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What do you do when helping a friend's startup goes bad?

I have a friend helping out his friend's startup. We'll say Joe is helping out Rick with his party finder app.

Joe has known Rick for many years, and Joe is pretty well into his technology career. Rick has built a small tech team, but has received advice from Joe and a lot of encouragement from Joe. Included in this, Joe has forwarded Rick to a startup program that netted him $20k in free advertisements. This is just one example of how Joe has tried to look out for Rick.

Joe has his own software company but it's been much harder to get lifted when compared to an app company. After hitting half a million downloads, Rick was having an easy time getting investor attention. Around this time, Joe offered an investor database to Rick for a small pricepoint. Rick did a 180 and asked Joe to help deliver user data to his paying enterprise customers. Joe did this but quickly found territorial behavior from the existing tech team when it came to getting access and getting the job done without having his credibility questioned (why?). Rick's tech team was not very experienced and was on the fritz about handling user data from a variety of perspectives. The job didn't go so well since Rick's lead technical person felt it would be quicker to do the job himself (miscommunication). While trying to be simply helpful, a lot of this business inefficiency started to dump back on Joe. Joe was literally accused, asked to answer for, and made to sign a memo stating he did not steal data from Rick's database (wtf?). After all this, Joe frustratingly told Rick that his tech team was lead by a moron (apparently) and he could check the logs any time to see how ridiculous this all was sounding. Rick then asked Joe for a second proposal, this time working directly with him.

Joe wants to run in the other direction. Joe really needs the cash, however. What might be a quick pro/con of working with a friend who is paying a fair market price but might be unapproachable or unable to hear the realities of his business "internally"? What are some stories you have as a technical person digging through to the realities when dealing with a CEO point-person who is amidst pitch sessions and organizational motivation? Is the ego of a pitch-man delicate, or how can someone best support a friend while in the month(s) they are pitching?

Generally speaking, was a mistake made by Joe for engaging with Rick because it had the subtext of friendship and not business? Are startup teams territorial to outsiders that have a preexisting relationship with the C-Level? Is the experience of coaching a friend toward success transferable (i.e. through financing support, systems architecture, etc.) and what are some stories you have of using such an experience to formalize an advisory practice?

16 Replies

Brian McConnell
3
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Brian McConnell Entrepreneur
Head of Localization at Medium.com
Sounds like a lot of teen drama. Sent from my mobile phone. Please excuse any typos or discombobulations.
Michael M
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Michael M Entrepreneur
Never Stop Creating!
I would start by recommending a therapist here, then looking at this in the sense business is business period if amicable resolve cannot be met hire a lawyer. However , that being said the advice your asking for is better suited in dealing with this as you should any professional manor sign nothing , say nothing unless it's mutually agreed.
Mike Whitfield
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Mike Whitfield Entrepreneur
Sr. Software Engineer, EPAM, Google
This feedback is classic, thanks for the laughs, keep it coming! :)
Mike Whitfield
0
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Mike Whitfield Entrepreneur
Sr. Software Engineer, EPAM, Google
I like that there's good humor (for me, anyway) here, but please let's also try to address this professionally! I'm certain anyone that offers a remark like above has dealt with a real situation like this!
Ankita Tyagi
1
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Ankita Tyagi Entrepreneur
Director, Financial Services at Attivio
Mike - I have experienced this and I was right in the midst of it. So, I got to be the observer. I absolutely second what Michael M said, get a therapist. And I say that with all due respect. Such problems, at least based on my observation and understanding, often stem from insecurity, fear or failing - often times turning into control issues. The perpetrator is often unaware because of the demands of the job. While he / she intends well, it's hard to step back and reflect if " Am I being unreasonable - after all I am the CEO / executive?". I was brought in to offer expertise on a subject but it was clear within a month or so, that the place needed a therapist who could listen to every side and mediate. I tried doing that for a while but it took a toll. Besides, its not very professional. One way to counter this is by having a document that clearly states expectations of the role, expectation of each other and establishes clear lines of authority. As in who reports to whom, what are some of the KPIs in case of a gridlock - who gets to veto - CEO, expert or customer data.
Personally, I will always go with facts / stats, irrespective of my title. If facts are not available, I would brainstorm with the expert but would try to align with the company vision, as much as possible. I would probably consider three or four options to execute. Prioritize them, try them on a sample size, assess results, if successful - scale, if unsuccessful - pivot. Sort of a lean start-up mindset.
Hope this helps.
Mike Whitfield
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Mike Whitfield Entrepreneur
Sr. Software Engineer, EPAM, Google
Thanks for the "desktop" version of the "therapist response", Ankita. Emotional/mental health (still) carries a stigma, especially in business. There's a lot to be said for it, especially in the startup space for first-time founders! There are a lot of parallels I can draw from my consulting background, but the big opportunity and allure of venture-backed business seems to create a larger-than-life expectation from organizations and especially founders. People still line up to have a go at it, regardless. There's another great discussion thread on FD about this topic I can source if there's continued interest.

