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Is it possible to quit a startup with a friend and maintain a friendship?
A little over a year ago, I started a company with a friend. He'd do CEO/sales/biz dev (and has a large network) and I would build the product, leading a small team (elance type stuff) as necessary. He quit his job and put in about $75k. I put in sweat and money for incidentals.
I built a quick and shoddy prototype in about a month of evenings and weekends, and we figured it would take about six months to flesh out, QA, beta, and market prior to "launch."
Not all of the money was used wisely. He opened an office in his home country (Romania) because "I can get developers who will work for $2/hr part time!" However, the cost of running the office is now about $15k/month. At this point, I'll need to invest to keep the company going in its current form.
He's moved more into a "product manager" mode, and driven the Romanian team to pivot and add functionality that various VCs, angels, or CIOs told him "would really make this sell." We're now building four products in a suite and we no longer have a "vision".
We're good friends, and have worked together before in an enterprise environment. He's still stuck in that mindset, and I never really absorbed that mindset. My wife has not been very supportive of the endeavor, and even less so now that money is coming into the picture with no product launch in the near term.
A "come to Jesus" meeting is my next step. If that fails, I'm tired and want to walk away. I'll have some equity (about 15% of the company vested so far), but that's not really a big concern for me. I'd be happy to sell them back to him at a reasonable valuation.
Have any of you "thrown away" a year of work with a friend on a startup, and were you able to maintain an amicable relationship thereafter? If so, any tips?
- yosefsolomon 16y agoThat's a good question... I can definitely see where your coming from and the position you in. I don't have any great advice except for LOOK OUT FOR NUMBER 1 lol
- andrewtbham 16y agoif you don't want to invest your money... don't do it. be assertive. 2 pieces of advice on being assertive... 1) if he tries to criticize you for not investing... agree with him. example: "you aren't committed to this company." Don't start criticizing him... just say something like "I guess that's one way to look at it." 2) you have to detach yourself from the outcome. you might not be friends, but as long as you don't criticize him... he won't have any real grounds. no one that is a real friend will be mad at you for doing what you want. you haven't made a commitment to fund the company.
- temp271828 16y agoThanks for the advice. My problem is usually being especially assertive, but a simple,"I will be prioritizing other things above participation in the company," definitely sets the right tone.
- andrewtbham 16y agothat's exactly right... agree with criticism and reassert what you want... when i first started my own consulting company, i had read several books about assertiveness and that's the advice. agree with criticism and re-assert what you want. I was trying to collect a bill and the guy that controlled the money ripped into me saying i did a bad job, there had been bugs... I said "I agree, I think we all wish things had gone smoother, but I think the bill is fair and I expect to get paid." He cut me a check shortly afterwards. The guy was hoping for me to start defending my work and get into an argument. I really don't think I would have made it in business without reading that advice and following it. sometimes it's hard to swallow your pride, but when people are trying to manipulate you.. they play on that. agree with criticism/reassert your position.
- andrewtbham 16y ago"At this point, I'll need to invest to keep the company going in its current form." I don't get that... You aren't the only investor in the world... Why not pitch to these people: various VCs, angels, or CIOs told him "would really make this sell."
- temp271828 16y agoHe has pitched but been unsuccessful. The output from all of them is that we have to change our vision, sometimes dramatically, sometimes slightly. The problem is the vision is now "build something huge" instead of "get something out the door and iterate." There was some interest, but the current pre-money valuation they've been talking about (~USD5m) is not enough to get anyone other than small angels involved, or we give away too much of the company.
- variety 16y agoFirst, don't think about it as "throwing away" a year of work. Think about it as a comparatively modest annual tuition fee at the most effective learning institution you will ever have the privilege of attending, a.k.a. the School of Hard Knocks. Which is to say, some of the most valuable education you will ever get... provided you don't repeat the same experience. As to the friendship, don't worry about it. As long as you act in a fair, principled, and (importantly) clear-headed and non-impulsive manner, a (true) friendship can easily survive an experience like this. They may even thank you (much later) for having seen the harsh light of reality far sooner than they did. If in fact they're a true friend. If they're not.. it can certainly feel very painful at first, when a supposed friend "de-friends" you, or acts in a destructive manner such that you feel forced to separate yourself from them. But what it comes down to is that true friends just won't do this to you, or put you through dilemmas like this (not intentionally, or in any vindictive way, at least). As to those turn out to be not such true friends, you were bound to find this out eventually (albeit perhaps through less cathartic means). Think of it as not a loss, but an opening, a chance to regenerate and find newer and even better friends, and have much better experiences. Lastly: one thing I learned from having gone through an experience like this is that when going into business with "friends" we tend to let our defenses down, and expose ourselves to far greater financial (or emotional) harm than we do in regular business contexts, wherein even when we end up dealing with people really are basically out to screw us, we at least know how to cut our losses and not let it damage us so much, psychologically. While your "friends" can actually end up damaging you much, much more even though you're supposedly all on the same, happy team. It's kind of a simple thing, really... but knowing this going into your next "friend"-based opportunity might help make for a much safer (and less soul-wrenching) ride.