A lot of people want to tell me how to run Posse.

At the moment we’re deciding whether to raise a large capital round and go for growth or keep things tight and focused. Both approaches have merit, and I respect all who have offered their guidance. But people are passionate about their opinions, and that can prove confusing. When I started my business four years ago, I was hungry for advice. I’d never worked in technology and had no experience raising capital or building a product. I cast my net as far as I could and sought help from people who seemed to know what they were doing.

Finding support was easy. Everyone I approached liked my idea; many wanted to be involved. I created an advisory board and handed out shares as if they were candy. I surrounded myself with impressive names, and they all had friends they wanted me to meet. Before I knew it, I had 50 shareholders, and we were all on a sugar high. Everyone had ideas and opinions, and they all wanted to meet with me. Many gave me books to read and research to do. I sipped coffee after coffee and read deep into the night. I wanted to appear grateful for the support, so I reported back on how I’d benefited from the advice and emailed notes on what I’d learned from each book.

All of the advice appeared valid, but much was contradictory. I didn’t want to give offense by ignoring well-intentioned suggestions, and I burned up time holding meetings and keeping up with my reading list. I couldn’t make decisions and had no time to focus on getting work done. But I was confident that my roster of advisers would pay off by impressing potential investors when I went to raise my first round of capital. Surely they would boost my credibility.

Not exactly. During pitches, every time the adviser section of my deck came up, I got the same response: “I’m impressed you got X and Y involved. Have they invested?” Well, no, they had not, which led to a follow-up question: “If experts in the field hadn’t committed to investing despite knowing all of the company’s details, why should we?” Once I realized that these big name advisers who hadn’t invested were having a negative impact on my ability to raise capital, I removed all references to noninvestors from my presentation.

Now I’m four years in, and I still crave advice. I think being a sole founder increases my need for reassurance that I’m on the right track. I always find that having a wide range of discussions, as we often do during fund-raising, helps me refine my strategy. But I’ve also found that too much advice can be a distraction and that advisers who want equity but aren’t willing to back the company are not always the best people to have involved. Now the company is moving on to the next phase of growth. We’ve been a start-up valued at less than $10 million with good prospects but with a small team and with very little revenue. As we start to become a serious business with significant revenue, I’m beginning to move in a different world, one where I need new advice.

I’m also at the next phase in my own growth. I used to see myself as inexperienced and in need of help. Now I make my own judgments rather than deferring to people I see as experts. I still ask people I respect for their opinions and ideas, but I’ve developed a strong sense of whom to trust. I’ve learned a big difference exists between people who enjoy giving advice and those who really care about me and the business. There’s also a big difference between people who think they know how to build a company like ours and those who have actually done it.

I can think of four people who have helped me at Posse and without whom we would have failed. But the new phase we are entering requires a new group of advisers. Here is some of what I’m looking for:

1. Previous success in similar fields

Some of the people I enlisted to my early advisory board sounded impressive. They’d held high-level positions at big corporate companies. When we suffered some early start-up bumps, though, they were unprepared. Their knowledge of how a start-up should grow was based on watching “The Social Network.” When we didn’t hit it big straight out the gate, they became concerned. I learned to look for people who had built a similar company from the ground up.

2. Focus on the granular

Many people who want to give me advice start with a discussion about the potential size of the exit and how quickly we’ll be able to get there. This always creates distractions such as attending to the setting up of complicated corporate structures to minimize future tax or setting up big sales deals ahead of building a product. I’ve found that the best advisers are the ones who drill me on what we have to achieve in the next three months. They’re interested in the granular metrics of the business, how we can improve them and how we can create replicable processes.

Good start-ups are rarely short of willing advisers. Maybe these people are looking for involvement in something that looks like fun; maybe they seek a slice of a big exit. But I’ve developed a keen radar for time wasters. I spend as much time as possible getting to know someone before inviting them to become involved. I do thorough reference checks and never give away shares in the company without a vesting period.

When I do find someone who’s right, I recognize that the relationship has value. Such people are usually in high demand; they’re giving up other opportunities to take a risk and help me. Time is their most valuable asset, so I make sure I’m prepared for meetings and I check in regularly to make sure that they’re happy with our progress and that they enjoy being involved.

