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Getting the Most Out of Co-founding and Business Partnerships - Power Dynamics of Business Partnerships

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I am interested in discussing more on the power dynamics of business partnerships.
Let's use the term co-founder and business partner interchangeably.
I will stick to the term business partner as the term is easier to understand.

A successful business partnership is like a successful marriage.
There is a special bond that you share with someone when you build a successful business together.

At the same time, failed partnerships are behind many business failures.

Possible threads

  1. How do you find out about what you want in a business partnership?
    Identify working styles, skill sets, communication & management styles, experience, commitment, etc.
  2. How do you find potential business partners?
    Events, LinkedIn, introductions, etc.
  3. How do you evaluate your potential business partners?
    Work on mini-projects, conversations, etc.
  4. How should you structure your partnership legally?
    Partnership agreement. Buy-out clauses, reverse vesting, etc.
  5. How should you candle business disagreements?
    Dispute resolution process (informal, gentleman's agreement to resolving the dispute written on paper)
    Conflict resolution skills
  6. When should you break up with your business partner?
    Having a clean break, continuing with or exiting the business smoothly
Lucio Buffalmano has reacted to this post.
Lucio Buffalmano

Very important topic, and there is little good literature on this as far as I know.

Matthew: A successful business partnership is like a successful marriage.
There is a special bond that you share with someone when you build a successful business together.

Indeed.
Both the closeness and, as weird as it may sound, also the "business intimacy" it involves, since your partner is your partner in acquiring wealth, resources, and recognition from the world, all crucial life endeavors.

I haven't written much on it because I feel the "experience" pillar is not as big as for other fields.

By the way, Matthew, I think you have good experience here, and now you're an advanced operator. If you'd like to write a post about this one day, I'd be very happy to publish it and share it (we the appropriate anonymity level you prefer).

GOING SOLO VS BUSINESS PARTNERS

Also, the first question to ask before you get into all the rest:

Should you go solo, or seek partners?

For example, before starting ThePowerMoves.com, I was looking for some partners, exchanged a few emails, and even sat down with a guy before I decided to just start on my own.

I think that going solo did a few good things for this business, including:

  1. Saving time (no time on discussing, agreeing, clarifying... )
  2. Full decision making (if one wants to cash out, or go in a totally different direction)

And, for those who care: "founder" title, no "co-", full credit, full "spotlight", etc.

And a few cons, of course:

  1. Less brainstorming opportunities =
    1. More potential mistakes that didn't become apparent before they turned out to be mistakes
    2. Fewer ideas (albeit that's been mitigated, and maybe wholly made up for, by this forum)
  2. Less experience with co-founding power dynamics:
  3. Missing out on complementary skills (imagine if I had partnered with a guy who was experienced in YouTube video-making, for example, how that would have changed TPM's presence on YB)
Matthew Whitewood has reacted to this post.
Matthew Whitewood
Have you read the forum guidelines for effective communication already?

Very important topic, and there is little good literature on this as far as I know.

There is an insightful book on this topic.
The Founder's Dilemma
I took the book off someone's table at a coworking space and skimmed through the book last year.
I should search for an audiobook version and continue with the book.

One key tenet of the book is whether entrepreneurs want to be king or rich.

If you want to control the company and be king, raise less money, and give the investor less power.
Hold on to more equity and keep your reins on the company.

If you want money, raise lots of money, expand your business, and hire people that can even potentially manage the company better than you.
Hire an external CEO if you think he can manage your company better than you can.

The problem is that many founders want both power/control and money from founding the company.
They struggle with this potential tradeoff and make bad decisions.

For me personally, my priority would depend on the kind of business that I start.
I lean more towards being rich because you can start other ventures with the money down the line.

The book also talks about how to form your founding team.
As such you should not partner with someone who wants control when you are going for fast growth and money.

Both the closeness and, as weird as it may sound, also the "business intimacy" it involves, since your partner is your partner in acquiring wealth, resources, and recognition from the world, all crucial life endeavors.

Business intimacy is a fascinating term.
It does capture the uniqueness and closeness of successful business partnerships.
All these endeavours do come with challenging times, long hours, and tough conversations.

I cannot speak for everyone, but many entrepreneurs actually spend more time with their business partners than their significant other.

I haven't written much on it because I feel the "experience" pillar is not as big as for other fields.

By the way, Matthew, I think you have good experience here, and now you're an advanced operator. If you'd like to write a post about this one day, I'd be very happy to publish it and share it (we the appropriate anonymity level you prefer).

It will be a huge pleasure to contribute to this topic.
We could work up to a post through mini-discussions along the way on this forum.

I still have many different dynamics to explore for business partnerships.
Probably, the dynamics will change depending upon many factors like

  1. Industry
  2. Nature of business
  3. Size of business
  4. VC versus bootstrapped
  5. Experience and skillset of partners
  6. Size of the founding team

GOING SOLO VS BUSINESS PARTNERS

This is very interesting as well.
Some people find business partners because they are afraid of going solo.
I don't think that this should be the primary consideration when considering whether to find a business partner.
It may create an unconscious, dependent-like dynamic.

