If you are trying to start a startup with a friend, think about this, do you really know this person? are you confident that under high levels of pressure this person is going to help you or is he going to break apart?
I started a startup with my best friend whom I knew for several years. The startup succeeded (kind of, we got acqui-hired by BigTech) but the friendship turned into a deep alienation in the process.
Startup pressure can bring out the true character of a person. The problem though is that you may not know the true character of someone until startup pressure is applied -- even if that someone is your best friend.
I'd actually argue for not starting your startup with a good friend. Friendship bias works against you when your cofounder turns against you under pressure. Instead choose a co-founder that you know professionally and that you have a good gut feeling about.
The problem of the story presented is not that he didn't start the company with someone he knew better, it's that apparently no agreements existed that prevented $ANTISOCIAL_COFOUNDER_BEHAVIOR from happening. I'm certainly guilty of that as well. The resources spent on setting up those agreements are always worth it. Also not a shame at all to bring in lawyers at this stage.
It is super common to divide shares generously the first day of the startup, it's like marrying a girl the first day you know her. Isn't it creepy?
It's common to divide 50/50, but with a vesting schedule. If co-founder shows $ANTISOCIAL_COFOUNDER_BEHAVIOR despite agreements made you may kick him/her out and will only lose shares that vested.
> Startup pressure can bring out the true character of a person
Not necessarily. It can bring out the worse.
Let's say you are stressing a machine beyond its limit. The risks are specified in the manual but you still do it. The resulting mechanical damage can't be blamed on the manufacturer.
So well put. People you could have roomed with, drink with, hung out with, even been trapepd on a desert island with, all successfully, can turn into monsters under the pressure of running out of money and associated startup events. And you can find yourself echoing that behaviour.
My experience is the reverse: I started a company with my 10+ years best friend, and it has been great. We even hauled another friend on board (he bought some shares, but we still have most of them).
Most people I know complain that they don't see enough of their friends due to increasing family commitments, but I'm spending most of my working time in the office having fun with my best friends. It's absolutely great and all the shared experiences also nurture the friendship.
I guess it all boils down to being really really honest about your assessment of each other's character. I couldn't have done it with most of my other friends. We also wrote out rules up front about all kinds of possible issues and determined who would arbitrate, so that we would have clarity before everyone is entrenched in a POV that coincides with their interest.
And our #1 rule is: if anything bothers you, you have to be explicit about it or accept your grievances will be ignored.
I started a company and brought on a best friend about 2.5 years in. It was a terrible and costly mistake. The business continues to thrive, but our growth was considerably stunted for the year he was on board.
I have a few theories for why it didn't work. I think it comes down to an expectation that, as a friend, normal work rules do not apply. This friend thought they could work on whatever was interesting (rather than what their job called for), and could flake or complain as a friend.
Perhaps a more domineering personality than myself could crack-the-whip and force a person into their role, but then what's the point of the person being a friend? And is that a good use of a founder's time and energy? Arguing with and controlling a friend/employee? Nope.
I have had much better luck hiring people I don't know and becoming their friend through work.
"Startup pressure can bring out the true character of a person. The problem though is that you may not know the true character of someone until startup pressure is applied -- even if that someone is your best friend."
This is true enough, but it need not be 'startup pressure' that reveals character. Many life situations can apply the same or greater quantum of pressure. So if you are going to do stressful startups with a friend, see if you have gone through hell before and come out on the other side still friends.
Tangentially life crises are very revealing of who your true friends are. Likewise romantic partners. When you are going through hell, just look around to see who is still there, and who ran for the hills.
I had a similar experience, unfortunately. Call it pressure to establish, call it stress... the friendship was ruined. Thankfully, we did not even start, but we were about to.
I would also argue that starting with a distant family member is also not ideal.
Can someone with historical experience starting a company with both a friend and a nonfriend comment about this?
We get a lot of advice (e.g. pg) to start a company with friends, but we also get a lot of comments one way or the other, but without personal experience in both.
Can someone who have been on both sides talk about it? I certainly have not been on both sides.
Contrary to the advice which is out there I believe the focus shouldn't be on friend or none-friend, but the 'person' and the 'relationship'. Being a founder is incredibly stressful, so you need to find someone who's got your back. In my case, it's my brother because I wouldn't trust anyone else with it, besides our parents.
