Can Friends Be Successful Co-Founders?
Quick question:
Which is better: founding a startup with your friends or going at it on your own?
Successful power teams such as Google’s Sergey Brin and Larry Page, Canva’s Melanie Perkins,
Cliff Obrecht, and Cameron Adams, or even Apple’s Steve Jobs and Steve Wozniak, can get that
“smart and broke friends setting out to change the world” fantasy going.
There’s something almost poetic in a couple of friends chasing a dream in a garage and actually
making it. But the reality is much more complex with nearly every aspect of the founders’
friendship being challenged down the rocky startup road.
Google, Canva, Pinterest, and other well-known names that have become synonymous with
entrepreneurial success were founded by people who considered each other as friends. At least
for some of the time they worked together. Indeed, the pages of startup history are filled with
friendships being torn by, well quite frankly, human psychology.
So if you’re planning on starting a new venture, and a friend seems like they would make a
great co-founder, there are a few important things to consider. Some recent findings might
even surprise you with regards to the opening question.
Birds of a feather startup together
Take a minute to think about what makes someone a friend. Maybe you share values, familial
backgrounds or norms, have common interests or beliefs, or have gone through similar
experiences. All these make us believe that the other person is “like us.” This resemblance
draws us closer, instills trust and mutual respect, gives us a sense of being understood and
being able to understand the friend.
Sergey Brin and Larry Page were both born in the same year, have parents with resembling
academic professions, underwent almost the same curriculum at university, and, eventually
met on the same university program. Tinder’s Justin Mateen and Sean Rad were also born in
the same year and even grew up in the same Persian-Jewish immigrant community. “He's like
my twin”[1] said Rad about Mateen in an interview.
Now think about who you’d like to work closely with when developing an idea you hold dear.
Chances are you want to work with someone you know, appreciate, share interests or passion
with, and that you can vouch for. Doing so generates additional psychological factors like
interpersonal commitment; a mutual sense of trust and a conscious feeling of a shared
responsibility towards each other, highly valued by the co-founders. Another example is
dependency, where one friend might limit her/his decision making because s/he feel they have
to have their friend’s acceptance first, even on trivial things. These are powerful elements, that
often help founding teams rise above the harsh conditions of early-stage startups, simply by
having the co-founders prioritize close relationships over creating conflict.
But as a company grows, external forces such as bringing in new co-founders, pivoting needs, or
specific funding conditions, often tend to shift founders’ focus. Reaching business objectives
becomes more pressing, putting friendships to the test.
Steve Blank, a Silicon Valley entrepreneur and a founder of the Lean Startup movement,
explains in a post from 2011[2] that a founding startup team should have a unique combination
of skills. Technological, hustling, design, product, and long-term vision skills help tackle the
everchanging day-to-day of a startup.
Having one person mastering even three of these skills is rare. So pairing up with friends can
broaden the company’s skill set and enable founding members to leverage their respective
strengths. As long as a co-founder’s skills are acknowledged and valued everything’s great. It’s
when a co-founder’s skill (or lack of) starts being questioned, that friendship is at risk.
or as Blank describes it a “temporary organization designed to search for a repeatable and
scalable business model”.
A Tale of Two Steves (or How To Give, Take and Match)
Apple co-founder Steve Wozniak told CNBC[3] about a friend he had: “He said: “you’ve got to
meet Steve Jobs because he knows this digital electronics… And he likes to play pranks.” I was
very much a fun humorist all my life. And Wow!… he came by and we started talking and sure
enough we hit it off… And we just became, you know, the best friends for a long time.”.
Yes. Apple was initially founded by two friends who loved computer electronics and kidding
around, and It’s what kept both Steves working together for 10 years. But when Wozniak felt
that the management gradually sidetracked him and his team, responsible for the company’s
top-selling Apple II computer, he understood change happened and left Apple.
Psychologist Adam Grant created an interesting model where people are considered either as
Givers - people focused on what others want, Takers - those who prioritize their own needs,
and Matchers - those who look to give and take in a balanced way, to protect themselves from
being exploited.
While Wozniak was an ultimate Giver, Jobs was more of a Taker. On Guy Kawasaki’s
“Remarkable People” podcast Wozniak said that Jobs wanted to “…be important in the world,
though he didn’t have the academic or business background, he had me”[4].
People, especially friends, can make this type of dynamic work, as long as the Giver still wants
to give and the Taker agrees to take. But it would be naïve to think of people as just one of
those 3 types. In reality, as people evolve and grow, they become more of a combination of
types.
Givers often get to a point where they feel that they’re not receiving enough in return.
In entrepreneurship getting “in return” can translate into team gratification or credit on an
idea, company shares, a title, or even an opportunity to present to the board at meetings. Over
the years I’ve had several Giver founder clients dealing with defining what it is they want to
receive and coming to terms that the friendship they had, had simply changed.
Best Friends For… How Long?
“Not the right team” is ranked 3rd on CBI Insights study as to why startups fail. At a founders’
level, this means that they were unable to do the necessary to overcome the challenges they
faced. Friendship is the “usual suspect” in such cases.
Venturing with a friend could actually lead to developing optimism biases or group thinking,
resulting in a lesser capability to efficiently solve issues or objectively assess a situation.
Therefore, the most important question you should ask yourself before partnering with a friend
is not “How strong is our friendship?” but rather "Are we able to put our friendship aside?”.
Think about it; you’ll have to deal with issues you haven’t dealt with before, be in situations you
haven’t encountered yet, experience things that you - as friends - never experienced together.
Your ability to support each other without directly projecting the effects of working together on
your friendship is the key to success.
All for One or… One for Oneself
Remember the question at the top about founding with friends or alone? It’s time to get an
answer. In his book “The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can
Sink a Startup”, Professor Noam Wasserman found that a whopping 82.5% of tech companies’
founding teams have more than 1 founder, and most had either 2 or 3 co-founding members.
Completing each other’s professional skills, leveraging a larger network, increase funding
chances, splitting the workload, having peers to think and share experiences with, have long
been cited as advantages that solopreneurs, single entrepreneurs, simply can’t have. But is it
good for the business?
Researchers Jason Greenberg and Ethan Mollick challenge the widespread consensus that
startups perform better when launched by teams rather than individuals. In a study they
published[5] in 2018 they surveyed over 65,000 Kickstarter project creators that generated
US$358 USM.
They found that solo founders were “more than twice as likely to own an ongoing, for-profit
venture than two or more founders” and the rate of likelihood increases when addressing
teams of three. In fact, solopreneurs were 54% less likely to stop or dissolve their business
when compared to companies founded by a three-person team.
As in most cases, there’s no clear-cut answer to the preferred founding format. From my clinical
experience, it matters less whether you do it by yourself or with friends, founding a startup is
complicated, strenuous, and challenging work.
Yet being mindful enough when choosing your co-founder, active in defining the new
boundaries of your friendship, and open enough to process the hardships, there’s a good
chance that you and your friend are prepared and ready to take that exciting startup
rollercoaster ride. Together.
[1] https://www.rollingstone.com/culture/culture-news/inside-tinders-hookup-factory180635/
[2] https://steveblank.com/2011/12/13/the-startup-team/
[3] https://www.youtube.com/watch?v=5X6O5yOaEGM
[4] https://guykawasaki.com/steve-wozniak/
[5] J. Greenberg & E. Mollick (2018), “Sole Survivors: Solo Ventures versus Founding Teams” on
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3107898