Is it OK to start a company with your best friend? This topic seems to come up a lot, as though it is a litmus test for whether a company will be successful.
Thursday, June 30, 2011
Last night I was at Unreasonable Institute and heard Daniel Epstein* interview David Kyle. This topic came up, and while I can't remember the exchange verbatim, it went something like this:
David: "you need to be careful about starting a venture with your friends. Sometimes the things that need to be said, don't get said because of the friendship. And you want diverse viewpoints and experiences, which may not happen with friends. If you do start a company with friends, get the roles defined. A lot of companies that get started by friends end up not being companies and not being friends."
Daniel: "well you know Unreasonable Institute was started by 3 friends, and I don't think we would have started it, or kept it going, without each other."
This month's Fast Company features some famous "best friend founders," listing Bill & Dave, as well as Cohen & Greenfield.** And there is also the case of starting companies with people you don't know real well, but with whom you become friends by virtue of starting and building things together (these often seem to become very strong friendships).
Who's right? Both. Neither. It depends.
The conventional wisdom (be careful about friends) is good advice if you want to solve a problem, get it funded by outside investors and sell. Perhaps some expertise is really critical, and you don't have friends that have it (or can develop it in time). On the other hand, if you are the kind of people that do well by making commitments to people you care about, can sacrifice somewhat equally in the early days, are willing to learn on the job, and think it would be cool to work with these people for many years (why sell the company when we are having so much fun together?), then go for it.
I can't think of a more important question to ask when starting a start up than "who am I starting it with?" There are some of my friends who would be great to start companies with, and others, well, not so much.
I think it is fine to start a company with a good co-founder that happens to be your friend. Just be sure they meet the test for being a good co-founder, not just the test of being a good friend. Start with character- are they honest, passionate and hard working? Then look at results- have they produced, and are they demonstrably good at things they care about? Next- do you work well together? Ask yourself- what challenging things have we done together, and how did that go? Is your potential co-founder friend still making the cut? Want more?
As with many of these issues around start ups, there are multiple "right" ways (and wrong ways) to do it.*** Despite many attempts, there isn't a cook book that guarantees a successful venture. As with the many early, important issues you face, I think the best approach is to think of them as design constraints. If you found a company with friends, what are the pros and cons? How can you work through them? These are definitely worth thinking through and discussing with your co-founders and mentors, and that may help you with the decision, too.
If you do it well, you might just get a BFFF (best founder friend forever).
* btw, Daniel is getting to be a pretty smooth interviewer (at least if he has good material to work with), what with practicing every night. Charlie Rose better watch out.
**bet you clicked the link just to check.
*** personally, I think it's unlikely I'd be a co-founder of another company unless it is with a friend (or at least long time acquaintance). But never say never.