Best friends make the best business partners. No lie!
Photo by James Sharp
I have often heard that you shouldn’t hire your friends or family to work with you because you’ll just end up hating each other and getting into fights. After all, your best friend wouldn’t take it very well if you were giving him orders all the time. Though working with a friend or girlfriend can be extremely tough, I have found that if you approach and manage the right way, you can create a wonderful company that is more fulfilling than any other company you could have created with random people.
I founded FD with my best friend Yu-kai Chou, I just started Blockbuster Review with my best friends from high school, and am about to launch In Our Closet with my girlfriend Kim. One question you may have is, “How do you have the time to lead so many projects?“ We can go over that on another post. Right now, lets talk about how to make a business work when your partners are your friends.
Part I: Choose the Right Friend
1. If you don’t have their respect, you can’t lead them
In order to lead, you must have respect. Your best friends have known you for a large part of your life, so they already know your habits, personality, and leadership qualities. They have already decided the level of respect they have for you.
When considering a friend for a business venture, ask yourself these questions before partnering up:
- Does my friend listen to me when I talk or does he constantly cut me off mid sentence?
- When I offer an idea, does he immediately shut my idea down or does he add to the idea/say it’s an awesome idea?
- Does my friend come to me for advice about a specific topic?
- When I criticize my friend, does he pay attention to what I say or does he ignore my advice?
- Does my friend put me down in a “joking” kind of way all the time? (ex: “Yea, Jun always drives slow. He’s the slowest driver alive”)
Using these questions, you can gauge whether your friend will respect you as a business partner.
2. Followers are ok. The key is self-motivation
Your friend doesn’t necessarily have to be a leader for your company to function; the important part is that your friend is self-motivated. Startups need people who can take an idea and run with it. Micro-managing is the LAST thing you want to be doing in a startup.
For example, my friend Chris is leading the Blockbuster Review project. His job is to post up all of the reviews that we write because Steve and I don’t have time to post them on the site. Well, instead of simply posting the review, he added the movie poster, Pros and Cons, and movie trailer to each post. He took his role and went above and beyond what needed to be done.
Part II: Making the Company Work
3. Assign each role based on skillset and ability
Hey, this is obvious right? Every startup needs people who are excellent in a specific role so that they can take the lead and make it excel.
Right, it is obvious in a normal startup; however, a startup with best friends can be tricky because friends want to do what they like to do, and not necessarily what they’re good at.
One of my good friends is currently a systems analyst at an IT Consulting firm. He makes an excellent first impression and is one of the best sales people that I know. I wanted to start a company with him and have him lead all sales in the company. He had a completely different mind set though. He likes to design, and he wanted to lead our creative design and branding division instead of sales. I gave him a shot and allowed him to design the website, which fell way short of my expectations. This is a perfect example of when to pull the plug on a project before it even started. I could convince my friend to take the lead in sales, but he would not take ownership of the position and go above and beyond.
4. Ownership
Because you are best friends, ownership in the company can be super tricky. I guarantee you that no matter what, your friend expects to have an equal share in the company. The best solution is to discuss ALL ownership topics before you start the company and have everything written down on paper.
I can’t stress this enough because most people believe that because you’re friends, ownership is mutually implied and everyone naturally agrees with each other.
Ask yourselves these question in order to determine company ownership:
- How much time are you able to commit to the company every week?
- What initial capital investment will you be putting into the company?
- What are your other current forms of revenue?
- How big of a risk are you taking by starting up this company?
- What are your opportunity costs for starting this company?
By answering these questions, you will be able to effectively and fairly distribute equity for the company.
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Hey, it’s not easy starting a company with your best friend. If done improperly, you might even end up hating each other! But if you follow my advice and do it right, the result can be a fun, rewarding experience that hopefully leads to a successful company.
If you’re thinking of starting a company with your friends or already have, please let me know!
Hey Jun, great post!
While reading your post, I did see many of the failing points that I have made and learned from my past experiences. I have started my company about 2 years ago with my friend (we met at a job) which is now my best friend! I don’t know how it happened but we connect in every aspect of a business partnership.
Now, my former “best friend’ that I have known for the past 10 years has become boring and closed minded. Maybe he was always like that and I never realized it but now that I talk to him about upcoming projects or even talk to him about a possible business opportunity for the both of us, he always shoots me down.
The thing about partnerships is pretty complicated if you ask me, not anyone will understand what you go through or put as much effort into the business as you will. When I talk about my project ideas to my friends, most of them are not interested or don’t understand a thing about it. It’s not ANYONE that can be an entrepreneur; you need to have that…”6th sense” if I can call it that way.
My problem was that I wanted to start a project with each one of my friend so we can all be successful in the future and have no worries. But the thing that I noticed is that to them, the “hype” fades away quickly while I have my list of projects to complete, then if I do start the project without them, they would claim ownership.
I mean, I’m a pure innovator and could work on these ideas by myself or with my main business partner but I tend to give a chance to my friends and offer them a partnership position….which tends to fail! So lesson learned!
Jun, what are the skills that you think we should look for in a person to make sure that they will be a good business partner? I think these following skills should be the basic: Innovation, Visionary, Self-Motivation and Perseverant.
Best of luck and prosperity to you and your business(es)!
Great question.
The most important quality in a business partner is the self-starter quality. This person has to have the drive to work hard and be passionate about the company without you riding his back the whole time. If you see yourself having to constantly push your business partner to get his work done, then this is a very bad partnership and you need to get out of it ASAP.
Your business partner needs to drive the business; you cannot be the one driving your business partner.
Let me know if you have any more questions!
Thank you for your article. I’m trying to decide whether to take on my best friend as a partner or not. It seems to be in our favor (our strengths complement each other, we have a solid relationship of trust, we’re both highly motivated and action-oriented, etc.) but so far everyone I’ve talked to, which equals a lifetime of business experience, tell me that having a partner is not worth it, that they have never known of a partnership that turned out well, that most turn out very badly, that I’ll lose my friendship, that I need to run away from this idea as fast as possible.
Jun, how long have you been in business with your friends/partners, and are there any examples of successful partnerships (of more than 2 years)?
This is horrible advice.
How long have you been in business, really?
It will only be fulfilling and wonderful until its not, and then you risk, and have a high likelihood of, losing your best friend in a very emotionally damaging event.
Trust me, your opinion is is the pie in the sky high that comes from not being in business with your best friend long enough.
There will be trouble as sure as the sun is coming up tomorrow.
Thats the nature of business and money.
Your business actually has a higher likelihood of failing because you have all of the emotional considerations of friendship to take into account when communicating with your best friend / partner. Its much easier being able to be more ‘clinical’ with a partner who isn’t your friend.
Better read the Uniform Partnership Act that was adopted by your state so that you BOTH know your rights, ethical obligations and responsibilities within the partnership. Mutual understanding this document is about the only thing that will give your partnership a long term chance.
I lost my best friend (I was the best man in his wedding) to a business partnership. I know what I’m talking about. The maxim of not going into business with friends exists for a very good reason.