I think that going solo did a few good things for this business, including:

  1. Saving time (no time on discussing, agreeing, clarifying... )
  2. Full decision making (if one wants to cash out, or go in a totally different direction)

I'm a big fan of being agile and lean.
If an idea can be tested by one person quickly, why not go ahead and start something first?

There are also super founding teams with a history together.
So the founders understand each other's working styles really well and can explore ideas really quickly.
I don't think that this is very common though.
Personally, I have not found my ideal team.

I do realise great synergies can come from working remotely as well.
As we have seen through this forum.
I love face-to-face communication though, at the same time, I would not constrain myself to explore partnerships by physical proximity.

Both the closeness and, as weird as it may sound, also the "business intimacy" it involves, since your partner is your partner in acquiring wealth, resources, and recognition from the world, all crucial life endeavors.

Business intimacy is a fascinating term.
It does capture the uniqueness and closeness of successful business partnerships.
All these endeavours do come with challenging times, long hours, and tough conversations.

I cannot speak for everyone, but many entrepreneurs actually spend more time with their business partners than their significant other.

I haven't written much on it because I feel the "experience" pillar is not as big as for other fields.

By the way, Matthew, I think you have good experience here, and now you're an advanced operator. If you'd like to write a post about this one day, I'd be very happy to publish it and share it (we the appropriate anonymity level you prefer).

It will be a huge pleasure to contribute to this topic.
We could work up to a post through mini-discussions along the way on this forum.

I still have many different dynamics to explore and learn when it comes to business partnerships.
Probably, the dynamics will change depending upon many factors like

  1. Industry
  2. Nature of business
  3. Size of business
  4. VC versus bootstrapped
  5. Experience and skillset of partners
  6. Size of the founding team

GOING SOLO VS BUSINESS PARTNERS

This is very interesting as well.
Some people find business partners because they are afraid of going solo.
I don't think that this should be the primary consideration when considering whether to find a business partner.
It may create an unconscious, dependent-like dynamic.

I think that going solo did a few good things for this business, including:

  1. Saving time (no time on discussing, agreeing, clarifying... )
  2. Full decision making (if one wants to cash out, or go in a totally different direction)

I'm a big fan of being agile and lean.
If an idea can be tested by one person quickly, why not go ahead and start something first?

There are also super founding teams with a history together.
So the founders understand each other's working styles really well and can explore ideas really quickly.
I don't think that this is very common though.
Personally, I have not found my ideal team.

I do realise great synergies can come from working remotely as well.
As we have seen through this forum.
I love face-to-face communication though, at the same time, I would not constrain myself to explore partnerships by physical proximity.

On the personal side, going solo brings about a lot of personal freedom.
From the Bill Gates thread, I am also someone who enjoys the idea of taking your laptop to any part of the world to work on your own idea.
If your business can self-sustain for a while, you can literally take 2 weeks off anytime you like.
Freedom is beautiful.

External Partners

External partners are also an interesting topic.
There are more like your very close, reliable brother or sister.

Of course, many companies put their partners just to build credibility and to enhance their image.
But that does not discount from possible great partnerships between founders from different companies.

Lucio Buffalmano has reacted to this post.
Lucio Buffalmano

Some great insights here.

Some people find business partners because they are afraid of going solo.
I don't think that this should be the primary consideration when considering whether to find a business partner

Very true.

If it's the very first venture one is starting, it could make sense.

If the options are: take some random guy on board, or never try anything, then starting with someone you don't get along with might pay off in the future, since you at least get started on entrepreneurship.

Of course, as you say, beyond that "getting over the hump" factor, then a fear-driven approach is less likely to lead to good decisions.

Have you read the forum guidelines for effective communication already?

From this thread:

Matthew: We had a video call, and I noticed a few red flags:

  1. Trying to summarise people's ideas and re-package them as his own
  2. He seems to enjoy summarising points to come across as leader-like
  3. He frames himself as busy again and tasks other teammates.
    To be clear, providing valuable leadership direction in business is always useful.
    But we discussed and contributed equally in terms of ideas.
    Then he actively tries to summarise and task.

A low-risk strategy would be to match commitment levels.
If the commitment levels drop below a certain level, then regard it as a distraction and drop it completely.

Interesting.

The risk of matching commitment level is that if you're with a partner who doesn't commit much, it can become a vicious circle until it slowly fizzles out.

A guy with the attitude you describe, I'd ask myself:

  • Do his value-contributions allow him to take a leadership / high-power / tasking role?

That's a crucial question, in my opinion.
Because if his skills, experience, contacts, financing, or whatever value he brings to the table match (or exceed) the power that he wants to wield, then it can be fair he behaves the way he does, and you can consider partnering up with him.

If the value he brings doesn't match the power he seeks, then, he might not be a good partner.

