Starting a business with a friend? Make sure you read this first
|Photograph: Sal Veder/AP|
Going into business with a friend is a bit like deciding to get married. Before saying ‘I do’, ask whether you can tolerate their foibles
Launching a media barter business with my co-founder and friend Paul Jackson could be a case study in testinga friendship to extremes. We should be sworn enemies by now. Instead, we head a business with 40 staff, offices in the UK and Asia Pacific and an annual turnover of £200m.
We had no idea it would turn out like that. When we started Astus in 2003, the conditions could hardly have been worse. Our business operates in the niche media barter sector which, put simply, allows advertisers to use their products or services to pay for part of their media campaigns. Twelve years ago media barter in the UK had a terrible reputation and Paul and I, both working for a US media barter company, felt it could be done differently. That brings me to my first tip for doing business with friends.
Launch a crusade
Initially, Paul and I tried to persuade our employer to adopt a new business model that focused on giving advertisers the media they wanted before asking them to pay for it. We spent two days presenting it to our bosses in New York – they said no.
That should have been the end of it, but neither of us could let it go. For us, launching our own business wasn’t a choice, it was a compulsion. I’m convinced that without our shared crusading zeal – we have strong views on the direction of the company and its values – our business would never have got off the ground.
Work together first
Paul and I had been colleagues for almost four years in a competitive environment before launching Astus so we knew a lot about each other’s professional strengths and weaknesses and how we cope with pressure. (Paul is calm and collected.) Crucially, we knew we could rely on each other. Research by Harvard Business School professor Noam Wasserman into nearly 10,000 founders of technology startups, found that the least stable founding teams were friends. He also found that the most stable teams were former colleagues.
Don’t separate the personal from the professional
We jointly funded most of the investment required to launch Astus, which was considerable. When you are friendsand have life savings invested in a business, it’s all personal, so why pretend otherwise? Although we are not afraid to challenge each other on decisions, we do have a rule about not disagreeing in front of the team. This has led to a few shouting matches in the street!
We know immediately if something is bothering the other and support each other if any personal issues arise so they don’t affect our work.
Carve out clear roles from the start
If you’ve never worked together, translating what you know about your friend’s skills from a social context into a business one is tough. And when it comes down to it, which of you is really in charge? Paul and I have been strategic about how we have divide our responsibilities.
I’m opinionated, gregarious and love networking, so it made sense for me to have a client-facing role and be the public face of the company as CEO. Paul is fantastic at running the team and getting the best out of them. He is also good with numbers so he is in charge of doing deals and is our COO. In practice, we consult on all the big decisions and trust each other’s judgment 100%.
Have an exit plan
This is probably number one on the to-do list if you are going into business with friends. A good exit plan should allow for different scenarios – from one of you wanting out to what happens if the business fails. I doubt many friendships survive a business going under, but having a clear exit strategy will make things less painful. Ours is outlined in our shareholder agreement.
Take a ‘for better or worse’ approach
Launching a new business with a friend is a bit like deciding to get married. Before saying “I do” it’s worth asking some of the same questions you would of a prospective life partner: can I tolerate their foibles day in, day out? Is our relationship strong enough to weather the stress and uncertainty of this new challenge?
Low points for us include me being struck down by poisoning and Paul having to drive me from the Lake District to London, stopping to make a crucial work call while I was being sick in a layby. Highlights include sharing a cold beer after a good day’s work in Hong Kong, Sydney or Shanghai, knowing we have built a team and a business we’re proud of.