I Broke Up With My Startup. Here Is What I Learned
For the past 10 years, I have been working in a startup. Whether it was working for someone else, helping someone with their startup, or co-founding my own, I have become intimately acquainted with the adrenaline rush of being on the edge of success and failure simultaneously.
As an entrepreneur, I am used to walking away from failure and not looking back. Recently, however, I have walked away from a very successful startup. My startup. For over a year and a half I have been working my ass off and grew my social media sharing application to tens of thousands of users. I know what you are thinking. I have heard it all. Most commonly: “You’re quitting?”
I’m not quitting. I’m starting again. I have left my startup in the hands of my equal co-founder, and am thankful for the lessons that I have learned through this process. I’m excited that it’s over and that I can move on from what I viewed as a dysfunctional partnership. Here are some of the lessons I learned.
To co-found, or not to co-found…
When I approached my friend with my idea for my startup, I thought I needed a co-founder to help carry the workload and balance my skillset. Did I need one? Definitely not. My background is in marketing, web development and design. With the help of a contracted developer, I had funded and built the brand and had a working application all prior to incorporation. If you can avoid bringing on a co-founder in the early stages of your product, do it. If I had waited to bring on a co-founder, I would have had a clearer idea of what I needed, and have equity to give to the right person.
Show me the money
An equal partnership should mean equal financial contribution. Period. You have no idea how far your savings will carry your idea and if your partner does not contribute in a fair and equal way, this will cause resentment. When you start to experience growing pains and you need a bigger server or more development muscle, you will need a co-founder that can financially contribute or that will allow you to take on venture capital. It’s important to know where your co-founder stands on taking capital and their financial role in the company. Get this in writing in your partnership agreement.
Know your role
If you do bring on a co-founder make sure that you clearly, and legally, define the roles, responsibilities and expectations of hours contributed for you and your co-founder in your partnership agreement. Based on my experience, it’s also important to define what happens if your co-founder is not living up to the expectations included in your agreement. In my opinion, I can say that it’s not fun owning half of a company, but doing 100% of the work.
Never, ever split the company 50/50
When my friend asked me what percentage split I thought was fair, I said 50/50. We also became co-presidents with no specific person as the CEO. I had read many fairytales on the Internet about functional 50/50 partnerships, but in the end I learned a couple things. Lesson one: many investors will not invest in this kind of partnership. They know that disagreements will happen, and when they do happen in a 50/50 partnership, it can bring a company to a standstill. Lesson two: Who is leading? Without a CEO, whom do your employees or team members go to for answers? Even the simplest company decisions can become overcomplicated with two people in charge and this causes frustration for everyone involved.
Never start a company with someone you haven’t met in person.
This probably seems obvious to most, but it wasn’t to my co-founder and I when we started our company. We had been good friends for years prior to officially starting a company together, but had never met in person. When we finally met, I began to realize how much core values can differ between people, and how these differences can interfere with business relationships.There are things that you just can’t learn about a person over the phone, via text or google hangouts. I believe that if I had met my friend in person, we would have never become co-founders.
Never start a company with a friend.
Those of you that have partnered with your BFF are probably shaking your head and thinking, “this won’t happen to us.” Being friends plays with your emotions and you tend to make concessions for each other that you would never make for a typical business partner. Have you ever moved into an apartment with a friend, only to find out that they never clean up after themselves and don’t pay the rent on time? At first, you let it slide, but eventually these things start to cause tension and lead to arguments. In the end, one of you might get to keep the apartment, but the friendship is usually ruined. The same thing applies to partnerships. Do you really want to jeopardize a friendship for a business opportunity?
When things get ugly…
Be prepared. Document everything as you go along. Make sure that you have a lawyer on speed dial, who can represent you personally and is familiar with the state or provincial laws in which your company is incorporated in.
In the end, with the support of my friends and family and a kick ass lawyer, I chose to walk away and invest the money I would have spent in court on my new venture. I’m heading into the fire once again, but this time, without all the baggage and a ton of knowledge from hard lessons learned.