Building Business Together…Strategies to Make the Marriage Work.
He is the big picture thinker, with grand ideas, fantastic people skills, and the focus of a squirrel. She is detail-oriented, precise, and has an optimized system for…everything.
Ten Years LaterShe complains that she is tired of planning everything, that she wants him to take the lead. He says that he can never do anything right. She feels unappreciated; he feels disrespected. The tension escalates, each feeling demoralized. Yet, they had a baby. And they really want to stay together for the sake of the baby.
Co-Founder Formation
They met at the same corporation. She is great at building deep relationships, and her pipeline is always full. He adores spreadsheets, and his attention to detail rivals the most efficient transportation system. One day, in a random conversation, they discover a business idea that utilizes their complementary skill-sets. They decide to build a business and split the equity 50-50 because it seems “fair.” Excitedly, they rush to the courthouse to get the license. And they have the baby.
Two Years LaterHer lack of organizational skills drives him insane. He worries that they are losing business because of the details that fall through the cracks. She gets resentful because she knows that they wouldn’t have a business in the first place if not for her savvy networking skills. Wanting to make sure that everything is accomplished in a timely manner, he checks in regularly on her progress. She feels micro-managed and disrespected. In response, she shuts down in conversation and holds information close to avoid another lecture. Her avoidance reaction stops the information flow, which increases his anxiety, and he nags to compensate. She withdraws further. The tension escalates, each feeling demoralized. Yet, they had a baby. And they really don’t want to give up on the baby.
The Co-Founder Conversation
Me: “Tell me about the partnership. Do you have investors? Bootstrapped? What is the equity split?”
Founders: “It’s 50-50.”
Me: “Do you have a prenup?
Founders: “What do you mean?”
Me: “Did you have a discussion about how you would navigate the relationship and business factors if things go sideways?”
Answer A: “No, I just thought that he/she is a good person. I was raised to treat people as I want them to treat me. I always trusted that we would just work through any problems that might arise.
Answer B: “Yes, we have a contract. It includes the basic information about what will happen if we dissolve, but there isn’t any information about the process.”
How to Prevent a Divorce
I was laying in a guest room, relaxed and happy, when a friend called me.
Friend: “Tricia, I just got engaged. I’m getting married next week.”
Me: “Wait, did you have the conversations? This is really fast. A lot of couples run into problems because they have never discussed the really important issues before they get married.”
Friend: “Okay, so what types of conversations do we need to have?”
Me: “Finances, expectations of what you think marriage should be, baby plans or lack thereof, parenting assumptions, sexual expectations, gender roles, housekeeping assumptions…..”
Pre-Marital Discussions for a Co-Founder Relationship
- How will we arrange the equity structure? What value do we think each of us is bringing to the table? Do we need a method of measuring the value-add? How often will we re-visit the topics of equity/financial splits? What if personal or competing opportunities change the amount of time or energy investment?
- What are the differences in our cognitive and emotional styles? Where might we drive each other crazy? How will we navigate different work styles? What are our personal values that translate into business? Where will we automatically assume that the other person is “wrong” if they have a different value and prioritization system?
- How will we navigate conflict? (Note: saying “we’ll just talk about it” is not a plan).
- What will we do if one of us gets sick?
- What are the fundamental aspects of doing business that we both view as critical and non-negotiable? Do we agree on the processes to achieve them?
- What are our operational definitions of “commitment?” Is it 5 hours a day, 12 hours a day, weekends? What exactly do we mean when we say words like “responsible,” “flexible,” “timely,” “productive,” and “honest.”
- What are our personal financial situations that may impact our business decision-making?
Prenuptial Agreement to Address a Potential Divorce
- If the co-founder is a friend or family member, you need to have a discussion about how you will maintain the relationship if the business goes awry. If a friend or family member invests capital, you need to have the same conversation. Create the ugliest hypotheticals you can imagine and work through possible scenarios. The conversation may be unpleasant, but engaging in it could save the relationship. Once people create a baby together, the relationship has a new level of shared investment. While I respect optimism, saying that “we’ll just work it out and agree to maintain the friendship if the business doesn’t work” is incredibly short-sighted. When we are invested, we naturally bring more emotion to the table, increasing the likelihood that we will become angry, defensive, anxious, or protective of both our role in the business and the baby that we created.
- Figure out how funds, expenses, and assets will be handled if you break up the business.
- Consult with business people, business attorneys, coaches like myself, as well as local and online resources. The more knowledgeable you are about the pitfalls that may occur, the better you can plan to mitigate potential risk.
- Avoid Negative Nellies. I want you to think carefully through situations so that you have the best possibility of winning and so that you can raise the baby together. Some people thrive on telling you why something can’t/won’t work and give you lots of anecdotal evidence to support their viewpoint. They are dream-killers. You want to interact with people who are excited about your idea but who will provide specific information to ensure the best possible outcome.
Top Reasons Why Co-Founders Will Disregard this Advice
- You are excited and you just want to get started. Sorting through this conversation sounds tedious, and it may create unnecessary delays. When I work with people who are in high-stakes situations, 70% of what I do is help them to slow down so that they can collect the amount of data that is necessary to ensure an optimal outcome. If you truly believe that your idea can grow wings, why not ensure that it has a healthy foundation?
- You don’t want your co-founder to think that you distrust him/her. Script: “I read this article. I know we’ve already discussed the general roadmap, but maybe it would be good to plan for the potential bumps.”
- You are worried that in the conversation, you will discover a deal-breaker, and the dream will fold before you have a chance to see if it could work. This option could happen. However, seeing the problem now will save you time, energy, the relationship, and real money. Proactively assessing or compensating for deal-breaker scenarios can protect you from engaging in a diminishing ROI situation. If you avoid dealing with a red flag, you simply delay the inevitable, and you lose a lot in the interim.
Can this Marriage Be Saved?
If you have a tense relationship with your co-founder(s), the first step is for both of you to figure out where trust and expectations got derailed. Get a third party who has a reasonable grasp of both relationship and business dynamics. It is difficult for us to see a pathway through disillusionment when we are exhausted, frustrated, and disappointed. A third party has the objectivity to see through the fog and help you move forward. When trust is broken, it needs to be intentionally repaired. Agreeing to “put it behind us and move forward” is the fundamental error that ends most relationships.
Hope
If you are considering a partnership and the two of you are able to engage in gritty conversation, you are already off to a great start. If you are in a floundering partnership, but everyone is committed to taking responsibility to make it work, there is a lot of hope left. In my years of working with people, I have found that motivation, personal responsibility, the willingness to try new strategies, and bull-headed tenacity can create an outcome that looks a lot like a miracle.
