9 Key Things Successful Business Partners Always Do
What's more important to a new venture than a great business idea? Finding the right business partners.
I've heard this again and again from successful entrepreneurs, and I've lost count of how many investors tell me that they put their money behind people--as much or more than ideas. Still, so many people go about this the other way around. It's especially sad to hear the stories of founding teams that had truly amazing ideas but who fell apart on a personal level.
Take Zipcar, the rent-by-the-hour car service that was founded in 2000, went public in 2011, and was later acquired by Avis Budget Group for nearly $500 million. You won't find the names of its original founders, Robin Chase and Antje Danielson, anywhere on Zipcar's website now; its About Us page briefly tells the company's story without naming them. The reason? Chase and Danielson left the company years ago. According to a new article in The Verge, the two women haven't even spoken in a decade.
I interviewed Chase for a book I co-authored with Jon Burgstone, so I knew some of Zipcar's story, but The Verge account adds some context. The story drives home the keys to how most successful business partners work together and what wrecks the chemistry between others.
Here are nine proven best practices for business partners:
1. Have a successful history together before founding a company.
This is by far the most important item on the list--the one thing from which everything else will flow (or won't). Great business partners almost always have had a prior history of working with each other. The more closely they've worked together, the better.
If you think you've found a promising person to pair up with but you don't have that kind of history, then get it. Work on small projects together, or at the very least, spend a lot of time together before you agree to do anything. You don't want the first time you have to work through a disagreement to be at a crucial point in the early life of your company.
Chase and Danielson knew each other because their kids played together on a playground. They were friends, or at least friendly, but they had never worked together before. They went from the excitement of a conversation about a cool business idea to holding their first Zipcar meeting within a matter of days, according to The Verge. That fact seems to have led to a lot of other issues.
2. Agree on vision.
Nothing derails a new venture like having business partners working at cross-purposes. So, it's crucial that co-founders agree on the vision--both their short-term understanding of the company's value proposition, and their long-term understanding of how they think the venture fits into the world.
Chase and Danielson seem to have gotten this part right. Their vision was aligned, at least in their earliest days. I remember one thing that struck me when I interviewed Chase a few years ago is that she and Danielson were both outsiders to the automobile industry--to the point that Chase didn't even like to drive.
"Conscious consumers, both [Danielson] and Chase agreed on wanting to drastically reduce reliance on single-owner cars," The Verge reported, "and thought that a company founded on that principle could be a lucrative one given America's growing interest in environmentalism."
3. Have the hard talks about money.
It's tempting when you start a new venture to skip some of the tough conversations. You're excited about the idea, and frankly you don't know whether you're starting the equivalent of Facebook or Friendster, so it can even seem counterproductive to get hung up on money. Some founders dodge the whole thing by just saying they'll split their equity, 50-50.
That can be a recipe for disaster, however, and it's apparently what Chase and Danielson did at first. Both did eventually make millions from the sale of the company, but not the kind of insane payout you might expect. From The Verge:
"Robin and I didn't get along very well," Danielson says. "She wanted extra shares, and I said, 'Look, you can get extra shares through employee stock options, but we started this together [so] we are going to have it 50/50.'" According to Danielson, that push for more assets, and more power, was their primary source of conflict.
(The Verge says Danielson's 50 percent stake was whittled down to 1.3 percent after multiple funding rounds, and that she received about $6.3 million after the $491 million Zipcar sale. It also opines that "Chase's stake had dwindled from over 30 percent to less than three.")
4. Decide who the real leader is.
In almost every successful business partnership I've studied, there's usually one visionary leader and one person who is more of a whiz at execution. I call them the Big Idea Person and the Get Stuff Done Person. Both roles are absolutely crucial; a big idea without execution is worth very little. However, there has to be some recognition that when the partners disagree on something, that one founder has the tiebreaker--the right to be, at least, "first among equals."
