Should You Start Your Next Business With a Friend?

(By Jun Loayza)

People are accustomed to taking orders from their boss, not their friends. This can get very unpleasant, especially if you’re not communicating tasks in the way that your co-founder likes to receive them. To keep my co-founder and I accountable, every week, we get together with the whole team and report our accomplishments and issues, eliminating the need to give orders throughout the week.

 I’ve built five companies in my startup career, four of which I started with friends. It’s quite common to build a company with a close friend: You get together, think of a cool idea and decide to get started. Why not, right? While it can be extremely fun to start up with someone you’re close to, it’s not without disadvantages.

So before you and your buddy get started, take the time to analyze the good, the bad and the ugly side of starting a company with a friend.

The Good

  • You have a friend in the trenches. Entrepreneurship can be a lonely lifestyle. My friends who work 9-5 tend to party hard at night, a lifestyle that I can’t keep up with as a 24/7 entrepreneur. When we do hang out, I just want to talk about ways to improve my startup, whereas they want to talk about anything but work. That’s why it’s so fun to start up with a friend: You have someone to whom you can relate.

  • Your friendship sets the tone for the workplace culture. Good company culture keeps morale high, attracts top talent and keeps employees loyal. My co-founder and I often conduct interviews together so the prospect sees our dynamic interactions and feels how fun it is to work on our team. Because we’re friends, we don’t hesitate to throw a get-together at my place or a poker night at my co-founder’s place.

  • You understand one another’s strengths and weaknesses. It was easy for my friend and I to assign roles and responsibilities, because we knew each other so well. He was even-tempered, organized and focused on the big picture, so it made sense for him to be CEO. I was the hustler with the do-whatever-it-takes attitude, so it made sense for me to lead the CMO position.

The Bad

  • You both have the same network. Friends usually hang out with the same people and will thus have the same network. This is bad because startups can succeed or fail based on who you know and what introductions you can get. My co-founder and I make a strong effort to go to events (he goes to investor-related events while I go to client-related events) in order to expand our network.

  • It’s hard to take orders from a friend. People are accustomed to taking orders from their boss, not their friends. This can get very unpleasant, especially if you’re not communicating tasks in the way that your co-founder likes to receive them. To keep my co-founder and I accountable, every week, we get together with the whole team and report our accomplishments and issues, eliminating the need to give orders throughout the week.

  • It’s easy to take advantage of the friendship. Because my co-founder is my friend, he feels shy about pressuring me to work harder, so it can be a vicious cycle: I slack because I feel comfortable around my friend and my friend doesn’t pressure me to work harder because he doesn’t want to mess up the friendship. A founding team that is brutally honest with each other and that can respect feedback has a much greater chance at success.

The Ugly

  • The stress of failure is compounded by your friendship. Startups are full of stress, failures and demoralizing moments. In a previous company, my co-founder failed to raise funding within the given timeframe; it was a very tense time because cash was extremely low and the company would fail if we didn’t raise capital immediately. Similarly, I’ve had moments when I’ve gone through a dry spell closing deals. It’s hard to console a friend when your business’s future is at risk.

  • Failed businesses can lead to broken friendships, and vice-versa. I have seen several failed startups lead to broken friendships. Many times, the founders blame each other for the failure. In other cases, problems that start as personal can end up affecting—or even destroying—the business side. My failed startups with friends have actually led to stronger friendships; it’s all about the level of respect you have for each other. But if you don’t communicate this from the start, it can easily go the other way.Would I start another business with a friend? Absolutely—though I always proceed with caution. Here’s what I look for in a friend before I ask him to join my team.

  • Do we have complementary skills?

  • Do we have different networks?

  • Do I trust and respect his work ethic?

  • Do I trust and respect his decision-making abilities?

  • Does he have previous startup experience?

Don’t start a company with a friend just because you think it’ll be fun to work together.  Start a company because you believe in what you’re doing—and because you each bring a unique skill set and network to the table, improving your chance of success.

(Source: Openforum)

“Opinion pieces of this sort published on RISE Networks are those of the original authors and do not in anyway represent the thoughts, beliefs and ideas of RISE Networks.”

RISE NETWORKS

"Nigeria's Leading Private Sector and Donor funded Social Enterprise with deliberate interest in Technology and its relevance to Youth and Education Development across Africa. Our Strategic focus is on vital human capital Development issues and their relationship to economic growth and democratic consolidation." Twitter: @risenetworks || Facebook - RISE GROUP || Google Plus - Rise Networks