The Good, the Bad and the Ugly of Starting a Business with Friends

Before you and your friend get started, take the time to analyze the good, the bad, and the ugly side of starting a company with a friend.

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I’ve built five companies in my startup career, four of which I started with close friends. It’s quite common to build a company with a close friend: you get together, think of a cool idea, and decide to start a business.

Why not, right? While it can be extremely fun to startup with someone you’re close to, it’s not without disadvantages. So, before you and your friend get started, take the time to analyze the good, the bad, and the ugly side of starting a company with a friend.


The Good

When you start a business with a friend you have a friend in the trenches. Entrepreneurship can be lonely. My friends who work 9-5 during the day tend to party hard at night. I can’t keep up with that lifestyle as a 24/7 entrepreneur.

When we do hang out, I just want to talk about ways to improve my startup whereas they want to talk about anything but work. That’s why it’s so fun to startup with a friend. You have someone you can confide in and relate to, at times when not everyone understands.

Your friendship also sets the tone for the company culture. Good company culture keeps morale high, attracts top talent, and keeps employees loyal. My co-founder and I often conduct interviews together so that the prospect sees our dynamic interactions and feels how fun it is to work on our team. Because we are friends, we don’t hesitate to throw a get-together at my place or a poker night at my co-founder’s place.

When you co-found a business with a friend you will understand each other’s strengths and weaknesses. For example, it was easy for my friend and I to assign roles and responsibilities, because we knew each other so well. He was emotionally stable, organized, and focused on the big picture, so it made sense for him to be CEO. I was the hustler with the do-whatever-it-takes attitude, so it made sense for me to lead as the CMO.


The Bad

While starting a business with a friend has its perks, it also has innate pitfalls. For example, you have similar networks. Friends usually hang out with the same people and will thus have the same network. This is bad because startups can succeed or fail based on who you know and the introductions you receive. To overcome this, my co-founder and I make a strong effort to go to events (e.g., he goes to investor-related events while I go to client-related events) in order to expand our networks.

It’s also difficult to take orders from a friend. People are accustomed to taking orders from their boss — not their friends. This can become very unpleasant, especially if you’re not communicating tasks in the way that your co-founder likes to receive them. To keep my co-founder and I accountable, every week we get together with the whole team and report our accomplishments and issues. This eliminates the need to give orders throughout the week.

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