Organization structure for startup

I've heard that it is almost impossible to build a startup among friends because a command structure or organization structure is hard to solidify. Everybody wants to be a commander but you cannot have more than 1 captain on 1 ship.

Basically what I've learned from other people is that no matter how many commanders you have, there must be 1 supreme commander to make the final decision. This is theoretical to me. Is it unwise to build a startup with friends? Even if you can establish a chain of command?

So Paul Allen & Bill Gates, Bill Hewlett & Dave Packard, and Larry Page & Sergey Brin were all unwise to start companies because they were friends?

I should check your source of information. Many (if not most) companies were started by a small group of friends.

Yes, there are problems in working with friends. Successful companies have to overcome those problems. No way is it "almost impossible".

And the kind of decisions where a final arbiter is required are really rather rare. If the friends trust each other, they can generally understand each other's point of view and come to an agreement. If they really can't agree, they can always bring in a trusted third party to decide.

Many, many startups are started by friends and some of them end up being successful. The friendship tends to evolve based on what happens in the business as well as out of it. Some of my best friends are people that were my partners in my startups. Then again, I know of friendships that were destroyed around disagreements in startups.

The chain of command is an important question that is important to try and figure ahead of time. It's actually not true that everyone wants to be a commander. Plenty of people are happy to let someone else take the responsibility and risk of making the decisions. It's not even true that there must be one supreme commander though that's the most common approach. You can have a majority approach or different people responsible for different arenas. But establishing who's responsible for what, is certainly an important milestone in a startup.

I believe it all depends on the maturity level of the individuals. It is also important to define the roles each individual will play in the organization.

If the individuals are level headed, are able to bear failure collectively and as a team, then I think it would make a very good team.

Startups, founded by multiple individuals should have a collective vision, rather than a 'Supreme Commander' vision. Supreme Commanders are few and far in between, and if they exist, then they are automatically selected by the group as natural leaders. There is a great post by Chris Dixon on Superman leaders here http://cdixon.org/2009/10/10/man-and-superman/ To summarize, if there are a number of equal individuals, then success would depend on a collective vision, maturity levels and how the roles are divided

In case of Superman leaders, they self select themselves as leaders, and are able to rally everyone around their vision

No matter how great of friends you are, put it on paper and agree. Who does what, authority, final decision making. Let there be no confusion or miscommunication because if you don't put it in writing, I GUARANTEE there will be! Titles, who reports to whom, responsibilities, "owners" of functional areas, decision making. Put it in writing now. Run through likely scenarios. Yes, absolutely there should be a single owner of each functional area and THE final decision maker.

I was part of a very successful startup that had many friends come in at various stages.

Best,

It is possible to build a start up with friends and/or families. However, everyone need to be prepared to accept and respect the hierarchy structure. Be realistic with your expectation; disagreement and power struggle may take place in the initial phase as everyone is adapting to his/her new environment.

Avoid treating issues too personal, instead remind yourself that whatever problem you are going through; you will face it anyway when working with strangers! However, the reality is much is at stake when working with your friends / families.

Business with friends or families can be rewarding but also possible to lead to headache and heartache.

Being emotionally professional is very important, if you don't have the knack for it, then it is wiser not to go into it in the first place.

I have found a very good answer for this question in book "E-Myth" by Gerber

http://www.amazon.com/E-Myth-Revisited-Small-Businesses-About There is a chapter about corporate structure for startups.

It may depend on how well you are at picking friends. Initially, there should be defined roles, but not necessarily hierarchical. Some founders are not suited to working in companies after they've grown. They may leave, but not because of friendship or lack of it.

It's really tough to go through life or business alone. Having people you want to be with and not let each other down can carry you through hard times.

Too many highly successful companies were started by a group/pair of friends to call it impossible.

I have no experience with respect to startups, but one of the problems with doing business with friends or family in general is communication. People often have these implied roles in relationships that work in other contexts, but not in a business context.

We've all seen it... people who are close end up resenting each other for seemingly inane things. It usually boils down to poor communications, immaturity or a combination of the two.

I've also seen the opposite. I had a friend in school whose family runs a store that has been around since 1890 or something. It works for them, because its clear who is responsible for what.

There is a level of complexity that you add to running a business when you start a business with friends. Your relationships with your friends already comes with certain dynamics. If you then build business relationships with your friends, you are adding a different level of dynamics which can be challenging to navigate when disagreements arise.

I agree that there are all sorts of examples of friendships and businesses that survive or even thrive once intermingled. However, my observation of various businesses around me (including those of my husband) is that you are risking your friendships when you go into business together. There's nothing wrong with that, but be aware of the risk.