It's hard to reconstruct what happened with Zipcar, but it seems likely that Chase and Danielson never really resolved this before launching, according to The Verge:
The rift continued to deepen, and Danielson says she was rarely consulted on decisions, even though the company's core was composed of only a handful of people at the time. "It looked like Antje was not being brought into the discussions," says Paul Covell, a product manager at Google who was Zipcar's first engineer. "There were more conversations happening without her than with her."
5. Ensure you understand each others' commitment.
It's a great advantage not to have other commitments tugging at you when you launch a new venture. However, that's rarely the case, and frankly it can be reckless to quit your day job before figuring out whether a venture will really work.
In the case of Zipcar, both Chase and Danielson were mothers with small children. However, only Chase was able to devote 100 percent to Zipcar at the start: "Because Danielson's family relied solely on her income, she needed to keep her job," according to The Verge. Even though Danielson says she worked about 30 hours per week on Zipcar, it seems that this imbalance was an issue from the start.
6. Have compatible, vital skills.
This is related to the decision about who the real leader is. A venture founded by two programmers isn't doomed, of course, any more than a company launched by two industry experts. However, if both business partners have the same skills, you're probably going to need to seek outside help. That can cost a lot, in terms of time, money, synergy, and lots of other assets that can be in short supply in a startup.
This also seems to have been one of the issues with Chase and Danielson. Chase had graduated from the business school at the Massachusetts Institute of Technology, while Danielson was more of a pure academic who had originally come to Cambridge, Massachusetts, to work on a postdoctoral degree at Harvard. Although some people praised Danielson's work, critics quoted in the article say she brought an interesting vision but not enough unique skills.
"It wasn't like she was doing any irreplaceable task," one early employee told The Verge.
7. Have compatible styles.
You probably don't want two partners with the exact same leadership styles and personalities, but you do want people who are compatible with each other. For example, between you and a potential business partner, who is the dreamer who likes to start late and work until 3 a.m.? Who is the motivated morning person who can handle emergency customer calls before sunrise? Who is the person who is fastidious about finances, and who is the one who has the natural charisma and sales ability?
This divergence seems to have been another of the issues with Chase and Danielson. According to The Verge, "Danielson's strengths didn't work in her favor. She was an astute academic and a passionate environmentalist, but one without a shred of business experience."
8. Decide how to fill other positions.
Second only to choosing business partners, the decisions on whom to hire for early positions are among the most important to the life of a young company.
It's striking to notice how many of the early employees at Zipcar were related to Chase. Her husband was the first chief technology officer, and her brother served as director of business development. In fact, Danielson points to this issue as the ultimate turning point in the early history of the company. According to her, in 2001 she voted to give Chase the right to hire and fire without consulting Zipcar's board of directors.
"Two hours later, she was firing me," Danielson told The Verge. (Chase takes issue with this account, calling Danielson's description of the situation "fascinating.")
9. Have a plan for happily ever after.
Few companies last forever; fewer founders can successfully navigate the transition from leading a small, dynamic company to one that grows into a big player, employing hundreds. In fact, the skills that lead to success in the first kind of venture often are the exact opposite of the kind that lead to success later. Meanwhile, if you're starting a venture with someone you have a good relationship with, is that relationship strong enough to survive whatever the endgame of your venture turns out to be?
For what it's worth, both Chase and Danielson have moved on and seem to be happy and content with their endeavors. These days, Danielson is an administrator at Tufts University, where her bio mentions Zipcar almost as an afterthought. Chase enjoyed more acclaim. Time named her one of the 100 most interesting people in the world in 2009. She went on to found a successful French car-sharing company called Buzzcar, and is founder and CEO of Veniam Works, a Portuguese company specializing in vehicle communications.
Want to read more, make suggestions, or even be featured in a future column? Contact me and sign up for my weekly email.
BILL MURPHY JR. | Columnist
Bill Murphy Jr. is a journalist, ghostwriter, and entrepreneur. He is the author of Breakthrough Entrepreneurship (with Jon Burgstone) and is a former reporter for The Washington Post.