Entrepreneurism: Making Partnerships Work
Jory: All of the women to my right have had experience with partnerships. Introduces all the above. Working with partners can be stressful. What are some of the common mistakes that founders make. I was so lucky. I met a woman who had just ended a partnership. It's like a marriage. Lots of work, like a spouse. The dynamics shift, and on top of that you have a biz to run. It can be the downfall of the biz. All the issues of partnerships. When is it right? When wrong? Do you think a buddy a good biz partner.
Mara: There are some benefits with a friend. In my experience, you need to have biz synergy first. If you're missing that, it may not work out. Start with a biz relationship first, and progress from there. My two co-founders are my two best friends since we spend so much time together.
Sandy: My two co-founders, we were friends, but not best friends. It is a marriage. You can find the annoying things…have to extract the personal from the biz. It can get messy. It works better if you're not too closely entwined.
Tish: Built on the basis of biz partners first, then it builds into friendship. It depends.
Jory: We weren't friends first. We are now. I really do feel that we came into our friendship with a certain biz candor. I don't think you can do that with friends. It's worked better with collegial relationship first. Hard to be honest with friends. I believe full out that the smartest thing we did was develop a contract immediately. Things shift over time. Have to have a clear understanding up front with roles and responsibilities.
Sandy: If you start out completely equal, have to develop trust. No nitpicking. We all had different skill sets. We aren't stepping on each others' toes. Worked really well. Had diff perspectives. Make things clear up front.
Jory: If your skills are similar to your partner, is that a problem?
Q1: I have a friend who works with a startup. They need a CTO. But they don't have money. Should that person be an employee or a co-founder.
Mara: We brought in a new co-founder. A piece was missing. We found this perfect person. What do we give them? How do we navigate this? I gave him as much as we could, even though not an original founder. I wanted full on dedication and commitment. They needed to feel importance. Transition was easy. Confidence and trust important. Don't give away ownership to anyone, but if they fill a missing piece, then have to do something important.
Q1: They need a CTO now. Don't know how to deal with this issue.
Jory: We needed a body in New York. We hired a person who had to earn sweat equity. Consultant first, with intention of bringing her in as an equity partner. If it's a superstar, you'll have to give up some equity. Don't give up too much of the company until you see whether it's a good fit.
Mara: We had a person work with us for a month and a half so we could figure out fit.
Sandy: Title of founder is not a title. It's a sense of who you are. Does this new person have the personality to be a "founder"? Blood sweat and tears role? How will this person fit into existing context? It wouldn't be fair just to fill in a role without having understanding of fit.
Jory: When you need outside expertise, Tish gets hired. What are common mistakes.
Tish: With growth and maturity, prompts of clarity of roles, especially of founders. Biggest challenge, as biz grows, the culture and role of founders changes. Have to take the time to understand the culture and role of founders. Extracting this info and then create meaningful role for founders. Founders get confused. What's going to happen next. How will company evolve. With growth, things get more difficult. More dots to connect. Big challenges. How do you scale. How do you keep founders involved while bringing in new talent.
Jory: How do you keep founders involved?
Tish: Founder wants to deal with ideas, but doesn't want to manage product.
Jory: How do you integrate founder once the company has grown, maybe not in operational role. What's the next step for founders?
Tish: Typically, you're almost an internal advisor. What is founder passionate about? Open channel for ideas flowing to the biz from founder.
Jory: Entrepreneurs don't see this coming. The company is growing but founder doesn't see that they may be an obstacle to growth.
Sandy: Hard with day-to-day management to see the larger picture. I'm managing a lot of people, and then the next day I'm talking about something technical. As a founder, the conception when you get it is one thing. But over time, the day-to-day stuff changes. Started as a code monkey, but I don't code anymore. I had to shift what I found value in. Now I've built this great team. Personal shifts as a founder. Is this the right role for me. Is this making me happy. I've been at it for 7 years. Thinking about the next step. Very personal thing. Can talk about this with partners, and they may be growing in different ways as well. Have to reevaluate often.
Jory: I wasn't married, didn't have kids. Husband in grad school I was winging it. Now things have changed. I was a blogger. Now I don't blog anymore. Tish, is your role to oversee roles? We as founders go out every three months to touch base and check in with where we are in life. Are we in alignment?
Tish: this was exactly what happened at Tag. No off site meetings. Didn't include the rest of the executive team. We have to get tougher on a regular basis to see if we are in agreement. It was the first step in setting up communications.
Mara: Finding a partner. Expend your network. Get referrals Tell everyone about your idea. Everyone. Mom, sister, brother. Sell the idea. They might know someone. Powerful way to get partnerships and new business. Go to events. Even if tired. Put yourself out there. Don't hold on to your idea until down the road.
Jory: That is a valid concern: privacy and people stealing your idea.
Mara: If they steal, that's one thing. Executing on the idea and strength of vision is another thing. Your vision you can tell people. You never know if somebody else has the idea but it didn't get off the ground. Talk to everyone.
Jory: I meet my partners this way, at a conference. You will find people just as passionate as you are. Let's talk about break ups. They're hard but not always a bad thing. These things happen. How to handle that well and legally.