I posted to open up the floor for anyone that this "clicks" with. I'd still like to hear from somebody who wants to evaluate this in lieu of the mental/emotional health issue. The fact is people take crazy risks in their "startups" every day. This isn't uncommon.
Joe Albano, PhD
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Joe Albano, PhD Advisor
Using the business of entrepreneurialism to turn ideas into products and products into sustainable businesses.
Clearly this is a situation in need of some clarity. Though the degree of drama varies depending on the specifics of the situation, the challenge of miscommunicated expectations crops up in virtually every relationship (business and otherwise - but let's stick to business here).

Great leaders have counselors / advisors / coaches (whatever you call the outside perspective) . . . and they use these resources to make better and clearer agreements.

I find that most people enter into situations with the best of intentions. The problem is that without having a thorough discussion they don't have the same expectations. My practice often gets contacted after the fact to untwist the wires that got crossed and try to repair the inevitable damaged relationships.

The problems are:
  1. Everyone thinks that they are perfectly clear in settingexpectationsand intent.
  2. Few people are actually good at it when working on their own agreement (I do this for a living and still get a 3rd party involved for my own high-stakesagreements).
  3. Most people don't seek the coaching they need until after the damage has been done.
I know that it's tempting to suggest a therapist ... but I doubt that there's real psychopathology here. The roles of entrepreneur / founder / startup team member are challenging. It's funny that people will invest in tools to make the mechanics of building their business easier - but are often reluctant to make the investment in the support mechanisms that can make them more effective and productive. I wonder if people feel like they should be able to figure it out for themselves or that asking for help in this area is some sign of weakness.
Ankita Tyagi
0
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Ankita Tyagi Entrepreneur
Director, Financial Services at Attivio
Haha! Thanks Mike...I do what I can.
Well can you please provide clarification in terms of what exactly it is that you are looking for? Legal / technical advice?
The way I understand your questions - they all seem to be around human element. These aren't issues around stock options, equity (actually could be...whoever has the bigger piece of the pie, exerts greater influence or tries to), funding, etc. If this is pretty common to most startups (as you rightly identify)...then I guess, its right of passage. You just deal with it.
After all how much can you really quantify problems that you don't even know are on the horizon. What's to say if Joe wasn't a friend and was hired to perform a certain set of duties, this still wouldn't happen?
I guess my point is are you looking for a template, some sort of framework to address these issues? Because I am not sure there is one. Best would be a legal document with clear definition and expectations KPIs etc.
I am curious to see if someone has a template to overcome these challenges.
Mike Whitfield
0
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Mike Whitfield Entrepreneur
Sr. Software Engineer, EPAM, Google
Thanks Joe A., Advisory and consulting provides a unique opportunity to have conversations that never otherwise occur. If accepting failure to learn from it is a part of good professionalism, then it sounds like communicating anticipated failures in advance to stakeholders is also part of good professionalism. Sometimes we want the signed piece of paper without introducing hesitation and it bites us in the butt later.

Rick's company exemplifies the challenges an early stage product company faces. It'd be really awesome to hear from somebody who has pitched not long ago. How does the experience affect management of the existing organization? In the early stages of a company, what behavior should be overlooked as "part of being in a startup" and what exceptions should be made for situations in startups that exceed everyday professional exchange?
Joe Albano, PhD
1
0
Joe Albano, PhD Advisor
Using the business of entrepreneurialism to turn ideas into products and products into sustainable businesses.
Agreed Mike. I think we believe that the agreement (in the form of a signed piece of paper) is the same as alignment. I've seem WAY too many people (many whom SHOULD know better) sign contracts without a clear understanding of what they are agreeing to. One culprit is boilerplate ... it gives the illusion of agreement without the burden of thought.
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