Forming Startups with MBA Classmates

One of my students sent me this HBR blog (recommending that business school classmates not start companies together) and asked for my thoughts.  I thought I would share them here – in case others are interested:

The Article: http://blogs.hbr.org/2013/11/dont-start-a-company-…

My Opinion:

I think that many of the the points made in this blog are valid – but I don’t think that they are exclusive to business school.

People start companies all of the time with individuals whom they only know along a single dimension (friends, co-workers, family etc.). I would argue that all of these situations, in one form or another, expose you to many of the same risks that the author points out about b-school classmates.  Starting a business with someone is much like getting married.  And like marriage you would ideally want to get a sense for multiple dimensions of that individual before you commit to a long-term, risk-sharing and financially impactful relationship (values, financial views, work-life balance preferences, acceptable outcomes, hiring others, strategic direction etc.)

That being said – in any of these situations, I think that its important to talk about these important things early on in the process of starting a business. Get things like personal risk profiles, biases, preferences for exit, company culture, individual financial situations out on the table. The sooner that this tough (and often awkward) stuff is discussed the better.  Outputs and understandings can then be woven into founders agreements and other charter docs that help prevent issues from arising later on – or if they do – have clearer outcomes.

Its better to have tough conversations about important topics early (even though they may be a bit uncomfortable and seem like a ways-off from being an issue).  The alternative could mean the demise of the company, friendships and even family ties.

David

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