This is the price for partnerships

Approximately 20% of new businesses fail within the first two years, 45% within the first five years, and 65% by the tenth year. This statistic has changed very little since the 1990s. Harvard Business Review

According to Noam Wasserman, author of "The Founder's Dilemmas," 65% of startups fail due to conflicts between founders. This means that if you want your new enterprise to exceed all expectations, you need to learn to collaborate productively and, more importantly, not always agree with your business partner.

One of my favorite topics is Partnerships. I've had numerous partnerships, and, to put it mildly, they haven't always ended successfully. But that doesn't change my belief that partnerships are incredibly important for the development of a successful business and startup.

Even Y Combinator strongly recommends having 2-3 founders in a startup.

My essential steps for creating a new partnership and business include:

1. Selecting where and with whom: How you envision the company's path, as it will be long and challenging, directed toward your goals. What you want to see in 5 and 10 years.
2. Dividing responsibilities and responsibilities for operational directions and tasks. Clearly describe them and document who is responsible for what and monitors it. Most importantly, there should be no impression that we are one team, all selling, all negotiating, and all responsible for marketing together. You can sell and do marketing together with the entire team, but there must be a leader in that direction who leads it and takes responsibility. This is important for operational efficiency and for investors.
3. A partnership agreement is the most crucial document, addressing questions about how to act in crisis situations, what steps to take in case of bankruptcy, sale, liquidation, and other strategic issues. Usually, it is referred to during times of crisis and difficulties, and if it's not documented and agreed upon, it can lead to misunderstandings.
4. Sharing ownership and the number of partners. A 50/50 split is the least efficient way and leads to constant conflicts. There can be a profit and financial split of 50/50, but managerial decisions cannot be that way; someone must have the final say and take responsibility. The ideal scenario is 3+ partners with operational roles and financial involvement. One partner should not hold more than 50% and a blocking stake, as it demotivates minority partners.
5. Choosing the company's strategy: Is it a "cash cow," a startup with the goal of capitalization, or creating a business for sale to a strategic partner, client, or competitor? It will determine how to build operational processes and identify the most important KPIs, as these will differ significantly with different strategies. All partners should agree on this path.

In one of my partnership stories, during the final meeting regarding the sale of the company, one of my partners declined a very interesting financial offer from an investor for selling the entire company, not just the part I was ready to sell, as it was at the peak of the company's capitalization. The investor told me, "This is the price for partnerships." We didn't make the deal, and to this day, the company no longer exists.

Wishing your companies stay out of that 65%. ???? #Partnerships #Business #Startups