Entrepreneur Myths (37 page)

(Q5)
How do you deal with partners who don’t work as fast as you do? What if you’re a fucking speed demon and your partner is steady but slow like a turtle? What if your partner is a fucking turtle and thinks they’re as fast as a hare? Or even faster than you?

Entrepreneur
Myth 53
| Good partners are easy to find

When you start a venture, finding the right founder partner is one of the most critical decisions you make. Choosing the wrong partner can spell disaster. I’ve seen more problems centered on partnerships, or what I call founderships, than anything else in a startup. Unfortunately, I’ve been involved in what I call “founder clusterfucks” (FCFs) a few times myself.

Choosing a business partner is like choosing a spouse. You’ve to know someone for awhile before you really know them. A lot of entrepreneurs miss this point. When going into business with someone, make sure it’s “until success, failure or bankruptcy  do you part.” If you find the right business partner, even if you fail together, you might still end up doing business together on another venture. Take the time to find the right partners.

Make sure your partner has the same goals you do

Looking back, one of the biggest mistakes I made was choosing partners who didn’t have the same goals. I assumed my partners’ goal in starting a venture was to make money, when in reality some of my partners were motivated by other goals.

In some ventures, my partners wanted to build their own personal brand or to simply feed their egos. Other partners were more interested in getting the technology into the marketplace, without regard for making a profit. You must have the same goals; otherwise, you will run into management problems.

Make sure you and your partner share the same risk meter

I've had founding partners who wanted the same equity share in the venture but weren’t willing to share the same risk. One partner expected me to work the new venture full time, while they were still working for another company. Of course, they’d join the venture full time once I raised the capital. They expected the same share of equity for sitting on the sidelines. If you’re in this kind of arrangement, your venture is doomed for failure.

As an entrepreneur, I've dealt with potential partners who expected me to put up the capital while they provided sweat equity for an equal share of the business. They weren’t willing to risk any of their savings but expected me to risk mine. Remember, if you’re putting up the money for a venture and your partners aren’t willing to risk their own capital, they shouldn’t be your partners — make them your employees.

Make sure your partner knows their role and how you complement each other

Before you bring on a partner, make sure they know their role. I've had partners who came on board under sales and marketing, but they also wanted to be backseat engineers or product managers. They found out quickly that selling product in the new venture was harder than they expected, so they tried to hide under a different functional department.

I've had other partners who had no clue about running the business but acted as if they were the CEO. Each partner needs to address different, specific functions of the business. Backseat driver partners rarely work out. You have to assemble a team of people who complement each other. That’s not easy to do.

Make sure your partner has the same commitment that you do

Is your partner willing to risk everything on your venture? Are they willing to go through thick and thin? Are they willing to sacrifice their personal lifestyle to get the venture launched? Is their family willing to do it too? Are their spouses supportive? Are the kids (if older) willing to support the risks? Is your partner willing to go all the way: boom or bust? Has your partner dug in their heels like you have?

Make sure your partners have the same commitment you do, and if they don’t, you need to understand their limits. You don’t want to be the only person bailing water out of the sinking ship while all the rats have left.

Make sure you and your partner bring equivalent value

If you plan to have an equal partnership, each partner must bring equivalent value. This isn’t easy to determine, so it’s up to you as the lead partner to determine the equity formula. If one partner brings in capital and puts in his own money, and another partner brings in the new product, do they each get an equal share of the business? Will each partner plan to stay with the venture throughout the entire journey or are some of the partners going to get bored, run out of money or just give up? You have think about these things before it turns into a founder clusterfuck.

Equal partnerships are difficult to maintain. Who makes the final call on major decisions? Don’t get me wrong. I use complexity science principles in making business decisions (which I call swarm management), and I prefer to make group decisions. However, at the end of the day, someone has to make the final call on critical decisions when nobody can agree. If I’m the founder of the venture, I will to want to make the final call on critical business decisions. This decision approach is difficult to apply after you bring in investors, because major decisions must be made as a team. Legally, you must call a board meeting when you face decisions that could have a significant outcome on your venture.

Make sure you and your partner share the same value and belief system

Does your partner have the same value system you do? Does their integrity and moral fiber match yours? I've had partners who were good partners, but they couldn’t help exaggerating at times. By the way, exaggeration is a form of lying. I saw them lie to customers, suppliers, everyone, even when it was not necessary.

