How not to get screwed by your business partners
I've started multiple companies, including companies that went on to raise millions of dollars from top VCs. Some of my companies got sold to larger corporations.
I partnered with total strangers.
Sometimes that went well, and we succeeded together.
Unfortunately, when it comes to money and power, people change. The friends you thought you knew become enemies who you can't stand. So, sometimes, I got screwed.
Here's what I learned from my experiences: how not to get screwed over again.
- Vet them beforehand - If you have to partner with someone, vet them beforehand. Check their references. Ask other people about them. Check their social media profiles. Sit down with them, and ask them questions. Starting a company with someone is like entering a marriage contract. You'll work with them for 12-16 hours a day, six days a week. You need to trust them. If there are any red flags, don't move forward. My biggest mistake was ignoring red flags. For example, one of my business partners talked openly about how easy it was to screw people over, but I laughed it off. If he finds it easy to screw others, he will also find it easy to screw me over.
- Resolve conflict quickly
- Hire a lawyer - Lawyers are your friends. Before you do anything, consult a lawyer. Don't sign anything without having a good lawyer go over it.
- Be open to criticism - Starting a company with someone is brutal. You'll work long hours. Tension will flare. You need to be open to criticism. One mistake I made was getting defensive when criticized. You have to be a team player. Be open to change and show that you're willing to compromise. Know how to handle conflict. Always be positive and quick to humor. Try to be empathetic and understanding of the other side.
- Brush up on your communication skills - One of my biggest mistakes was communicating poorly. If you are to start a company with someone, brush up on your communication skills. You'll need to communicate well to handle conflict, build trust, etc. Don't let tensions flare. If you are unhappy about something, pull your partners aside, and speak to them calmly about the situation. Never raise your voice, and always be open to their points of view.
- Have regular 1-1s - Talk to your business partners often to ensure that you are on the same page. They are less likely to screw you over if they trust you and if you've built rapport. Trust is essential in a successful business relationship. You build trust in multiple conversations.
- End well - Even if you get screwed, don't end on bad terms. The world is tiny, and your reputation matters. As Michelle Obama says, "When they go low, you go high." Make sure you don't do anything harmful or hurt your reputation. That will only hurt you in the long run. If you feel angry, take a deep breath and calm down. Don't burn bridges if a relationship is not going well and you lose trust. Try to speak to your business partners and express your concerns. Then, move on.
- Find some mentors - You will need advisors. One of my biggest mistakes was not speaking to mentors when starting my company. Mentors can give you a different perspective and guide you in the right direction. Talking to a more intelligent person about your situation is always good. If you feel stuck, seek out help. Check out mentordial.com to book a call with a mentor.
Do you have other advice to share? Have you been burned by a business partner? What do you wish you had done differently? Please share below so that other people can learn.