The Risks of Working With Friends in Business
We all dream of building an empire with our closest companions. The idea of brainstorming late at night and sharing the spoils of success feels incredibly appealing. You naturally trust these people, so skipping the formalities often seems like the right move. However, this comfort level is exactly what leads to disaster for many startups.
Mixing personal history with professional obligations creates immediate confusion. For instance, giving honest feedback to a buddy can feel like a personal attack. You might hesitate to correct their mistakes because you fear damaging the relationship. As a result, small issues fester into resentment that slowly poisons the company culture.
Furthermore, friends often struggle with accountability and unequal effort. One person might view the venture as a casual side hustle, while the other treats it as a livelihood. This mismatch in dedication creates friction that is difficult to resolve without hurting feelings. Without clear boundaries, you risk losing both your investment and your best friend.
To avoid these pitfalls, you must establish formal agreements immediately. It is vital to separate your emotional bond from your financial reality. Blake Mycoskie, founder of TOMS, explains the importance of hyper-specific contracts when partnering with friends in this insightful clip:
In the video, Mycoskie argues that because you know your friends so well, you must be even more specific about roles and compensation than with a stranger. He suggests using third-party benchmarks to determine equity splits, ensuring that logic overrides emotion.
Ultimately, preserving the friendship requires treating the business with professional discipline. If you cannot have the hard conversations now, you will certainly have a messy breakup later.
About the Author
