Let’s meet three friends: Ned*, Luke* and Ryan*. They all have multiple years of work experience from large corporations both in Germany and abroad. Ned and Luke are best friends from high-school and Ryan is a good friend of theirs from recent work years. Now, all three in their early thirties, they had grown tired of the corporate world. Tired of the processes and the endless policies. Most importantly, they all felt that their individual impact in the workplace was minimal, while their time and energy inputs were significant. It was time to break away from the corporate world, to capitalize on their friendships and to start something new. It was August 2020, and within this context, looksiee.com* was born.
*The names of the company and its founders have been changed to preserve anonymity
Ned, Luke and Ryan would initially meet on Fridays after their day jobs to discuss ideas. Besides being friends they each had a specific work focus: Ned was more the sales guy, Luke more on the product/IT side and Ryan had a strategic focus. They trusted each other, and everyone involved knew that they wanted to focus on real impact in their new venture. They decided on the industry they were going to act in, and created the first version of their sustainability-focused start-up. The first foundations were set, and they were eager to hit the road and begin their entrepreneurial adventure!
Their business idea involved high-ticket sales and corporate customers. Fueled by their own excitement, work ethic and quality networks they eagerly pushed for the first sales. Surely, they reasoned, clients would be eager to collaborate! They continued to reach out and to sell their idea but soon their initial enthusiasm began dwindling into disbelief. Weeks and then months passed without a single sale.
Soon, the team experienced a few “aha” moments. Firstly, they learned that B2B sales processes are very slow in general. Even in a perfect world where a new company has already found their market-product fit (which was not true yet for looksiee.com), a new B2B venture can get easily caught in the tediousness of corporate processes. What’s more - Looksiee kept hitting the same wall with their prospective clients: their product was interesting but the problem being solved was not urgent enough. Looksiee.com had successfully found a solution to a nice-to-have problem but not, as of yet, to a relevant problem. The clients’ purse strings stayed firmly shut, and looksiee.com was steadily eating through its seed money. Tensions were mounting as cash remained scarce.
Nevertheless, their business ideas kept evolving and they remained optimistic about the future. April 1st 2021 rolled around, and true to their ongoing commitment, the 3 co-founders quit their day jobs to dedicate themselves full time to their new venture.
At the same time the energy among the friends, now co-founders, was shifting. As they took the next steps in building their business foundations, individual working and communication styles became more visible…and more problematic.
It was clear from the beginning that Ryan (who had worked for consulting firms in the past) was used to putting in extra long hours at work and was highly output driven - he liked a top down structure and wanted to provide it for the team. Ryan would push a direction on the team, but he did not necessarily get their buy-in. Ned and Luke were not always keen to follow his direction. While Ryan kept putting in more and more hours, Ned and Luke were more interested in working smart vs. working harder. To top it off Luke and Ryan were often butting heads and getting into arguments. Their communication styles differed. Ryan is the type of person who is immediately vocal while Luke needs more time to process a new idea or direction before responding. With Ryan playing a more disciplinarian role and Luke an artistic-personality type, they would also get into spats over many small things (showing up for a meeting on time, how to polish a new pitch deck, etc.). Just like the proverbial “pebble in the shoe” the small things were beginning to add up and to feel big over time. Disquiet was creeping its way into the team.
Paradoxically, the team was also beginning to see Ryan as indispensable to the future of the company. It looked like he was pulling the most weight. This meant that he was an essential piece to their success puzzle - right? Ned in particular began to doubt his own gut instincts, which were pointing down one path, and telling himself that Ryan’s direction was the right one to take (since Ryan had more experience with strategy). His reasoning added up mentally, but it didn’t correlate with his intuition.
The work continued, and time was passing. By the time the team entered into the autumn of 2021, Ryan had communicated that if Looksiee.com did not see good traction by the end of that year, he would be leaving the venture to pursue other projects.
Ned and Luke were growing increasingly concerned that they too would have to find corporate jobs again in order to support their families. The project looked to be at a major crossroads. The same question was in all of their minds: would they survive the next turn in the road?
Circumstance however had its own plan, and decided to place a new kind of challenge in the path of the new enterprise. It was time to challenge their existing mindset and perspectives.
Enter the GoToMarket.Ninja, who happened to be in their city one night and bumped into Ned. Over dinner and drinks, the Ninja did what he loves doing most: he asked some key questions.
Firstly, he challenged Ned to have an honest look at what business actions are the most important for achieving revenue. Ned was surprised at his own answer: sales. Sales (his own role in the company!) is the key to achieving revenue. Not strategy, but sales. For some months now Ned had been putting his faith more into strategy and less into sales. Then, he had a breakthrough.
He voiced exactly what the Ninja had been thinking.
You can have the best strategy in the world, but if you’re not making money, then it’s not the right strategy for you.
Simple.
Then, the GotoMarket.Ninja reminded Ned that business consultants are all too easy to find in the job market. There are thousands of people well trained and practiced in devising strategies and creating slideshows. They know how to play the consulting game well. If needed, the GotoMarket.Ninja reasoned, he could pull several hundred of these people from his own network and recommend them to the Looksiee team.
