Can Friends Survive as Business Partners?
Across the managed services market, it’s easy to spot friends who became business partners. But can those friendships survive the day-to-day stress of business development and business management? I’ll answer that question by sharing my own personal experiences.
When Amy Katz and I launched Nine Lives Media (the foundation for MSPmentor) in 2008, we asked each other a lot of questions. One of them was the following: Can our friendship survive a 50-50 business partnership? Both of us openly wondered if we could build a business while also building a friendship. Fast forward to the present and our business partnership and friendship both have evolved dramatically.
Where It All Started
First, some background: Amy and I met back in 1998 while working for an IT magazine — she was in corporate sales and I was running day-to-day editorial operations for a print publication. Over the next decade or so, Amy would extend far beyond sales to become a business innovator. And somehow, I evolved beyond print journalism to piece together websites and online communities. Moreover, Amy and I kept reconnecting in the business market, working on projects together in 2002 and 2003, and then working for a start-up in 2006 and 2007.
So why did Amy and I go into business together? And what can entrepreneurs learn from our experience? I suspect Amy and I have different memories of how Nine Lives started. From what I recall, I was determined to launch some sort of media company. By November 2007 or so, I made it clear to Amy that anything I did would be 10 times more successful if she was involved. By December 2007, we had a handshake agreement in place — she’d oversee business development and I’d over see content development, with sites launching in January 2008.
In early 2008 we took a critical step: We sat down with a lawyer to hammer out a 50-50 partner agreement. It was Amy who broached the subject. At first I was uncomfortable discussing worst-case scenarios — what if one partner wanted to leave the business? What if one of us was incompetent? How could we work out a fair business divorce… if such a need ever surfaced? In retrospect, Amy has made dozens of savvy business moves at Nine Lives. The first one was getting us both to sit down with a lawyer and hammer out that partner agreement.
Common Goals, Different Skills
But before we even sat down with a lawyer, we knew there were clear reasons WHY we should go into business TOGETHER.
1. Clear Skill Sets With Minimal Overlap: I’m an editor and an amateur hacker of sorts, constantly piecing together content and code into community. If pushed, I can help to influence revenue concepts but I’ll never be a sales leader. Amy, on the other hand, is a business leader who understands how to build profitable services that meet customer needs. Amy can have an editorial dialog with the best of ’em. But content ultimately isn’t her thing. In other words, we understand and respect each other’s roles.
2. Similar Business Ethics: During a breakfast with an MSP earlier this week, the MSP told me about his own business partnership. He mentioned that 98 percent of business decisions are “rubber stamp” decisions. In other words, he and his business partner see eye-to-eye on 98 percent of all strategic decisions. And the decisions always put the customer first. So, 98 percent of decisions are simple formalities: A quick discussion where both business partners already have a shared belief on how to meet a customer’s need. The situation is similar for Amy and me. Generally speaking, we see eye to eye on a range of decisions, and simply get “rubber stamp” approval from each other before moving forward with the actual implementation of a decision.
Still, there’s the 2 percent of business decisions that can be painful to discuss. Big financial decisions. Strategic shifts in the products or services you offer. Those 2 percent of conversations aren’t easy. They’re long and sometimes tiring. But generally speaking, Amy and I have succeeded with those in-depth decisions because:
- We discuss the big decisions together, then noodle them separately for about 24 hours before regrouping to share updated thoughts.
- We’re direct. I never wonder what Amy is thinking. She says it. Gradually over the past three years, I’ve gotten a bit better in this area. I increasingly say what’s on my mind… about life, business, etc.
- We’re human. At the end of the day, Amy and I each have families to go home to. We want Nine Lives Media to continue growing and succeeding. But we each have home lives. That reality helps us to keep business decisions in perspective.
3. Similar Work Ethics: Amy and I basically work until the job is done. We unplug for family commitments. We disappear for family vacations. But when the game is on the line, Amy and I can typically be found emailing each other at some crazy hours.
4. Similar Non-Exit Strategies: This is a big one. Peers often ask Amy and me how we built our “exit strategy” for Nine Lives. (Short answer: What exit?) Yes, Penton Media acquired Nine Lives Media in August 2011. But we didn’t exit. Amy is here, running the Nine Lives business as a division of Penton. I’m here, working on our content strategy. No signs of an exit because we’re happy with the surroundings and committed to Nine Lives.
Over the past three years, Amy and I really didn’t dwell on an “exit” strategy. Instead, I think we focused on a survival strategy.
- How can Nine Lives stay hungry?
- And how can the company march forward if one of us ever had a personal emergency. Or worse: What if one of us died?
That second bullet helps to explain why we partnered up with Penton. We didn’t exit. But we did reduce our risk while gaining big Penton advantages, which I’ve explained before.
5. Similar Conclusions: Generally speaking, Amy and I reach the same conclusions quickly about the people with whom we work. One bad recruit could have completely sunk Nine Lives during its first year or two. But time and time again, we’ve been fortunate to attract the right talent to the Nine Lives table — right from the start (side note: thanks Kim).
Back to The Central Question
Of course, I’ve yet to answer the question raised by the headline: Can friends survive as business partners?
Let me answer the question with a simple phrase: Happy Birthday Amy.
Stated another way: I’m not sure if friends can become good business partners. But I do know business partners can become best friends.