Mara: It's awful, and painful. Like a disintegration of a marriage. Contract over. Trust and reliance on each other. When a founder loses that hunger, and distances themselves, you can't make them passionate. Can't force it. doesn't work. I pushed it. When it fades out, the founder checks out, it's hard to get them to stay around. Lesson learned, we sat them down and said we want you to be happy, we set you free. It's better to part with a partner on good terms. Make it an amicable separation as possible.
Sandy: When you enter the partnership, make sure you're in alignment with where you want to go. Short term sale or long term biz? What is it the partners want. Make it explicit.
Jory: To be fair, things change. Things shift.
Tish: It's easier for me. I wanted out early on when I was in a startup. Sometimes it's hard as a founder to admit you want out. It's about having a conversation. About trust and communication. Have the conversation. When founders are no longer engaged, they're waiting to be asked. They want to say something but they're waiting to be asked. They've lost that spark. It's ok. You can trust that it'll be ok.
Jory: When you take capital in, you have investors to deal with. Have to be careful. One of the founders of 4square left. Founder left and didn't want that role anymore. It's hard to make that case to the world. Is it damaging for that founder.
Tish: More times than not, the board knows. One of the trigger events, regarding should I stay or go, a natural place is when you bring on new talent, esp executives. It prompts those kinds of discussion. It's unconsciously planned. You start to build a biz. As you bring on new people, you start thinking about how the new people will transition into the biz.
Q3: with new partnerships, thinking about equity and contract. Is there a point when we'll reexamine this relationship. Can you plan your exits?
Jory: We didn't have that much forethought. Our heads were not there. But we had good lawyers. We had to deal with a vesting schedule re ownership %.
Sandy: When you start a partnership, have to be optimist. Open arms and complete trust from the beginning.
Mara: I completely agree. No pessimism. No seeds of doubt. When my co-founder left, we didn't have the vesting schedule and it hurt us. Those vesting terms are there for a reason. Moving forward, it's one of the most important thing we talk about.
Tish: I was in a startup 2 years into it. I found I wasn't a hardware person. I had 2 years left. I opted to give back the remaining equity. It wasn't fair to take more equity. What goes around, comes around.
Sandy: In the valley, reputation is king. Don't burn bridges. Keep things amicable. Your personal reputation is so important. News travels fast here. How did you treat people.
Mara: Take the high road. Work it out. Keep your personal reputation clean. It's not worth the time and mental stress.
Jory: Treat people well. Don't change terms on staff. Be generous with employees. It will resonate with the rest of your career.
Q4: Who was doing admin when you started out.
Sandy: We had a team of 3. The third co-founder, was a biz guy. He was pretty useless in the beginning. When his skill set was needed, he stepped up. He shielded us from all the distractions. He started doing more admining stuff. Our first hire was an office manager. She got that stuff out of the way. We solved it by hiring a dog first. We took series A, in order to hire people. To pay for employees to take that next step. Personal decision. Founders have to decide.
Mara: At first, I took on most admin. Dealing with lawyers and customer service. We were a bootstrap company. My approach was to alternate roles. I wanted everyone on the team to be well versed in everything. Some sense of ownership. So they weren't oblivious to what was going on administratively. Delegating worked well for us.
Sandy: Hiring college students for the summer.
Jory: Moms were hired to do accounting, etc. We all took it on. We didn't wait for our first round of funding. We paid for people to help us. We paid for it. $5-10 grand was a lot of money, but worth every penny down the road.
Tish: One of the most stressful things you're going to do tougher. Agreement is important and gives you a really good sense of your partners going through the contract.
Jory: Is this person an advisor or a partner? We had to pick roles. We needed a CEO and ruthlessly honest with ourselves.
Sandy: The first year, you can see organically which founders have what talents. You have to evaluate the roles? Are you the right person for a selected role? Am I playing the right role. A lot of introspection. You want your baby succeed, you need to let go of your title to make things work. Employees are now dependent on the company's health. Am I giving the company enough? Have to be brutally honest and take a step back and say what's going on.
Q5: We have 4 founders at different locations. What happens with founders in diff locations?
Mara: Yes, in same country, but worked over Skype and something chat. Hard. But a lot of pros. Forces you to be a strong communicator with emails, and phone conferences. Forces you to stay in close contact. Kind of like a long distance relationship. Forces you to find the time to communicate.
Jory: Founders don't realize that they create a culture. We tend not to realize we've got a culture. When others are hired, they enter our culture.
Tish: When biz grow, they start to lose talent. The culture needs to scale and change too. the last 4 deals have been about this. The culture needs to scale with it. Founders may be resistant to change. "We don't do biz that way" that's a warning sign. This is really common. When I come into the picture, I feel like the grim reaper. Its because the culture isn't growing. You have to empower your people. Can't always come from the top. How transparent do you want to be. How do you scale that as you grow? Such a common thing. Many time it's because the communication is not good. Need to talk about values.
Jory: What do you think about flat organizations?
Sandy: Can work for a while. But doesn't work over long term.
Mara: People like to have managers, and like mentors. Depends on people.
Jory: Thanks everybody. clap. clap. clap.
[Editor's note: The transcript above reflects what the liveblogger heard, to the best of her ability, but is not a verbatim transcript of the session. As such, it may contain abbreviations or paraphrases.]