In my time I’ve started a number of businesses of different forms and structures. I’ve had my successes, I’ve had my failures. I was born with a restless soul. I love new projects and moving an idea from the drawing board to reality.
I love people and the skills and insights they bring and have enjoyed working in great, stimulating partnerships. My natural inclination is to go into business with other people and to be generous and optimistic. It feels right to start with a positive spirit.
Yet I’m not sure setting up business with other people is always wise. Hard though this is for an entrepreneur to say – Be Cautious.
Most businesses are started by more than one person. Best friends, colleagues, classmates often launch into ventures together – excited by the combination of talent they bring.
My own experience has taught me to think hard before signing up with other people.
Some of my partnerships have inevitably resulted in one or other of us moving on. Mostly the moves have been happy ones, but some have been less so. When you’ve put so much into a project, it can be hard to split.
The Beatles once said that they would hate to be Elvis, because he was on his own, whereas they had each other. Sadly, despite all the love they brought the Beatles ended up warring.
Partnerships are interesting beasts. Like a marriage, you are full of excitement and joy at the beginning. You never expect to disagree or be apart. Yet things can turn out badly, despite both parties being trying to be honourable. It’s just the way things can go. People are different. Circumstances don’t always go according to plan. You’re not always going to be liked if you’re trying to run an efficient business, even if you have great intentions and impeccable morals. The business itself might not work. The economy might conspire against you.
Sometimes you can make mistakes, the chemistry can be wrong, or you can just be a bit of an idiot for a while.
I take negative splits very personally. Perhaps too personally. I’m trying to learn to be less sensitive – business is business. Life moves on.
Think of the feud between the Facebook founders highlighted in the recent film (The Social Network, tagline; ‘You Don’t Make 500 Million Friends without making a few enemies’. Think of the disputes at Twitter. Even longer-lasting ‘successful’ partnerships can have their ups and downs – think Bill Gates and Paul Allen, Mick Jagger and Keith Richards (here’s a great article from the Economist). Sadly, successful partnerships are rather rarer than unsuccessful ones.
Although I would happily entertain partnerships in future if the scenario was right, there are a few things I’ve learnt from my experiences.
1) Simplify, simplify, simplify:
Businesspeople and lawyers often dream up complex share structures, loan agreements, profit shares and options. My advice, keep it as simple as you possibly can:
Before you go to your lawyers, condense your agreement down into the simplest form. Then try to simplify some more. Tell them what you want. Try to reduce the variables down to the very minimum. If these negotiations are tough, they’ll only get tougher later. Be realistic about what you bring and what your partner brings. The simpler you can make it and the more realistic you are, the less likely you are to run into difficulties later on. Often the business will be completely different 5 years on from how you intended it. Make sure you’re prepared for that.
2) Entrepreneurship can be a lonely game, but that’s not always bad:
If you want camaraderie in the early stages, or are afraid to go alone, remember if things go according to plan you can bring in advisors to give you advice and staff to help. Could you hire the skills your partner has? Could they replace you? Don’t give away too much of your business to someone else just because you like them, because you want to be generous or because you’re can’t see anything going wrong. Too many people split companies 50/50 because it feels right only for it to cause bigger problems later. There’s a lot to be said for a company with a clear leader and single direction in the early days.
3) Hope for the best, plan for the worst:
It goes against the human spirit to expect the worst. Yet it’s vital to have a legal safety net for you and your partners. If you make them simpler, it’s going to be simpler to sort. Too often I’ve seen people have to wade through legal and accounting documents to try to resolve issues. My own rule is that if you can’t remember the details of your deal a couple of years later, it was too complicated.
Even if things go badly, you can work them out. One of my earlier partners and I had a messy break. We are now great friends again.
If I had my time again I would have been tougher, whilst staying fair.
The rules above don’t necessarily work for every partnership. Far from it. Some need complex agreements and can afford them. Whether you introduce the need for finance, or stock options, it may just be a bullet you have to bite. Sometimes an opportunity is too good to ignore, even if the mechanics of getting it right are difficult.
Partners can also help add the special magic that is needed to get a company started. There might be a business genius and an inventor, who need one another.
Finally, start a business or project for the right reasons. If you’re thinking money, prestige or an easy road, stick with the day job. If you believe the world will be better off for your project (this excludes all the companies building bullshit facebook or iphone apps), go for it.
As for me, despite my inclination is to want to start things with others, I’ll probably try to go alone for as long as I can.
“Above all, as I have implied, the man who goes alone can start to-day; but he who travels with another must wait till that other is ready, and it may be a long time before they get off.”