Make sure the partners you bring in have the same moral fiber you do, or at least very close to yours. Hopefully, you have the moral fiber they expect as well. If one of your partners lies to customers, for whatever reason, that is also a representation of your character. Do you want to be known as a liar in the marketplace because your partner can’t help but lie to others? When you have partners, you represent each other indirectly. Make sure everyone does it accordingly. If you lie to others, you’re lying for the entire group.

Make sure your partner has the same work ethic that you do

When you start a venture, you’re going to work 20-7-365. Make sure your partners have the same work ethic. If they don’t, you will experience problems. I have seen situations where one founder put in 18 hours a day, even on weekends, while the other partner refused to work evenings or weekends. I funded companies and found out later that not all partners were burning the same midnight oil.

I’ve been in ventures where one partner was wealthy and really didn’t feel like working more than four to five hours per day. They had made their money and wanted to enjoy it. Fuck, I don’t blame them, but I wish they’d told me that before we started the damn venture. These types of partners are more like investors than operating partners. Take their money, but if they want to manage and operate the business with you — make sure they are going to roll up their sleeves.

I’m an entrepreneuraholic and dealaholic. I admit it. I’ll put in the hours to do whatever’s necessary to get things done. If you’re my equal partner, I expect you to do the same. Make sure that when the day gets long, your partners are working their asses off just like you — even if it’s three a.m.

Make sure your partner doesn’t fuck around

Make sure your partners are not having extramarital affairs internally or externally. Affairs waste valuable time and energy, and take focus off the venture. Plus, an affair means your partner is a liar. It’s
bad
for business.

Notice: Make sure your partner’s assistant isn’t working overtime with them, alone late at night. Things can get out of hand, if you know what I mean. I’ve seen this more than once.

When people (including partners) work closely together in a highly-charged, high-pressure environment, little wieners will come out to play. Make sure your partners understand this can’t happen for the sake of the new venture. Partners need to keep their pants on and skirts down. If you have partners fucking around, you have to get rid of them because sooner or later it turns into bad business

Paul Newman, actor, director, activist and entrepreneur, was married to his wife Joanne Woodward for 50 years. When asked about extramarital affairs, he replied, “I have steak at home. Why should I go out for hamburger?”

Make sure your partner understands the risks of failure

Four out of five startups will fail in less than five years. Your partners need to understand the risks associated with the venture. They have to be cognizant that, despite the fact that failure’s not an option, failure can happen. Talk to all your partners and lay down all the risk variables involved and potential failure spots. If you sugarcoat it or don't discuss all the risks, you could have some pissed off partners down the road.

Make sure your partner communicates truthfully with you

Truthful communication between the partners is critical. Partners who lie, hide things or exaggerate to each other for whatever reason doom the company to failure.

I funded a venture in the enterprise sector whose CEO could not help but lie. Even when it was not necessary, this CEO habitually exaggerated or made up stories. I had no choice but to push for the removal of the CEO to another position — otherwise the rest of the founding team would have mutinied. Luckily, the CEO was nice enough to shift positions. I made sure his equity stake was not diluted.

Make sure your partner has something to lose

Make sure everyone, including you, has a lot to lose if the venture fails. If you have more to lose than your partner, there could be problems down the road. Usually, you want your business partner to put some real money into the venture so they feel the pressure to perform.

I've been part of startups where some of the partners left the venture when the capital didn’t come in on time, because their exit barriers were nil. If your partner commits time, money and sweat, it’s much harder for them to just walk away when you experience turbulence. They will be forced to dig in their heels, not by you but by the situation.

There must be an agreement between all partners in terms of exit: each partner should stick it out until the business either fails,
all
the partners throw in the towel at the same time, or the venture becomes successful and everyone celebrates all the way to the bank. You have to have the mentality of “One for all, all for one.”

Make sure your partner doesn’t make major partnership decisions without your input

Watch out closely for this one. I've had partners make major decisions on my behalf without my input. I am no longer partners with them. There needs to be partnership operating guidelines in place that all partners understand. Independent decisions have to be made every day by each partner based on their function, but decisions that affect all partners should be agreed upon by all partners.

Make sure your partners aren’t burning the money unless all parties have agreed. Some years back, I had a partner who spent $10K for corporate identity without asking my input or approval. Not good. I've had transactional partners bring other transactional partners into a deal without my input. I've had partners take over a project and try to put me on the sidelines because their ego was so huge, they wanted to run the deal. The only time they needed my input was when they needed the fucking money. Nobody needs these kinds of partners.

However, I have also been blessed with partners who knew exactly when to make decisions on their own and when to hold off and consult with their other partners. They are the ultimate team players.