Slowly but surely, Ned was starting to realize that Ryan was not as indispensable to the team as hitherto assumed. Strategy was not the main driver of business revenue, and, however unfeeling it may sound, Ryan’s role suddenly looked far less vital than it had appeared thus far. If necessary, Ryan could be replaced.
That no one single person is irreplaceable is true for everyone, yet this perspective shift was what Ned needed to start viewing Ryan differently. He started to understand that he was the one who was accountable for contacting prospects and making sales, and that his actions were in fact more vital to the company’s survival than Ryan’s strategy.
This was a turning point for Ned. He was hit by the realization that he could, after all, envision the company without Ryan. If it boiled down to just him and Luke they would be alright.
Yup, it was one of those “Aha moments” that seems simple enough when you look at the words written on a page…but when you’re right in the heart of a project it can be difficult to see. Ned was very thankful for this external perspective from a trustworthy mentor. It came at just the right moment.
At this point in the conversation Ned mentioned Ryan’s apparently measured commitment to the project - he reiterated Ryan’s position - if R. didn’t see tangible returns by the end of 2021 he would leave the project. To this the GotoMarket.Ninja commented unhesitatingly: If someone is thinking of leaving don’t hold them back. It’s not your job to convince anyone to stay or to come back - they might already be half-way out the door.
A little shaken, but with a new found clarity, the meeting wrapped up and Ned headed home with a new resolution in his mind.
It was time for the 3 co-founders and friends to speak honestly. This they did. They emphasized the importance of their mutual friendships, yet they also bravely broached a sensitive topic: Ryan’s potential departure from the team. There were logistics to handle. They redistributed Ryan’s tasks to Ned and Luke. As for the 33,33% equity Ryan held in Looksiee they scheduled a meeting with the notary for April 2022 to buy out his shares for a symbolic price. Ultimately it was Ryan’s own decision to leave the team. While personal issues sorted themselves out, everyone breathed a small sigh of relief.
Yet, for the remaining founders there was still a fragile, new business to attend to.
Ned and Luke, now in their new team of two, went through several very tense weeks after Ryan’s departure. They became very concerned that their cash flow would not pull through. Somehow - in what can only be called a payoff for not giving up - they found a business angel and made a third pivot for their company, one that would make it easier for them to enter the market.
Since this pivot these two have been enjoying their work more than ever before!
Initially, Ned was honestly concerned that the friendship with Ryan would take a hit. For many months after his departure, Ryan still held 33% of shares of Looksiee LLC. Initially he wanted to sell for the same amount that he had invested, but in the end the friends agreed that the two remaining co-founders would buy out Ryan’s shares for a symbolic price.
In fact, the friendships, already closely tied in with their communities and families, did very well. It turned out that Ryan really was happier starting a new endeavor on his own. Ned and Luke, best friends from high school, took their golden chance to deepen their own friendship, as they buckled down to transform and pivot their business yet again.
As we interviewed Ned for this story, he wanted to highlight some of his own take aways from his founder’s experience:
1. Do skills assessments, communication-style and managerial-style assessments before launching into a venture with your friends. Friendships can help you to trust each other, but if you want to be professional together, it can also be very helpful to understand each other’s strengths, weaknesses, communication and managerial styles. Looksiee never took this vital step and it undoubtedly contributed to unnecessary misunderstandings and miscommunications among the founders.
Here are a few well known assessments to get you started :
To better understand your managerial style try the PI index
2. In reference to #1 it’s good to remember that the trust you have as friends is going to be severely tested when you work together as co-founders. Trusting in your co-founders to deliver on their commitments to the team is vital. No one likes to be micromanaged. In the early stages of Looksie Ryan would often cross-check Ned and Luke’s work - this kind of behavior would always stir a bit of unease in the team as those under review would inevitably think to themselves: “Don’t you trust me to do a good job on my own?!”
Trusting in your co-founders to deliver on their commitments to the team is vital.
3. Yes - do take the time to include very clear clauses in your original contract that stipulate how one or more of the co-founders can get out the project! It makes the difficult decision of departures and team changes that much easier.
4. The story of the quick growing start-up is rare, very rare… There’s a statement that Ned and Luke would agree with 100%! Creating a company from the ground up does take some time and patience. In their case, about 1 year to get started, another year to build the foundation of the firm and hopefully in the third year they will start harvesting the fruits of their labor.
5. Focus your energy on the activities that bring in revenue: In those moments when you get caught up in too many projects at the same time, ask yourself: what are the key activities in your company that actually bring in revenue? If you can’t figure out a way to reliably and regularly make sales, your company won’t survive. It’s really that simple. Remember to ask yourself if you really need someone focusing on strategy work. Ultimately, it is all about trial and error, and you’re going to have to try many different strategies to find the right one for you.
Ask yourself: what are the key activities in your company that actually bring in revenue?
