It's not you, it's me...
The fourth in our six part series of articles harnesses our Associate and Partner network and focusses on Founders and the complexities of relationship between Founders and Co-Founders - for better or for worse. "It's not you, it's me," how do you stop things going pear shaped at the top and what do you do if it does?
Some of the worlds successful companies were started by Co-Founders - Apple, Ben & Jerry’s, Facebook, and Microsoft are just a few examples of when friends go into business together, but your Co-Founder doesn’t necessarily need to be your bestie either. Often businesses start with two people coming together who were previously work colleagues that dreamt up a great idea, a spouse or partner, or someone that was sought out to bring a specific, missing, skill set.
As in our personal lives, the complexities of relationships in business are numerous, but whatever the reasons behind the construct of the top echelons of your company, running a business with a Co-Founder can have many benefits - the same passion, drive, and enthusiasm to make it a success for example.
Thousands of businesses go down the Co-Founder route, but sadly sometimes things just don’t work out as planned and Co-Founders end up in a situation where they have to part ways. Or, to quote Gwyneth Paltrow and Chris Martin, ‘consciously uncouple’.
To borrow that now well-known phrase, ‘consciously uncoupling’ has a dictionary definition of ending a relationship but in a way that is viewed as a positive step by both parties, who mutually believe their lives will be better for doing so. The couple then makes a serious attempt to remain friends. This could equally be the case for a business but often relationships can quickly sour when money and status is involved.
Gemma Ryall, HR Director and business mix Associate knows this is more common than people think. The cracks start to surface when the reality of running a business hits home or when creative differences surface. As companies grow, the role of the Founders, and the relationship between them, starts to change - this is inevitable and for some people it’s too much;
“The Founder may have many technical skills but being CEO of the company may not be one of them or the best outcome for the company and this can cause fragmentation.
Getting used to the idea that your friend or former colleague is now your boss or employee can also be too much for some people. Relationships need clear definition as well as nurturing. Setting up a business - especially a startup or a company scaling up - can be stressful and exhausting. Understanding how you can support each other is important versus tension and frustrations creeping in due to uncertainty of who is making decisions.”
And it’s not just friendships that are impacted here, Co-Founders can easily hit irreconcilable differences in terms of company direction, approach, values and behaviours. As well as being emotionally and financially difficult for the Co-founders, perhaps more importantly it ends up having a detrimental impact on employees, clients, and overall company performance.
All sounds a bit depressing and dire doesn’t it? In the situation of Co-Founders who have a relationship akin to Luke Skywalker and Darth Vader, there are only two options; work hard and fondly reconcile or, one of you has to go over the edge of the Death Star’s garbage chute. Only kidding of course, but the second option is, inevitably, splitting up.
So how can it work? According to David Page, CEO and Founder of business mix it’s about having the right balance: “Having the right processes and structure in place will make a huge difference. And this includes being clear on your relationship - who has the strengths, experience, capability, and aptitudes for a given role?
“We all can’t be the CEO or indeed want to be. No matter how well you get on with your Co-Founder, the clarity of who does what and who has what authority now and in the future needs careful consideration otherwise you risk being in a position where you both assume different things.”
Being clear on the way you set up the business and finances, everything from your approach to IP to how cash is being used in the business. This can be how Co-founders are paid, the percentage of the split for the initial and ongoing investment and reinvestment back into the business are all specifics that need decisions and clarity from day-1 to give you the best possible chance of joint success.
What about different shares and director agreements? These can impact how much influence the Co-founders will have if they leave the company. If you are the Founder with the idea but need a person to help that come to life, what are you willing to negotiate and share?
The legal aspect of your business is also crucial. Although you’re likely to already know each other well, you’re now going to be sharing financial responsibilities so you’re going to need to be aware of each other’s personal financial situations. As friends, you might not have discussed this before, so be prepared to have frank, honest discussions about money, constantly. But, what if one of you likes the lifestyle of a lavish expense budget and the other wants to take a more cash-cautious approach to the pennies?
All businesses have their ups and downs, and many will go onto being hugely successful but a sustainable, good relationship with Co-Founders is crucial. Thankfully, help is at hand.
Being a Founder is physically as well as mentally, emotionally, and financially challenging. Scrub that, exhausting. And lonely. More often than not a Founder puts their own welfare last on the list of things they deal with. Its clear Founders need to look after themselves in order to sustain the energy, enthusiasm and north star vision that kick started it all in the first place! To help them, business mix has introduced a Founder Protection scheme; unique to the individual and helps the founder or Co-founders understand their challenges and put themselves in a position that they get looked after. And also gives Founders a space in which to discuss all the worries they don’t want to, or can’t share, with their teams or at homes - especially during 2020 when pressures are through the roof for many.
David Page who runs this programme believes it’s all too easy for Founders and Co-founders to talk about their business all the time, to the detriment of all else, but a few simple things will help make businesses run smoothly and this includes carving out some personal time - for yourself and the time with your Co-founder – ‘professional date night’ if you will.
He said: “It’s about being honest with yourself - what role are you looking to play in the short, medium and long term. We believe all founders should recognise how important it is to have this kind of conversation for their own welfare.”
If you’re interested in the founder protection programme or more detailed HR guidance, please get in touch with . business mix will also be running a Founder Protection programme webinar in the Spring and we’d love to have you join us - get in touch for more details.