The Problem With Going Into Business With a Friend

September 15, 2014

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.

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:

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.”

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.

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.”

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.”

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.

Article originally published in The New York Times.

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