Dear SaaStr: Is It a Good Idea to Start a Company with a Good Friend?

Q: Is it okay to start a business with your best friend? What is the talk we should have before the formation to ensure transparency and make sure our bond is not broken due to possible business issues that I’m sure will come up? Yes I’m nervous.

It’s a genuine set of issues to work on.

Having said that, many successful startups were founded by friends and partners. Mailchimp was. It just sold for $12 Billion. Canva was. It was just valued at $40B.

What’s ultimately key is to talk about:

  • How committed each of you are
  • What happens if it takes 2–3 years to take off
  • What happens if you totally have to change your product, vision, etc.
  • What happens to your roles as you scale to say 20, 50, 100 employees
  • What happens if one of you needs to move to a smaller role
  • Do you both really want to do this for 10+ years

You at least need to talk about this.

Then, if you feel aligned, I strongly recommend a long, long vesting schedule on your founders’ stock. Even 10 years. That protects the founder(s) most committed from those … who aren’t as committed.

More on that here:

A Simple Commitment Test For You And Your Co-Founders

Published on September 21, 2021

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