make your agreements explicit
The first lesson is to keep agreements
explicit 
. It’s not enough to
think 
that yourfriend understands what you think: make sure he does by discussing it openly withhim. As my mediating friend phrased it, “unspoken promises” have a tendency toturn into broken promises (which are always hard to swallow). Avoid unspokenpromises.Here’s an example of a really bad thing to keep implicit: “We’ll only call it quitsif the business is bankrupt and can’t raise any more money.” The promise here isthat we’ll keep going until the very end. This may seem obvious to one party inthe business, but it may not be so to the other. One partner could, for instance, feelthat the time to call it quits is when the business has 3 months of cash flow left.Another may feel that it’s worth going deep into credit card debt territory before
 
giving up.Don’t make this mistake: keep those agreements explicit.
2. Detail your agreements
Once you make some agreements explicit, it should become clear that you needfurther discussion to figure out exactly what your explicit agreement is. Don’t beafraid to do this. It’s not “too early to discuss this”.Here’s an explicit agreement that’s not detailed enough: “We want the business tomake a lot of money”. Really? How much are you happy with? 10’000 pounds amonth? A million? What is the definition of success? It’s almost certain that youand your business partner have different views as to what “a lot of money” is.Being on the same page about what you expect out of your business will ensurethat you don’t pull in different directions when things are going well. Think of how mortifying it would be to find out that your partner wants to pull the plugwhen you think that the business is successful.
3. Don’t be afraid of discussing the bad stuff 
There are a number of subjects whichseem almost embarrassing to discusswhen things are going well. Forexample, “What if one of us decides topull out?” Your first reaction to thistopic might be “What? We’re barelygetting started, and already we’retalking about what happens if one of uspulls out?”The reality is that people’s lifecircumstances change through time.They get married, or decide to leave thecountry, or get engrossed in a differentpursuit, etc. Many things can get inbetween a founder and his start-up.Similarly, many things can go very wrong with a start-up. When those things dogo wrong, or when one of the founders decides to pull out, is not the time todiscuss these things. You need to discuss them with a clear head when no one is

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