Starting a business with another person is like getting married and should be taken just as seriously. Most people would not commit to spending the rest of their lives with someone they barely know. And the same should be true of people going into business together. Founders of a business spend as much, if not more, time with their co-founders as they do their spouses.
As in marriage, compatibility is key when selecting a partner. While business partners do not have to be twins, there are points of compatibility that should be present. Conversely, there are some points of incompatibility that should be noted and avoided to give a venture the best chance to succeed.
In my many years of working with startups, I have found that certain personality types are incompatible with building a successful business. These are the top five business partners to avoid.
- The Narcissist
One of the most charismatic personality types you will ever encounter is The Narcissist. However, a narcissist is also by far the most harmful type of person an entrepreneur could go into business with. Narcissists are attractive partners because they are usually very smart, charming and self-confident. As soon as the façade falls away, however, the very same person will become the polar opposite. He will become highly manipulative, refuse to admit to making mistakes and simply be unable get along with anyone.
The Narcissist is toxic for any work environment. He will bring division, sow the seeds of discontent and lower morale in the office, which can lead to problems retaining key partners and good employees. Every action he takes, everything he says, is ultimately about getting what he wants. Characterized by a lack of empathy, The Narcissist can only see his side of a story and does not have the ability to compromise, fundamental traits in any successful business partner.
The short solution for working with this type of person is DON’T! Avoid The Narcissist at all costs.
This person talks big (she knows this person, has this extraordinary talent, has access to these hard to get resources, etc.), but rarely, if ever, delivers. The goal of The Talker is to put in minimal effort, all the while expecting a great return.
- The Bully
The Bully is a time-honored personality type who is the same from the playground to the Board room. This type is often characterized by a “my way or the highway” mantra. If the Bully is the person who invested the most money in a venture, he will never let the other partners forget it. And, will usually use this as leverage. The Bully will threaten to take back his funding or refuse to make a promised investment unless he gets what he wants, or threaten to sue because he can afford to drag things out until the others acquiesce.
I have represented clients who knew from day one they were going into business with a bully, but did so (often against advice) because they were convinced (by the Bully) that they needed his money. A project has a better chance of success without a bully than trying to constantly appease one. The Bully is never satiated because it is not about the success of the project for him; it is about control. And, do not kid yourself by thinking you can change him or that he is not going to bully you. The Bully bullies everyone.
At the first sign that a partner is a bully, move on without him. If you must do business with a bully, make sure the ins and outs of the relationship have been memorialized in a detailed contract BEFORE you move forward.
- The Talker (aka All Talk & No Action)
Building a great business requires a team effort. There is, however, one player you can do without: The Talker. In many of the business breakups I have negotiated, it is usually the removal of a Talker that provoked the action (pun intended). This person talks big (she knows this person, has this extraordinary talent, has access to these hard to get resources, etc.), but rarely, if ever, delivers. The goal of The Talker is to put in minimal effort, all the while expecting a great return. They often over promise and under deliver. This type of person has given group projects a bad name because she talks a good game and does very little, but still manages to get a passing grade due to the efforts of others.
The problem in a business setting is that if all the other players are bringing their “A” game, they may be unable (and eventually unwilling) to compensate for the lack of effort of The Talker. And even if they can pick up the slack, always having to do so quickly breeds resentment from those pulling their own weight. Ultimately, The Talker never delivers, uses valuable resources and offers very little in return to the enterprise.
Entrepreneurs can weed out Talkers by offering equity on a long-term vesting schedule (with a risk of forfeiture if they underperform) to potential partners. This prevents owners from having to share their hard-earned success with someone who contributed little or nothing to it.
The Perfectionist is an uncompromising creator who tinkers and tinkers, never believing the product or service is ready to go to market.
- The Goalpost Mover (aka Lucy)
The Goalpost Mover (“The GM”) is kissing cousins with The Bully. The ultimate GM, the one most easily recognized, is Lucy from “Peanuts.” She is constantly changing the rules of the game while the competition is in progress. That she is at an advantage is usually not as important as you being at a disadvantage and kept off balance. The GM constantly abuses whatever power she is given. To The GM, business partners are adversaries to be defeated, not collaborators to be valued.
The GM will agree to do something, renege on the agreement and then demand a series of concessions to string you along, without ever keeping her end of the bargain. The problem with The GM is that you rarely get anything out of her. Whatever The GM promises is never delivered. Try as hard and as often as you might but The GM is never going to allow you to kick the football, at least not while she is in control.
Short of avoiding them altogether, an entrepreneur’s best bet is to try to lock The GM down with a detailed agreement that severely punishes breaches. This may not be foolproof but it is better than nothing.
- The Perfectionist
“Perfection is the enemy of the good” is a quote many people use to remind them to do their best and then let it go. There have been some exceptional entrepreneurs whose perfectionism is well known and well respected. Steve Jobs, Richard Branson and James Dyson are just a few well-known perfectionists who created great businesses and products. However, for every perfectionist who creates a revolutionary cell phone or vacuum, there is one (or ten) whose incredible invention is unknown because it is still in the garage being “improved.”
The Perfectionist is an uncompromising creator who tinkers and tinkers, never believing the product or service is ready to go to market. He depletes valuable resources trying to perfect a minor detail, at the expense of the overall product, and ultimately the company. When other partners are ready to pull the trigger, The Perfectionist finds another problem, another reason to delay the launch.
For this type of purist, nothing is ever good enough. His need to create a product with no flaws means the product never gets to market. This imperils the business, the other partners and everyone’s hard work.
Perfectionists are not all bad, but they should not have the final say. Setting up a system where other team members have input is invaluable to counter the unrealistic expectations of The Perfectionist.
Toni Y. Long, Esq.
This article was also featured in Legal Ink Magazine.