I have had an absolutely opposite experience. In 1994 I founded a company with 3 close friends. One left early (under his own power). Another friend joined us to replace him. We had a great run for 9 years, survived the bubble crash, and sold in 2003. We’re all still friends. It wasn’t easy, it required flexibility and great communication skills. But it can be done. And when it works, it’s great. In those same circumstances, I’d do it that way again.

Case in point, who would you start a company with if not friends? Yes, you risk the friendship but otherwise you need to both simultaneously build a relationship with the person while building a company – and as you’ve seen building a company is hard enough. Just because you had a bad experience and lost a good friend doesn’t mean that having friends as co-founders is a bad idea. However, you do need to be careful that you pick friends not just because they are friends, but because you share some ideas, work the same way or are complementary.

It’s also possible to structure the company up front to avoid these kinds of confrontations later, which I’m sure you’ll do in the future. I wonder if you’d have the same opinion if you’d started with a different corporate structure.

Also, keep in mind that while startups shouldn’t be democracies they also shouldn’t be dictatorships. If your teammates (and they are teammates and not employees early on) don’t feel ownership (of both the company and decisions) then it will be harder to motivate them. Delegation is one of the finer arts of management and done well you can still maintain authority while giving people the ownership that they need to stay passionate.

I’m glad to hear you are having success. Good luck.

Sean

I would also recommend every entrepreneur to take a self assessment test – many of those out there. Play with the test and pick every choice – to see the feedback. Even if you answer them wrong – you will at least know what not to do. The thing that stood out for me in one of those self-tests was a question on “who would you enlist as part of a founding team” with the choices being “friends” or “outside consultants”. The right answer to this question is “friends”, and if you answered it as “outside consultants” the feedback from the test was “go get a day job”.

When I think about consultants (someone in general who claims to have been around the block), I am reminded of a line from the movie about Earl Long (played by Paul Newman), where through his trials he points to his cronies and says – “look at them, finest bunch of Yes Men in the great state of Louisana”.

My litmus test for consultants – I usually set them at the first meet – try putting up a couple of your visionary ideas – and if they do not challenge you immediately, you might as well save the coffee for someone else. End this meeting as fast you can – they are the “Yes Men”.

I do work with two outsourced consulting groups – six years into the relationship. Why did I choose them? Becasue even at the risk of loosing my business, they challenged my RFP and told me I needed to do build it a different way – got my attention – and of course they were right! Six years later, they are not consultants, but a partner in the truest sense.

I love my family, but agree with you completely – keep them out – they are as I call them, “the entrepreneur assassins”.

:-) Probably not relevant here, but for some reason this post reminded me of this quote.

Working with friends can be OK, and can be a lot of fun, but it’s important they know it’s your company, and that if things stop being fun, etc, you’ve agreed in advance to part ways. Forming a partnership with a friend, on the other hand, is a very bad idea, bringing your spouse or significant other into a senior role, a very very bad idea. Dating people you work with, also a bad idea, especially in a small company, or if you have a predeliction for hot-headed ‘animal in the bedroom types’, who are usually also psycho in other contexts.

Having adult oversight is important, although you need to be careful about that too. I can’t count the number of times I’ve dealt with people who had much general business wisdom, but were completely and totally clueless about my specific business. You got to watch out for that too.

“Stay away from working with friends. ” This, IMO, is terrible advice. Friends are the only people you know well enough to have a sense of whether a partnership might work out. Any other partnership has AT LEAST as much chance of going sour. And, of course– a good friendship will add loyalty/duty to you motivations for success. As a counterpoint to your experience, I’ve started 3 successful companies with friends. I’m still friends with all of the co-founders.

“As the primary founder you better have an authoritarian role in the start-up process”. Again, I disagree. If your co-founders feel like employees with no ability to affect the vision and not partners, you’re going to lose your co-founders. If you think you’re right when 3 co-founders disagree with you very often, either you’ve selected stupid co-founders or (more likely) you’re being bull-headed. In all 3 companies I’ve founded, I have never ONCE pulled rank on a partner (this is 3 businesses over a period of about 8 years, to give you an idea) and I’ve always been the nominal CEO.

All of your problems seem to stem from not doing a good job selecting co-founders. You need:

1) Aligned vision. Make sure you’re on roughly the same page in terms of what you’re building.

2) Complementary skillsets with a ton of mutual respect and clear division of expertise. The UI guy should have implicit authority on UI issues, but should almost never have to use it… His partners should have the wisdom to defer to him on most UI issues and he should have the wisdom to defer to his partners if they vehemently disagree with him.

3) Partners who are smart as hell.

4) level headed partners who are driven by metrics and logic with good conflict resolution skills. With your “my way or the highway” attitude, I think you probably ought to look to yourself first here. If you’ve got 3 partners who are smart as hell telling you are wrong… Well, you’re likely wrong.

Improve your attitude and pick great partners with aligned vision. Conflicts will be cake and friendship is a huge plus. Hell, if they don’t start as friends, they’ll end up that way (spend 12 hours a day with someone and you’ll either end up loving them or hating them).