Matthew Whitewood has reacted to this post.
Matthew Whitewood
Have you read the forum guidelines for effective communication already?
Quote from Lucio Buffalmano on January 28, 2021, 8:30 pm

A guy with the attitude you describe, I'd ask myself:

  • Do his value-contributions allow him to take a leadership / high-power / tasking role?

That's a crucial question, in my opinion.
Because if his skills, experience, contacts, financing, or whatever value he brings to the table match (or exceed) the power that he wants to wield, then it can be fair he behaves the way he does, and you can consider partnering up with him.

If the value he brings doesn't match the power he seeks, then, he might not be a good partner.

Lucio, thanks a lot for the advice.
This objective, detached feedback really helps a lot.
Now I look back at this, and it brings clarity.

The value he brings does not justify the power that he seeks.
I'm considering to lower my commitment and investment levels substantially.

I realised that some people play power moves and act leader-like to fake adding value and to do less of the groundwork.

Some people find business partners because they are afraid of going solo.
I don't think that this should be the primary consideration when considering whether to find a business partner

Very true.

I'm going to take more of my own advice and not be afraid of going solo on "difficult" projects.
I do have a fear of going solo sometimes.
Especially if it involves unfamiliar territory.

That being said, I am doing my best to not sway too much into the cynical region.
We know that it is not good for relationships and collaboration, business or personal.

Taking Time To Think

I'm a bit sleep-deprived and frustrated.
I will take some distance, meditate and think to gain some clarity.
Maybe I'm the one who should take the blame for unproductive dynamics.

I didn't write the above in my best frame of mind.
But good to write things out when fresh in the mind sometimes.

I actually find this review to be helpful for business partnerships as well:
The Seven Principles for Making Marriage Work

Strangely, any relationship that requires very close collaboration has complications of a similar nature.
I think it goes back to remembering the fundamental truth of collaboration

Collaboration is beneficial for the individual first.

Any close collaborations will bring to light the conflicts of interests and differences.
And this is where conflict resolution and negotiation skills become paramount.

Yes, some daily frustrations are part and parcel of dealing and collaborating with others.

We might argue that the best partnerships / relationships are not just with the best moments, but mainly the ones with the least frustrations.

However, I think both of your posts are valuable, including the ones where you vent more.
If you reach a point where you think you should invest less, that's an important potential red flag for going forward (first step towards "vicious cycles").

Matthew Whitewood has reacted to this post.
Matthew Whitewood
Have you read the forum guidelines for effective communication already?
Quote from Matthew Whitewood on March 7, 2021, 12:13 pm
I'm going to take more of my own advice and not be afraid of going solo on "difficult" projects.

Keep in mind the "middle of the road" option:

You start with something, then once you have something, you start to look fr someone to recruit.

That, generally, gives you:

  1. More power / influence, less bickering, more effectiveness  (avoid the power dynamics of "who's the top dog in this group of supposedly equals)
  2. The right to the title of lead project / CEO / bigger shareholder
  3. Bigger ability to vet and choose who to work with (it's always an easier pitch when there is something already, and more people get interested to ideas that are already in motion)
Matthew Whitewood has reacted to this post.
Matthew Whitewood
Have you read the forum guidelines for effective communication already?
Quote from Lucio Buffalmano on March 7, 2021, 4:33 pm

We might argue that the best partnerships / relationships are not just with the best moments, but mainly the ones with the least frustrations.

I have one great business partner that always comes to mind :).
That being said, I always avoid comparing my other relationships to this one.
Because I think natural business chemistry is very rare like that of romantic relationships.
And this would place unrealistic expectations on other partnerships.

Quote from Lucio Buffalmano on March 7, 2021, 4:33 pm

However, I think both of your posts are valuable, including the ones where you vent more.
If you reach a point where you think you should invest less, that's an important potential red flag for going forward (first step towards "vicious cycles").

Thanks a lot for reminding me about vicious cycles.
Really appreciate that.

Earlier in the day, I followed your advice against my emotional desires and said "my bad for not noticing your message for cancelling the meeting".
It started the precedent of a productive conversation though I could tell he wanted to have more power.
It prevented a vicious cycle from happening.

I have to watch out for my mental patterns.
It may betray my best interests and the team's best interests.

Quote from Matthew Whitewood on March 7, 2021, 12:13 pm
I'm going to take more of my own advice and not be afraid of going solo on "difficult" projects.

Keep in mind the "middle of the road" option:

You start with something, then once you have something, you start to look fr someone to recruit.

Thanks for this idea as well :).
I need to always keep in mind the "middle of the road" option.
It does make things simpler.

I find that, for business partnerships, a near equal relationship can be very challenging.
I guess that's why there's usually only one CEO.
Your suggestion of delineating titles and areas of responsibilities brings about so many benefits.
It helps to create a sense of ownership of an area of responsibility in the team.

Lucio Buffalmano has reacted to this post.
Lucio Buffalmano
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