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I spent a recent night consoling an associate who had fallen out with her best friend. They tried to start a business together, and she quit her high-paying job to do it. Three months in, the friend had yet to commit full-time and wasn’t pulling her weight. They couldn’t agree on how to split either the tasks or the ownership stakes. Tension built and eventually exploded, and the business died before it was born. Their 15-year friendship was over.

I started my business, Posse, with my best friend, too. We’d worked together as colleagues for eight years and respected each other’s strengths. I spoke at his wedding and trusted him completely, and we were, indeed, close. He was the first person I called when I came up with the concept, and he appeared enthusiastic. But a few months in, he announced that he was starting another company, one that wouldn’t interfere with Posse. Soon after, he disappeared. Suddenly, I was running Posse full-time and solo. He did keep his founder shares, but we no longer speak. I lost a significant chunk of the business and my best friend (which was worse).

These situations arise all the time. Sometimes they make news when the friendship that is breaking up was behind a prominent company. The results can be disastrous for the business and heartbreaking for the individuals. Of all the dramas that entrepreneurs discuss with one another over drinks — often several drinks — I find that the merging of personal relationships with business seems to cause the most pain.

Melanie Perkins and Cliff Obrecht at the offices of their company Canva. Picture: Jeremy Piper.

People start with the best intentions. Most partners appreciate one another and have high regard for one another’s ability and integrity. It’s only natural to want to build something with a trusted friend, someone whose company is welcome. And yet, so often, it all falls apart. Within my group of friends are three couples who started technology companies together. Two divorced within the first four years but still run successful businesses as a team — not without some pain, I imagine.

The other couple grew stronger. Melanie Perkins and Cliff Obrecht have been running companies together for the last seven years. Two years ago they founded an online graphic design company, Canva, that is going through a growth explosion, with more than 750,000 users in the first year. They appear to have the perfect partnership — they complement each other’s strengths and drive the business forward in tandem. In an effort to understand why Mel and Cliff have thrived as partners, while so many others, myself included, have struggled, I asked them to share their secrets. Here’s Mel’s advice:

1. Keep the dream alive

Mel says she and Cliff have always been clear about what their vision is for the business. Every day they talk about what Canva will look like in five to 10 years. “When you know what you both want to build,” she said, “it makes every little decision easier. They’re all steps toward a shared dream.”

2. Have unstructured conversations

“We do lots of walking where we’re free to have crazy conversations and brainstorm ideas,” she said, adding that in business, it’s easy to have rigid boardroom-type discussions in which everyone is afraid to speak openly for fear of side-tracking the meeting.

3. Don’t keep battle scars

Once a decision is made, it becomes a team decision. There is always discussion, but what matters is working toward the shared vision. “We always focus on the best outcome for the business,” she said. “Once something is agreed, the process behind the decision isn’t mentioned again.”

4. Build trust over time

Mel describes how, during the first few years of working together, they were both involved in everything. Over time, as the company has grown, they’ve developed trust and chosen to focus on different areas. “We’re in business together because we believe in each other’s skills,” she said. “It’s great that we each get to play to our strengths, because it means we can cover a lot of ground.”

5. Have the same expectations of each other

“Both of us have an extremely high work ethic,” Mel said. “We’re focused on the business 24/7, and a common expectation of ourselves and each other provides the foundation that makes everything else possible.” In my experience, it’s very hard to have dual roles in a relationship. But I’m incredibly jealous of those who can pull it off. With your best friend by your side, the journey through the highs and lows of business would be magical.

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This is the story of a trap into which I’ve fallen twice at Posse. Investors often set the trap unknowingly – no harm is intended – while they are figuring out whether they would like to invest. Both times this happened I felt heartbroken and exhausted, with my business in turmoil. We were lucky to survive.

It all starts so well. You meet venture capitalists and deliver a knockout pitch. They love it, you exchange business cards and they set out the next steps. First, you have to meet a few other people from the firm. They are busy so it can take a few weeks to secure the appointments, but they are genuinely interested and they ensure that you are seen as quickly as possible. You meet again for lunch, then dinner, then drinks. You become friends.

