The world’s richest man was recently asked, “What is one thing you would change if you could go back in time?” As the founder of companies that have completely altered how the world travels, explores outer space, powers homes, and accesses the internet, Elon Musk had a simple response… he would have chosen his cofounders more carefully.
Musk’s reference to issues within the Tesla founding team has significant weight; even if your company sees massive success, who you partner with on a business venture can have a massive impact on your journey.
I had the opportunity to know my cofounder well prior to starting my first business. Stephen and I were best friends in high school and had built up a strong foundation after a close six-year friendship. With experience doing multiple school projects and navigating life’s teenage challenges together, we were well set up to know whether we would make a good team. Now, after 25 years and four successful companies under our belts, our decision to be business partners has proven to be a good one.
But what happens when you make the wrong decision? Based on the results of multiple online surveys, within multiple industries, somewhere between 24% and 45% of businesses fail because of issues between the founding partners. This makes who you partner with one of the most significant determining factors to your success in a venture. Choosing who will work alongside you as you navigate the roller coaster ride that is a start-up is as important as building a valuable product or service, successfully executing your business plan, and raising capital. Unfortunately, the level of intention needed to find the right cofounder and build a strong partnership is not given the priority it deserves by today’s entrepreneurs.
After interviewing multiple cofounders for my upcoming book, The Cofounder’s Handbook, I can attest that many are silently suffering within their partnership. Upon reflection, they wish that they had spent more time in the due diligence process disclosing expectations and determining roles and responsibilities. Others recognize that their “set it and forget it” attitude towards their partnership meant that resentment and mistrust slowly built up due to lack of communication and misplaced optimism; presuming issues would just sort themselves out on their own.
With all this in mind, it is not surprising that Elon Musk would say that working with the wrong cofounder was the “worst decision of his career”. The result of a mismatched partnership can, if not handled delicately and appropriately, lead to either a miserable business experience or worse yet, the dissolution of the company.
So, what can one do to ensure that the worst career decision isn’t your business partner? First, take the necessary time to determine whether someone truly is the right person to help you bring an idea into reality. Don’t presume a single skill set or the ability to inject investment is sufficient to form a partnership. Be sure to have hard conversations early, preferably BEFORE you sign a partnership agreement, and get ALL your questions answered, even the ones that make you uncomfortable. Deal with any warning signs and “bad feelings” head-on as often the outcome of these concerns do rear their ugly head down the road.
Second, get intentional on a daily basis about building a strong partnership. Discuss and determine together the goals and vision you have for your company. Handle swiftly and decisively both relational and business concerns that come up within your partnership. Make it a daily practice to treat your cofounder with respect both in front of your team and behind closed doors. All of this will go a long way in ensuring that resentment, mistrust, and ego don’t work to destroy your partnership and business.
Finally, seek help when a resolution to an issue cannot be reached. Mediators, business coaches, and advisors can be great sounding boards and offer a “tie-breaker” for challenges that are at a standstill.
What advice do you have for those looking for, building, or struggling in a cofounder partnership?