Gimlet Media had their "Startup Podcast" and in one episode they fretted about hiring the boss's wife. The advice he got was if she's qualified he should do it.
I started a small real estate business and asked my friend of 15 years to invest with me. He did sight unseen because he was a friend. I didn't know what I was doing. I made some horrible rookie mistakes. Even though we were suppose to be partners, I voluntarily took the hit on the loss and made him whole so he didn't lose any money. Our friendship was more than worth the loss. He trusted me and keeping our friendship was worth every penny.
Reading the abstract reminded me that so many people don't understand effective communication. The academic essay style is a travesty of global proportions. Effective communication would start with the conclusion section, then the body, and leave the intro out. Make your statement quickly, and then expand upon it for whoever wants to keep reading. Saying, "in this essay I will tell you what I learned" is not going to keep me reading. Give me the high level points, then expand upon them!
Give him a break, it's obvious that English is not his first language. The article is about mistake and learning about his startup, but you have moved the topic to his style of writing. Seriously, you do realize HN is worldwide right and many of us don't speak English as first languages?
I don't think it's a first/second language issue, but rather a "how to present ideas in written form" issue. The GP is not criticizing typos, but rather the way in which the article is structured. If the post were written in Spanish it would have the same issues - just in Spanish rather than English.
I actually think the (quite nice) blog formatting might be partially at fault: whenever I read a paper, I expect a certain style of writing and ideas presented in a certain way. By presenting it visually as a paper and then using a casual blog style, my first thought is not "this blog post is okay" but rather "this paper is bad".
I really appreciate any post-mortem like this, so I don't want to be too critical. But the document itself helps demonstrate one of the reasons for failure: poor user focus.
The faux-academic-paper style looks cool, but is a clearly worse reading experience. It's tolerable on a big screen. But on a small laptop it requires pointlessly scrolling up and down. On mobile, it's much worse.
A lesson declared in the document is "too slow iterating". But I think that's a symptom. I think the real lesson is that instead of building to the founder's vision of what's cool, you have to build for actual people and their actual needs. To do that well, you of course have test your hypotheses, which requires iteration. But the iteration itself is secondary; building the founder's fantasy iteratively can fail just at thoroughly as building it in one long go. Either way, it's self indulgence.
I'd say the blog format has the same build-what-I-think-is-cool flaw. It's more excusable in a personal website, of course. But I hope he learns this lesson before his next startup.
Agreed. The writing style, formatting, design, and so on, of that blog post contain a handful of symptoms of potentially major problems in the way he went about building the business.
The paper is written in that style, which is why I brought it up. I'm sure it's used in countries other than the US too, I just don't know the details.
My point was that his communication would be more effective if he did not follow that standard.
One thing to consider is that your co-founder might not actually be your friend. It's easy to think you have a relationship with someone that you spend a lot of time coordinating with that might not truly exist. I believe most problems in any kind of relationships are based on expectations. It can be devastating to realize that someone else doesn't actually care what you think unless it serves their agenda and result in feeling used or exploited.
My advice, which I have failed at many times, is keep business compartmentalized and separate.
I started my 21 yo company with 2 friends. One we fired after about a year (he was literaly doing nothing). Then the other one and I continued for 6-7 years before he started working on other projects with an other company. Still, we still holded 50/50 of the shares (which was not a problem due to the way small companies works here).
For all this time we stayed friends.
And then, 3 years ago he offered me to join him on his new company. And at the end he screwed me. Deeply. Leaving me and our first company in big troubles.
So long our 25 years of friendship.
The funny part (if any) is that a couple of months ago, he sold me his shares of our company.
Not because he felt guilty of any kind. But because, as the company had made a really bad year in 2016, with important loss compared to the size of it, he had to sell the shares to not being a part of a loosing money company to obtain a loan from banks for buying his new house...
I didn't had shares in the new one. The deal was to come and help as a contractor first, and then make a holding for the companies (other were involved).
But cash wasn't flowing and I soon worked for "free" as I wanted it to rise (my other company still paying me), and the cash promise at the end was very interesting. And at the end they kicked me out.
I know I made mistakes continuing doing this, but we were friends for decades so I didn't see it coming.