You discuss the wondrous opportunities for your business and the ways in which they can help you reach those opportunities. Watch out: You’ve started to fall in love. You discuss generalities about the deal terms, big stuff like the valuation and how much they’ll invest (a lot). And of course, they will want a seat on the board. You are excited; this will transform your world. In no time, you are planning how you will spend the money, looking at new office space and thinking about recruiting new team members.

One of the senior partners you needed to meet with was traveling, so you wait six weeks for the meeting. It is promising, too; he wasn’t as excited as the junior guys, but he likes them to be autonomous and allows them to pick their own deals. The senior partner suggests you meet a friend of his who runs a big company that, he says, would make a great partner for your business. It sounds helpful, but you know he really wants to know what his friend thinks of you. The company is based in Chicago; you have to travel and the meeting takes two more weeks to set up. All goes well, and after a week you hear the firm wants to move forward with your deal.

Next comes due diligence. This starts with a long list of requests and a promise that, once all the information is together, this will not drag on. They guarantee you will receive the term sheet within two weeks, so you pull in your team and work late — very late — to assemble the material. It may include questions like: Who owns all these shares on the capitalization table? Is there anyone here without an employment contract? Why did you model revenue this way? Will you really need all those engineers?

You answer all of the questions diligently, repeatedly rework your financial model, and either make changes to your contracts or write new ones. More than a month passes. You have spent money you do not have getting help with contracts, accounts and a revenue model to satisfy the investors. You have answered almost every tricky question that could be asked about your business plan, your competition and the market. Everyone seems happy and the firm assures you that due diligence is almost complete. The term sheet is only days away. Four months have past since you first met. There is one more thing — a meeting, a problem, a question, something that is going to take more time. Finally, you start talking about investment terms. And then something happens. It could be any number of things, but it is a knockout blow that kills your deal.

The first time this happened to me, I had negotiated for five months with a big name corporate brand. The company had proposed investing $3 million dollars, and the association would have catapulted Posse’s profile to the stars. I liked the executives leading the deal and could not wait to build the business with them. They assured me that they could move quickly and that they would reach a decision within a month. But the months dragged on and more people became involved, asking more questions. I was not even worried; I was so sure we would close the deal. After all, they would not invest so much of their company’s time if they were not serious, would they? But when the terms came back, they killed the deal; they were nothing like the proposal we had discussed when we first met. The company would invest, but it came up with a valuation of less than half what we expected. I might have accepted anyway, but our board refused.

Last year, I spent six months attending to the whims of a group of angel investors from New York. It took three months to complete a series of qualification presentations, after which they selected a cast of a dozen members to perform the due diligence. I answered their questions, reworked financial models and met every relevant person full time. They said they would invest more than a million dollars, and the process required only four to six weeks. Then they told me they could not invest nearly as much as they had thought. The exercise had been a gigantic waste of time, distracting me from talking to other, serious investors.

I remember venting my frustration during one of these drawn out episodes with one of my mentors. He said, “Never start due diligence until you’ve agreed on a term sheet.” With hindsight, it seems so obvious. If I had refused to do any work until a term sheet had been worked out up front, then I would not have spent months and tens of thousands of dollars pleasing investors who were not serious, did not have the money or whose deal expectations were vastly different from ours.

The problem is, refusing to do any work until a term sheet is signed sounds great but is hard to do. When you first meet, you are excited and the investor promises that the process will take only a few weeks. You can afford to invest a few weeks. Even as time drags on, everything appears to be proceeding, and you are certain the deal will close. As time drags on, costs pile up and cash reserves dwindle. You realize that, with so much time invested, you cannot afford to start the process again.

I will never get stuck in this situation again. I will never let an investor seduce me into believing that a term sheet is around the corner while I put time and money into meetings and answering thousands of questions. I will ensure that a term sheet is agreed upon up front and then start the due diligence process. If the V.C.s find something they do not like during due diligence, they can always back out of the deal, but at least I will have established that there is a deal to be done. Even though I know their firm is big and my company is small, I will do this because I know that time and energy are my biggest assets.

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