The case study on my site that gets the most attention is the one about Fighting Founders. Which makes sense – I work with mid-sized agencies and production companies that were started by two or more people and are usually still independently owned. Founders – whether they’ve been in business six months or six years – are going to face certain challenges. When two of my clients clicked on my site and immediately ended up reading the Fighting Founders case study I realized that they are drawn to content about what works and what doesn’t in much the same way someone getting married reads about how to prevent a divorce.
So I’m going to do a three part series about the potential dynamics that can happen between founders. In my career I’ve seen this scenario several times. Two people start a company. Things gel after the first few years and the business takes off. But as it grows, the roles of the founders change. Tension and conflict ensue. The people who handle this with grace, or who lack grace but manage to handle it anyway, are not the ones who call me. These posts are for the rest of us.
Part One: Starting out
Often people who decide to start a business are friends or they become friends. That should be a good thing, right? We spend more time at work than anywhere else, particularly in a start-up. You want to spend that time with someone who is compatible and whose company you enjoy. So when you start a company, you look for someone who shares your vision and values.
But when the personal and professional lines blur, conflicts can become freighted. It’s hard enough for most of us to talk about money, but often partners don’t have clear conversations (preferably with an outside advisor like an attorney or financial advisor) about investments, responsibilities, or consequences in the beginning of a partnership.
In the heady early days, it’s easy to assume everything will work out. But what happens when one of the partners decides that she wants to pursue her own outside creative projects, or another decides that he wants to spend less time on the road? What if someone develops a substance abuse problem? Contracts only come into play when the relationship is broken, so it helps to put good agreements in place while the relationship is still strong and things are going well.
Consider things like ownership: who owns what? What happens if someone wants out later? Do you share ownership with others down the road as the company grows? Be clear about your end goal: Do you want to sell in five years and make a killing? Or do you want your company around in twenty years with the two of you still at the helm? We wouldn’t have much sympathy for a couple who married without discussing children, only to find out later that one wants a big family and the other wants no children at all. But how many agencies and companies start without a clear end goal?
Some things should be discussed and agreed to even if it’s not in a contract. How do you make decisions? Who or what is the tie breaker when you disagree? Do you know how you both handle conflict? The most fruitful partnerships happen where each owner knows how they handle conflict, stress, and tension—and how their partner manages them.
Alain de Botton says that we often base our two biggest decisions – who we marry and what we will do for a living – on intuition. And we are often wrong. I have seen multiple business relationships run aground because one partner ignored clear warning signs in the other out of the gate. Financial mismanagement in a previous business or in their personal finances. Lying or avoiding accepting responsibility for mistakes. Drug abuse or a drinking problem. Bad decisions about who to sleep with or hit on. A terrible temper.
No matter how talented or charismatic or insightful a person with these red flags may be, when you have a company with more than two people, it’s almost impossible to work around someone who behaves in these ways. If you do decide to partner with someone who has any of these red flags, be clear with your legal advisors what your concerns are and find out how to protect yourself.
What else would you advise for people who are starting a creative company together? Please add your thoughts in the comments.
For the next two weeks: In Medias Res – challenges to partnerships in the middle of the action. First Conflict and then Changing Roles