Friendship + business = failure?
Tips for starting a business with friends
Ileana and her best friend used to practice flamenco together. That love for dancing led her friend to start a cultural events production company, a project to which Ileana was invited, first as a consultant and later as a partner.
I thought “It doesn’t sound bad, I can join this project and contribute with my knowledge and time.” In other words, I didn’t ask for a salary. Red flag No.1
By the time she accepted, her best friend had already included two other people with whom he had discussed beforehand some plans and ideas that were not consulted with her. Red flag No.2
Although they managed to bring from Spain their first flamenco dancer, getting a venue and a spot in the busy cultural agenda of Mexico City was a huge challenge, and they ended up spending almost all the profits on the theater rental. Red flag No.3
They didn’t get disheartened and continued with the operations. Over time, Ileana realized that there wasn’t very good communication between the partners, nor clarity about responsibilities, contributions, and next steps. The atmosphere between them worsened when her friend started a relationship with one of the other partners. Red flag No.4
After a series of red flags and 3 years of receiving an uncompetitive salary, many misunderstandings, and little recognition, Ileana finally decided to leave the operation and stay just as a partner. Her friendship with her dance partner was ruined and was never the same again.
Although there are bad experiences in the art of entrepreneurship with friends, there are also some notable examples.
We’ve repeated this story hundreds of times, but it’s worth doing it again: Fuckup Nights originated in a Mexico City bar, as 5 friends drank mezcal and reflected on the abundant success stories and the need to share their failures in the professional world.
Although Fuckup Nights went from being an underground event in Mexico City to a global movement in more than 300 cities around the world, the group of friends that created this movement had encountered many challenges that somehow they managed to overcome as a partnership. That’s why we have asked them for some recommendations to avoid the friends + business formula from becoming a dreadful fuckup.
Clarity and difficult conversations
Hiring someone or finding a new partner takes time, and sometimes you never quite get to fully know them. Having a friend as a partner can save you some surprises since you’d be working with a person that you already know in many different aspects of life, you know how he/she behaves in the workplace, in times of crisis, his/her talents, and you even get to know the passion you both share about the same topic or type of business.
Despite the affinities or passions that you might share with a friend, in the day-to-day of running a project, many of the short and long-term problems are related to expectations, both financial and administrative. When those expectations are not clearly expressed within a team, priorities, efforts, and decisions are likely to be focused in different directions and misguided.
My recommendation is not to start a business with a friend except when you and your friend(s) are the ideal people to create it. Founding a company requires skills and principles different from those of a friendship.
If you are going to start or have already started a partnership with a friend, I recommend you to have as much clarity as possible about the company’s vision in terms of impact, size and culture, the responsibilities of each person, and the repercussions based on positive or negative results. Also, to be clear about who is the person that makes the final decisions. 50/50 or consensus relationships hurt company results and friendships.
-Pepe Villatoro, Co-founder of Fuckup Nights
Talking about the clarity of roles, compensations, and writing everything down is essential to make a partnership work, not only between partners who are friends but between partners in general.
Blake Mycoskie, entrepreneur and author, mentions the importance of setting boundaries and having difficult conversations. He suggests being clear and direct when discussing sensitive and uncomfortable topics. If there’s an unspoken disagreement today, in a few years it may become a problem.
Do you think it’s fair? How do you feel about it? Is there something that you want to say? It’s important for Blake to address these difficult conversations before writing them down and making them official with attorneys. Don’t leave anything open to interpretation.
Communication and difficult conversations should be a habit in any partnership.
It’s not you, it’s the business
As in the case of Ileana and the failed events production company that she founded with her friend, entrepreneurship with friends opens the debate on scenarios where you will eventually have to choose between the business or your friendship.
And this is where the clarity of roles, compensations, etc, must be mixed with another key point: not taking anything personally.
Don’t take it personally, this isn’t about you, it’s about the business. Always lookout for the higher good of the organization. A partnership is like a marriage where the company is your child. In a divorce process, there are laws that seek the higher good of the child and I think that the co-founders, especially when they are friends, have to put aside their egos and seek for the higher good of the organization.
We have had to make decisions that are not always the best for some on a personal level, but they are the best for Fuckup Nights. I think that common purpose is what has helped us stick together over the years.
-Leti Gasca, Co-founder of Fuckup Nights
Having a clear vision of the how and why of a company, it will be easier for the partners to make more congruent decisions, even if they are complex decisions that conflict with some personal aspects. Like the decision to cut the founders’ income during the events industry crisis to keep the payroll that helped to maintain afloat the movement in the midst of those uncertain times.
A professional project requires being the most professional and responsible version of ourselves, sometimes putting aside the informalities of any personal relationships, and being willing to be flexible. have difficult conversations.
One of the perks of a partnership with friends is the possibility to have a certain amount of flexibility. This makes it easier to have difficult conversations, to be willing to discuss complex topics, and to consider the needs of everyone in the team with empathy.
Besides the compatibility of principles, flexibility is key in any partnership, being open to the changes in your partners’ lives and understanding that people and their lives evolve, you are not the same you were 5 or 10 years ago, probably in essence you’re still the same, but surely your life and the people you’ve worked with has changed. Therefore, the decisions we make are based on other factors.
If we adapt to these changes and face them in an empathetic and proactive way, we can have better partnerships and friendships.
-Carlos Zimbrón, CEO and Co-founder of Fuckup Nights
Samuel Villegas, entrepreneur, and CEO perceives changes between partners for personal reasons as one of the cons of having a partnership with friends. To counteract this, it is important to have exit strategies, a plan B, and cover all possible scenarios.
When we tried to solve the dilemma of love + business, we concluded that there is no universal answer to predict success or failure, but there are many variables that come into play and that define the course of a business. What we know for sure is that friendships can bring a more fun environment, and generate a stronger sense of resilience. In the end, you are probably going to fail. Why not do it with the best company?
I have always worked with friends, it would be counterintuitive to work with people with whom I couldn’t develop a friendship.
It’s not that I don’t understand the risk of starting a project that involves money, but that risk applies equally to friends and strangers.
Personally, I prefer to start businesses with friends, it’s fun and they tend to be the result of common goals. The challenge is the development of the project, to be clear about the objectives, and to be honest, which will help in decision-making. And never, never lose respect for your partner/friend.
-Luis López De Nava, Co-founder of Fuckup Nights
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