Note that it was not in the startup world, but I told this story because of the friendship side.
And about the shares of our first company, he basically give them to me, as he wanted to get rid of them very fast. In fact all the paperwork was done (and dated a month before).
The reason I signed them is that I too wanted to buy them back, but was a bit scared of the amount he would ask for it.
Most startups fail cos the founders broke up or cant keep going on anymore, we keep pointing to lack of demand or lack of money as why a startup failed but to be honest most startups start from a situation where there is either a lack of money or a lack of demand so technically speaking most startups start from a failed situation.
Theres no pass fail on a piece of paper as we're used to in school for startups, its more where you've given up and dont want to continue.
What was he doing from end of 2015 to middle of 2016? If I lost access to my bank accounts I’d be contacting the bank, calling emergency board meetings and filing legal motions the next day.
The author opens by nobly asserting "I take all responsibility for the failure" yet then, everything that follows is how his co-founder screwed him who he is now suing. Feels kind of inauthentic overall.
How is that incompatible? If you partner with a crook, can't you take a responsibility for making that mistake (of not seeing the signs) but still call the other person out for being a crook?
Taking responsibility is different from saying other did no wrong.
I have to play devil's advocate here, because we know one side of the story. Perhaps the partner is not a crook, perhaps he was just not rich enough, hence why he was the recipient of a small salary in the first year and was unable to come up with further money to put into the company since his family didn't have any to risk, and why when the company generated actual revenue gave his family members opportunities to work with him. It sounds like the company's revenue consisted of one big customer and it folded when that customer was lost, but there's very little details of why that happened.
> everything that follows is how his co-founder screwed him
No. It's the part that takes up the most space, but there are a number of other, perfectly useful conclusions, like "you need a product and customers, not a technology", and "adapting to customer needs brings you succees".
I put some of that down to him not writing in his native language - perhaps it is more difficult for him to translate feelings or concepts to English.
But I do agree that it would have been better to hear about some of his own failings or bad decisions. Hard to imagine his co-founder would try to eject him from the company without at least some perception of an issue with his character, skills or decisions.
Yeah; to be honest I couldn't make it to the end of this "postmortem" because of how badly it seems to want to assign blame. I have taken part in numerous postmortems for multi-million dollar outages, and find they're valuable only when starting from the premise that we're all smart people trying to do our best, so any mistakes made by people are indicative of too much being asked of the people (lack of training/system complexity too high/lack of training/lack of automation).
Besides the fact this leads to AIs that are actionable and positive for engineers to tackle, hiring is really hard. If you're just going to blame your partners or coworkers and aren't providing any insight on how to choose partners or employees better, I'm really not interested.
Haven't read the article yet but my first question is: what the heck did they use to make that?! It's beautiful like LaTeX but appears to be plain ol' HTML!
Off-topic, but I find it rather baffling that with uMatrix blocking scripts from ajax.cloudflare.com, the page renders with the article content missing, despite it being included in the page source (just with style="dispay: none").
Sometimes I wonder about what’s more profitable in B2B space - product or consulting/contracting. Doing the latter I manage to pull in more in 3 months what this guy generated it sounds like in 3 years.
That gives me a pause everytime I want to sink 3 months of my time into some startup idea.
If one is sufficiently skilled, consulting pays much better in the short term and carries almost no risk. Building a product pays negatively (costs money in the form of expenses and investment) in the short term, and is very risky (the product may or may not actually get built, even if it does it may or may not fit the market, even if that happens, it may or may not generate sufficient revenues, and then there’s the risk of the company going out of operations due to internal/external problems). The founder that wrote the article this comment thread is discussing stumbled at the final stage - company went out of ops due to internal problems.
As someone that has done both, you might be right. Consulting is way more profitable, but the thing is that you basically are working for someone else, and you can scale it as far as you can fit it on your calendar or hiring.
But with a product you can sell 1,000% of what you had yesterday, the schedules might be a little tight since B2B expects at least a few sales meetings.
So it has its pros and cons. And from my experience (and other's, both friends and clients who want to create something), it's unlikely to have something sellable in 3 months.
Accenture and PwC et al show there's unicorns in consulting, but not many.
There's also the in-between/both approach - Oracle and Salesforce are both "Here buy our shit!", followed up very quickly with "Here, you need our services department and a support contract to make that shit work".
