How Do You Find Good Partners? Try Before You Buy

One of the most frequent questions I get from people is “how did you meet your partners?”, followed by “what is a good way for me to meet partners?” and “how do I avoid picking the partner from hell?”

In my What Startups Are Really Like essay I touched on this a bit:

How do you find good partners? When I gave my two presentations at James Madison University, I got this question from both groups. My partners and I were lucky. We all went to the same elementary school together. Growing up, we all knew each others’ brothers and sisters and cousins. We weren’t best friends and we didn’t all stay in touch through college, but when we came back together there was a level of comfort in knowing each person’s background.

Most people don’t find partners like this. The way that most successful partners come together is by working together. If you’re looking for a partner and you’re in college, look at your fellow classmates. Who have you worked well with? Who has complimentary skills to you? Entrepreneurship classes or clubs where you start a mini-business in college are also great places to find partners. The important thing is that you actually work together before committing. Lots of people – and I mean almost everyone – are bullshitters. You can weed out the bullshitters pretty quickly when you do real work together.

I can’t emphasize enough how important it is to work with your partners in some capacity prior to partnering with them. Even though we knew each other, my partners and I worked on a few web projects together in 2006 prior to coming together and incorporating in December of that year. You have to know how people work to know if you can work with them. Do they do what they say they’ll do in a timely manner? Are they actually good at what they do? Do you enjoy working with them? There are a bunch more questions like that, and they can only be answered by doing real work together.

In my opinion, college is the best place for finding partners. The college environment does a great job of putting you in groups with people you barely know, with the pressure to get something done in a very short amount of time, that is important to each and every one of you (if you care about your grades, that is). And you likely work with several groups per semester, every semester, so you have a lot to compare against.

This can happen in the working world, but the opposite can too. If you’ve worked with someone for years and you like them personally you might not be so good at objectively evaluating their talent. Then again, if you work great with someone for years and you plan on starting a business in a similar industry, work might be the perfect place to meet your partner.

I’ve also seen people come together after one partner hires the other partner. A great example is the web developer who sees potential in a clients project. The client enjoys working with the developer. They can successfully transition into partners because they already work well together.

Another way to protect yourself is to start your business part-time. There are many reasons why this is a good idea, but it also protects you from being “all in” with your new partner. If things fizzle out and don’t go to plan, you’ve still got your full-time job to lean back on while you lick your wounds and decide your next move.

In addition, sitting down with a good lawyer and drawing up a rock solid partnership agreement that protects all parties will take a lot of the stress off and prevent potential issues down the road.

Any way you slice it though, if you try before you buy, your chances of a failed business and a nasty divorce go way down.

9 comments on How Do You Find Good Partners? Try Before You Buy

  1. Joshua Holt says:

    Adam, I couldn’t agree with you more about the importance of having a rock solid agreement among the partners. The act of drafting the agreement will make you consider (and resolve) many tough issues that could potentially derail your business later on. How much capital will people contribute initially? What happens if we want to bring on an additional partner later on? What if somebody wants to leave? A good agreement will be like a roadmap that you can constantly refer to when these issues come up in the future. It should be easy to read and something you can pull out and understand yourselves. If you take the time to think about these issues now, you’ll definitely take a lot of stress off the table and make it easier to focus on the actual business projects.

    Of course a partnership legally speaking has quite a lot of disadvantages, so you should really consider an LLC or corporation if you’re looking to establish a solid foundation for the business. It looks like Pure Adapt is a NY corporation, so you’ve got that covered.

    Thanks for this post though — I’ve been looking forward to hearing more about your thoughts on meeting partners since I came across your blog many months ago.

    • Adam McFarland says:

      Thanks Josh. You’re absolutely right about the act of creating the agreement forcing you to ask the hard questions. We spent a ton of time and money getting things right legally in the beginning, but it was worth every penny and every second. I’ll make note to do a full post about it soon. It’s a rather interesting story.

      As a lawyer, do you see the bad side of this often? Companies who didn’t set themselves up properly and now have to deal with the consequences?

      • Joshua Holt says:

        I have seen the bad side as well. Companies, like the relationships that start them, have natural life cycles too and sometimes drift apart. Not everybody is starting the next GE or IBM, therefore you have to be practical and plan for the eventual parting of ways even when it’s amicable.

        In fact, that’s the most likely endgame (an amicable departure). Sometimes people will forgo wanting to think about this because they’re certain they will never have a nasty split with their partners. But what happens when Greg decides to get married and move to San Francisco? Or maybe Mike gets a job offer he can’t refuse and which you all support him in taking? (obviously, I don’t know these people but I’m just throwing out hypotheticals!).

        What you don’t want is five years of a great partnership to end badly with lawyers and/or hurt feelings because you didn’t plan for something as foreseeable as people growing up and going different ways.

