Down the years some of the most successful businesses have been started and run by two individuals with complementary skills.
One of my old employers Balfour Beatty, the UK’s largest infrastructure company at the time, started as a partnership between a Scottish Engineer George Balfour and an English Accountant, Andrew Beatty. Whilst Bill Gates is the better known of the two Microsoft founders, it was Paul Allen who persuaded him to drop out of Harvard and start a business supplying software to a company that had built the first personal computer.
Of course partnerships don’t always run smoothly, think Mark Zuckerberg and Eduardo Saverin for example, and Gates and Allen fell out for a while (though by then Microsoft was well established). In this article we’re going to think about the “Partner or no partner?” decision.
The Pros
On paper, working with a partner on a new business seems like a good idea. Like Balfour and Beatty, you may have complementary technical strengths. I coach an online antiques business that is a partnership between a software engineer and a furniture enthusiast.
In his book The Medici Effect (1) Frans Johansson notes that it is at the intersection between disciplines that disruptive innovation occurs. A few talented polymaths may be able to achieve this single handedly, but for the rest of us a partner with deep knowledge in a discipline different to our own is required. If your partner is from the same discipline as yourself you can still innovate but it is likely that the improvements you devise will be incremental rather than revolutionary.
Additionally you can divide up the essential skills that neither of you possess and therefore climb the learning curve faster.
You may also have complementary temperaments. I knew a very successful partnership once between a hard-driving, results-focused entrepreneur and a more relaxed, considered and people focused colleague. “Right, we’re going to do X” the former would announce. “Hmm, have you thought about the impact on Y in department Z?” the latter would reply.
However, this aspect of complementarity only works if you respect one another’s character. And this in turn boils down to ‘chemistry’, that connection between people which is hard to define. It’s something to do with empathy, with trust and ‘gut feel.’ Which is why it’s helpful if you have had an existing non-business relationship with someone for a while.
A partnership is generally more productive. When there’s two of you, there is someone to cover during holiday periods (assuming your start up has such a thing) and to keep operations going while the other person is engaged in business development.
I’ve known a few bosses who suffered from the delusion that they were always the smartest person in the room, and to whom therefore any collaborative effort was a chore, but in general my experience of teamwork is that while decisions may be slower, the quality of them is far superior to what you can achieve on your own. Therefore you don’t have to waste time and money circling back on them later. Slower decisions are a small price to pay for making sure the ladder you are climbing is up against the correct wall.
Not everyone will agree with me on this, I know. Gianni Agnelli, one time CEO of Fiat, is reputed to have said “The right number for a board of directors is an odd number less than five and it is not three.”
The Cons
Is it all good news then?
Here's what Felix Dennis has to say: “To become rich, every single percentage point of anything you own is crucial. It is worth fighting for, tooth and claw. It is worth suing for. It is worth shouting and banging on the table for…” well, you get the idea. He is not a fan of partnerships for the simple reason that they usually mean you giving away 50% of your business. I’m not convinced: I reckon 100% of zero is less than 50% of, say, £100m. But there again, I don’t have several hundred million in the bank.
And embarking on a partnership can be risky. The departure of a partner, particularly at an early stage of a start up, can often herald the end of the business.
Enduring Success
How can you gain all the potential upside of a partnership without any of the risk? Well, you can’t immunise yourself perfectly, but here are some thoughts.
Firstly, there needs to be some genuine reciprocity in the arrangement. If the value that one of you is bringing to the partnership is questionable, then it won’t be long before it is questioned. “I’ve cut Steve in on my business because he is a long standing mate with nothing better to do” is a really bad basis for a partnership.
Secondly, chemistry is real. If you don’t feel in your gut that you have each other’s back, that there is a genuine and deep connection between you, then it may be an idea to steer clear. You will need that connection and trust when you are putting the finishing touches to that new product at 3:00 in the morning.
Maintain open and candid communications and keep short accounts. If something is not working then surface it and talk it through at the earliest opportunity. All the normal rules of performance management apply here: criticise the performance and not the person, own your own part in any underperformance, consider what you need to do to equip yourselves for future success, treat each failure as a learning opportunity.
A ‘beginner’s mind’ — curiosity, eagerness and a lack of preconceptions — is a partnership and a start up essential. Nothing is going to cause more friction between you than if one (or both) of you believes they have seen it all before. And it could lead the business down a blind alley.
Finally, if you are taking on a partner solely because of the funding they bring with them then you need a very frank discussion about why they are joining the business and the extent to which you are prepared to involve them in decisions. Otherwise it’s only going to lead to resentment: “I have to listen to this person purely because he provided the funding.” “I have been used here. My opinion is not respected.”
The very worst partnerships become a psychic pressure cooker that sooner or later will blow.
The very best partnerships can deliver benefits well beyond anything the partners could have achieved individually, not least in cameraderie and mutual support. Reflecting on an association early in his career a friend said “I do very much miss that feeling of a partnership. I don’t think it’s something you can easily come by when you’re working for someone else, even if you have a close-knit team.”
Choose your partner carefully.
References
Johansson, F. (2006). The Medici Effect: What Elephants and Epidemics Can Teach Us About Innovation. Boston: Harvard Business School Press.Dennis, F. (2007). How to Get Rich: The Distilled Wisdom of One of Britain’s Wealthiest Self-Made Entrepreneurs. Penguin Random House.