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Musings Report 2017-7 2-18-17 This Sounds Cynical, But Don't Go Into Business with Friends
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This Sounds Cynical, But Don't Go Into Business with Friends
Advancements arise from people pursuing fantasies and dreams. If there is no dream, there's no motivation to risk investing time and money in some new venture.
Every enterprise starts with someone's vision, hope dream. No vision, no enterprise.
In our mind's eye, we imagine a positive outcome of going into business with friends. The less experience we have, the easier it is to imagine positive outcomes, as there is no experience of failure.
Those with little experience of running an enterprise will naturally assume the best about people: clients, customers, suppliers, partners, employees.
If you don't assume the best, why start a business at all?
It is with the most positive vision and best intentions that many people dream of going into business with their friends. As cynical as it sounds, don't do it unless special conditions apply.
Being partners in a business is much like being married. You depend on your business partner in much the same way, and you must share the same level of commitment and trust.
As in a marriage, you discover what the person is really made of in crisis, under pressure, when things go poorly--when bailing out is easier than staying.
But unlike a marriage, business partners don't have romantic ties (unless they are married, of course).
This sets up potential loyalty conflicts: a business partner who is a dear friend is not the equivalent of one's spouse, or one's family.
All the things we know about friends are in circumstances quite different from being business partners. For example, most people tend to veer strongly to either spendthrift or thrift--few move flexibly between the two extremes.
One partner may want to stay in the startup garage, so to speak, while the other wants a well-appointed office the moment the firm can afford it (or perhaps before).
Most of us don't really know where our friends stand on all sorts of critical issues such as money and risk management. We may not have seen how they react under pressure despite many years of friendship.
Being partners in an enterprise (and every enterprise is demanding) is more demanding than friendship because risk and money are intimately involved.
As in marriage, business partnerships require a dynamic mix of separation of powers (each is in charge of different aspects) and negotiation: we can't read each others' minds, so issues must be hashed out in conversation and negotiation.
Agreeing to disagree isn't always a practical solution--somebody has to make decisions as the need arises. The foundation of those decisions matter, and both partners need to agree on the foundation.
Becoming partners ruins many otherwise sound friendships, and it may well ruin otherwise sound marriages.
If a married couple is also in business together, they must have the means to separate the conflicts and negotiations in the two spheres.
Being business partners is a special relationship that may overlap friendship or marriage, but it places very high demands that neither friendship nor marriage prepare us for.
Business is a hothouse, and not every friendship can survive the heat or the intensity.
Before going into business with a friend, ask which is more important--the business or the friendship? Of course we will say friendship, but if our livelihood and family depend on the enterprise's financial success, it's friendship that is jettisoned first.
It's easy to dream about how fun it would be to work with one's friends, but there are so many assumptions that go into the expectation of fun. It can be fun, but only if the partners have real experience in the hothouse of running an enterprise when things are going badly and fun is in short supply.
Some very successful businesses were founded by friends: Steve and Steve (Jobs and Wozniak), Hewlett and Packard, and so on. But these friendships had the right qualifications to survive business. Each partner took responsibility for a critical function of the business, and the personalities were favorably compatible.
It isn't always obvious if friendships have the right qualifications and personalities to thrive in running a business. If you're considering going into business with a friend or friends, leave no assumption unstated. Draw clear boundaries of authority and responsibility, and develop an appetite for trust and negotiation.
I lucked into successful partnerships, an early one with an acquaintance and a second one with my spouse. I attribute my success to luck rather than planning, and it's tragic to see friendships ruined by business partnerships that failed.
Summary of the Blog This Past Week
This Is How the Status Quo Unravels 2/17/17
Political Consensus Is Splintering into Class Wars 2/16/17
While Elites Played Empire, America Fell Apart 2/15/17
America's Outmoded "Factory Model" Educational System Needs to be Radically Reinvented 2/14/17
Japan, Inc.: Optimized to 1960, Stumbling in the 21st Century 2/13/17
Best Thing That Happened To Me This Week
It's a furniture-making month. Made a divan-sofa from scratch (clear Douglas fir), turned out OK.
Market Musings: The Dow and Volatility
By most conventional measures, the U.S. stock market is over-extended and overvalued. For these reasons, many observers expect some of downturn.
Some see this as a "blow-off top" that will usher in a Bear Market; others are looking for a garden-variety correction in a longer uptrend.
I've marked up two charts, one of the Dow Jones Industrial Average (DJIA) and one of inverse volatility: the XIV index, which goes up as short-term volatility decreases.
This is also known as the "inverse fear" index, as the VIX rises when punters become fearful. As the VIX rises, XIV goes down.
XIV is in a strong uptrend that suggests complacency and no-fear dominate the emotional backdrop of trading now.
The DJIA's strong uptrend confirms this bias.
On a very simple, basic level, if these two trends were about to falter or reverse, we'd expect to see some weakening in indicators such as stochastics and MACD.
But both of these indicators are rising or pegged to overbought, reflecting strong bias in favor of buying rather than selling stocks.
It's easier to anticipate a trend reversal than it is to accurately predict one. These uptrends will eventually falter and reverse, but there is little evidence to suggest a meaningful reversal is imminent. If there is a downturn, it might disappoint Bears unless major indicators roll over hard.
From Left Field
Before Capitalism, Medieval Peasants Got More Vacation Time Than You. Here’s Why
Pinworm prescription jumps from $3 to up to $600 a pill: Parents, doctors angry over drug price gouging (via John F.)
This Infographic Shows How Only 10 Companies Own All The World’s Food Brands -- a proliferation of brands but not of owners....
How the Trump regime was manufactured by a war inside the Deep State -- an interesting overview...
Existentialism: Crash Course Philosophy #16 (8:53)
Old School: The bold new franchise of adulting classes and adulting schools -- to teach young people with few adult skills despite 20 years of schooling....
Welcome to the new dark ages, where only the wealthy can retire-- IMO retirement is oversold; it's often a catastrophe for the retiree. Better to work comfortably than retire comfortably.
End of the "Oilocene": The Demise of the Global Oil Industry and of the Global Economic System as we know it.
As Leaks Multiply, Fear of a 'Deep State' in America (via Joel M.) The New York Times is a mouthpiece of the "deep state" that it tiptoes around so coyly...
The Coming Bear Market -- good, self-explanatory charts...
What’s wrong with renewable energy? --a solid summary of the usual objections: it takes fossil fuels to build and maintain the alt. energy...
Here are 250 Ivy League courses you can take online right now for free--the future of education, along with YouTube University...
"As soon as you trust yourself, you will know how to live." Johann Wolfgang von Goethe
Thanks for reading--
charles |
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