Increasingly, Microsoft seems to be taking the same approach, at least with its Azure line of products where you can buy “service” separately from the actual cloud product.
Not _super_ surprising. AWS has spawned an entire industry who provide addon services/support for it (and if I were those companies, I'd be waiting for the Bezos shoe to drop and eat the entire space's profit). The company I work for has a bunch of clients who outsource all of their AWS capability - usually in insanely expensive and inflexible ways...
Of course, even companies like Salesforce, SAP have little cottage industries sprung up around them that do the “requirement analysis”, setup, maintenance, etc.
I always wonder if it’d not be effectively cheaper to hire a parttime sysadmin to manage one’s own servers than all this trouble companies now go to with AWS/Azure.
A while back, I had a good look at the AWS offerings, and they were alluring enough to someone in the early stages of anything. But the initial knowledge-barrier is not too low (there are even courses on AWS) - so why wouldn’t I instead to use my preexisting Unix skills to do it by hand; and why wouldn’t a beginner choose to learn the (not too hard, and IMO of comparable complexity as AWS) basics of handling storage etc in Unix than to pay a vendor. The moment one is at even intermediate scale, having one’s own setup seems more practical.
I know that they provide services for AWS, but they still have their own offerings just the same. There’s no real reason for Rackspace to dump its massive existing infrastructure and move to AWS. So the only new thing is a service department for AWS customers.
A sales person from the company contacted me a while ago to offer services, Jessica De La Garza <[email protected]> and talked about their services. They have always been about their "Fanatical Support"
The sales woman must have taken a bit of liberty with her words. I haven't used them in a couple of years, I did really like their "Cloud Sites" offering they had.
I would never start any business with friends or families.
Anything with lots of money involve can hurt relationship.
With that said there were other points in there too and pitfalls that OP did early on that are good lessons. I think another thing to consider is that he didn't have a lawyer or accountant from the inception to go over the legality of 50%-50% and administration role.
It's a sad article but the ending was bright and I'm glad he's taking it as lessons learned. It'll help other people too.
edit:
The pivot from B2C to B2B is interesting. I never actually consider this but reading this now it's more of a "No duh" moment.
It seems that this startup was successful in finding product market fit but was killed because of co-founders mismatch.
I am planning to start a business with my fiancée, we have been together for 10 years, and we complement each other nicely in terms of skills. What are your experiences with that?
Anyone visiting this discussion who may have suggestions about co-founder relationships etc., I would encourage you to visit Ben's site [0] to share your stories to others may learn.
I think co-founder relationships are one of the least explored aspects of a startup, despite its importance.
Disclaimer: Not affiliated with this site apart from the fact that I voluntarily submitted some content about my own co-founder experiences after being asked.
I started with friends and end up with hurted relationship. (Advice given to me by my father years before that never start company with friends even when you both feel to be technically compatible.) Lesson learned, learn lesson when given from experience.
I, for one, am sending big hugs to Miguel Angel Maldonado. I can totally see how this played out. Wow this rant is obnoxious. keep strong if you ever happen on this thread.
I started a startup with my best friend whom I knew for several years. The startup succeeded (kind of, we got acqui-hired by BigTech) but the friendship turned into a deep alienation in the process.
Startup pressure can bring out the true character of a person. The problem though is that you may not know the true character of someone until startup pressure is applied -- even if that someone is your best friend.
I'd actually argue for not starting your startup with a good friend. Friendship bias works against you when your cofounder turns against you under pressure. Instead choose a co-founder that you know professionally and that you have a good gut feeling about.
The problem of the story presented is not that he didn't start the company with someone he knew better, it's that apparently no agreements existed that prevented $ANTISOCIAL_COFOUNDER_BEHAVIOR from happening. I'm certainly guilty of that as well. The resources spent on setting up those agreements are always worth it. Also not a shame at all to bring in lawyers at this stage.
It is super common to divide shares generously the first day of the startup, it's like marrying a girl the first day you know her. Isn't it creepy?
It's common to divide 50/50, but with a vesting schedule. If co-founder shows $ANTISOCIAL_COFOUNDER_BEHAVIOR despite agreements made you may kick him/her out and will only lose shares that vested.