        You can find eminently affordable lawyers who can work with your team as a ghost team member, providing a valuable neutral opinion and helping you steer clear of all kinds of problems. If you’re worried about cost (what start-up isn’t?), just discuss the money upfront. The lawyer has a vested interest in forming a long-term relationship with you and a good one won’t be interested in taking your money for a one-off job and then leaving.

        I’ll close by saying that a lot of small business owners don’t realize they can hire what we call “outside general counsel.” That means the company isn’t big enough to have a lawyer “inside” that works there permanently. As an “outside general counsel,” you have a lawyer available to you to give you legal counsel whenever you need him. Maybe that’s only once a year, but you keep going back to the same person and they get to know your company and needs. It can be really helpful when problems do come up.

        • Adam McFarland says:

          Very insightful Josh!

          We were very cash-strapped at the start, but our lawyer worked with us and charged us an amount that was very fair to both parties. Considering the complexity of our “merger” at the time (DI, clients, 4 people, etc), it could have been much more. To your point, I think he valued the long term relationship with us. We probably only talk to him once per quarter now, but it’s always nice to know I can pick up the phone and have him on his cell if I need it. A big stress relief.

          • Joshua Holt says:

            Exactly! Obviously I’m biased, but I think having a lawyer on your team is smart. You don’t have to spend $1000s of dollars having him sit around doing nothing, but when you run into obstacles, you’re going to be so glad you have that relationship of trust already.

  2. Tim says:

    As a serial entrepreneur who has never done a project on my own, that is to say I’ve always had at least one partner, I never really thought about the concept of finding a business partner. I was involved with a family business for 13 years so I didn’t have a lot of choice about my first business partners, it was a struggle at times and I ended up buying one family member out eventually. Even when dealing with family/friends a rock solid operating agreement is a must, things change(this includes people) and you can never be too cautious when getting involved in a relationship that is planned to be long lasting.

    My newest business is a very bizarre situation, I’ve “known” my business partner for about 9 years, however we’ve never met. Our business is 1 year old already and we still haven’t met, we’ll get around to it eventually! We’ve definitely had our share of disagreements over the past year and at one point I thought we were going to go our separate ways, but things turned around just as rapidly as they went south and now the business is looking better then ever. At first I thought it was really odd to have a business with someone I’ve never met but it hasn’t really had any negative effects on things and we are both dedicated to the business. We talk off and on all day on Skype, it’s as if we are in offices around the corner from each other but we are too lazy to walk down the hall. It is also an interesting conversation to have with people, most simply cannot understand the concept or who would be crazy enough to do it.

    I don’t think, based on my experience, that I would seek business partners. If I had an idea/business I would contract out the work I couldn’t do and keep my eyes peeled as the project got rolling.

    • Adam McFarland says:

      That’s an interesting point.

      It might not necessarily be the best idea to seek out partners for the sake of finding partners. In fact, it’s probably a bad idea…but that could be a whole post in and of itself. Taking the approach of starting to work on a project, figuring out where your weak points are, and then filling those voids from there (first as contractors, and then possibly evolving into partnerships) is a much better approach.

      The other thing I didn’t really mention in the post is that these things usually just sort of “happen.” They aren’t planned. People generally don’t advertise “I’m looking for a partner” nor should they. I guess the best advice I can give is that when they “happen” make sure you’ve worked with them before and that you cover yourself legally.

  3. Rob says:

    Very insightful post & comments.

    It certainly “just happened” for me. I was working with a guy and considering setting up a company with him (even bought the url!) but then he became too busy to continue working during his studies (MD). During the time we’d been working we’d had an AGM for the photographic society I was a part of and this guy had walked in and bitched about everything, so we made him president just to shut him up. I absolutely hated him and he left me seething for days afterwards. Fast-forward 6 months and I’m running a studio lighting class. He comes along and seems to do okay, we get on marginally better. I’m caught short because the MD student doesn’t have the time available and so I start working with this guy instead. Over time we get to like one-another and eventually end up becoming business partners after both of us graduated (he graduated a year before me and tried going it alone, but we went on holiday together and talked things over and decided to take things a bit more seriously). It’s now 6 about 6 years since we first met and we’re still doing well. We live about 200 miles apart, meet when we have to, but spend most of our time apart (although we probably spend an hour or two on the phone each day + 5-20 emails). Initially we tried to match each-others’ skills, but it soon became apparent we had different skillsets so since then we’ve taken advantage of that and tried to diversify what we do, because in such a small organisation i think it can be wasteful if your skills completely overlap.

    I think finding a business parter is a lot like finding someone to spend your life with. You’ll know when you’ve met “the one” and you can’t force it to happen, but you do have to get out there.

  4. […] already covered how you find good partners (abridged version: try before you buy), but what about the question of how many partners you should […]

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