With co-founders of firms, great minds don’t think alike - Sunday Times

If you both think the same, you’re not pushing yourself hard enough, not taking calculated risks, not exploring new ideas and opportunities

Henry Ford, the car pioneer and one of the great entrepreneurs of his time, was once asked how difficult it was to go into business with close friends. “My best friend,” he replied, “is the one who brings out the best in me.”

For me, that’s Jeremy Middleton, the co-founder of HomeServe and someone who always brought out the best in me when we were working together. Thirty-three years after first meeting, we’re still incredibly close and are godfathers to each other’s oldest daughters. As risk-taking marketeers, we bonded on the same brand team at Procter & Gamble even though we had contrasting backgrounds, personalities and skillsets.

We clicked because of our passion for building businesses, yet our ambitions were different, so while Jeremy was instrumental in HomeServe’s early days, he took a back seat as the firm grew to pursue his own interests. But I’m so pleased he was there — to motivate, to talk sense into me, to disagree, to challenge my ideas and to assess our progress with unvarnished truths.

He was the perfect sounding board and unfailingly honest, which is what you need in a co-founder. It’s lonely being an entrepreneur, always worrying about the next step and whether it all might suddenly collapse around you. So it’s incredibly empowering to take that journey alongside someone with a
different outlook and complementary skills, who won’t just tell you what you want to hear.

Some businesses stagnate because co-founders are too alike, whereas the best partnerships are often a blend of discrete ingredients, in which responsibilities are allocated that play to an individual’s strengths. What’s more, investors are more likely to be attracted to companies where there is a broader array of knowledge and skills at the top.

Sometimes, that co-founder relationship is based on successive ventures. I recently met up with Rishi Khosla, the chief executive of OakNorth, a digital bank that enables high-growth businesses to get access to fast, flexible finance. It made pre-tax profits of almost £200 million last year and it’s the second business that he and his co-founder Joel Perlman launched together. They understand each other instinctively.

Because tensions can easily scupper a great business and ruin an even better relationship, you need to learn how to collaborate productively and — even more importantly — disagree constructively. In fact, it’s the disagreements that often drive innovation.

If you both think the same, it means you’re not pushing yourself hard enough, not taking calculated risks, not exploring new ideas and opportunities. Disagreement between co-founders demonstrates a healthy desire to test each other and constantly improve. It’s a sign of strength, not weakness.

Being a co-founder is one of the most important relationships in your life, so work hard at it and don’t take it for granted. Be open and honest, show humility and a desire for real collaboration, and be empathetic listeners.

Meanwhile, try to carve out time every week just to sit and talk through issues, updates and ideas, to maintain the bond that brought you together in the first place. It’s easy to let that connection fray, so protect it.

Disagreements — at whatever level in an organisation — aren’t a sign that something is broken. Manage things carefully and move forward quickly, and it will help to galvanise the team and prevent the cosy drift that inspires no one.

But accept that very few things last forever, which is sometimes best for all concerned. When school friends Ben Francis and Lewis Morgan parted ways in 2016, having formed Gymshark four years earlier, the company was already bringing in £13 million in revenues. Morgan sold his shares a few years later for about £100 million, and Francis has continued to grow the company, with last year’s revenues totalling more than £550m. The split empowered the brand rather than damaging it.

Everything has its sell-by date. I’ve seen too many businesses stall because the co-founders refuse to accept that it would be better if they went their own ways, forever delaying that tough decision and leading to resentment and hurt. And growth slowing down or grinding to a halt.

Last week, on the same day, I met two separate founders, both of whom were grappling with this issue. They came to me for advice about growth. But the real issue they wanted to discuss was how to engineer an amicable split from their respective co-founders.

My first piece of advice was to find a peer group of chief executives and founders, and learn from their experiences. Get some wisdom by networking with people who have been through the same thing. The best entrepreneurs are those unafraid to learn and admit that they don’t know it all, who have the humility to ask for advice.

Second, appoint an independent business adviser who can help you through the process. Then, use the impending split as an opportunity to bring in an investor who can not only provide the equity funding to buy out the co-founder but will also bring great help and advice on the next stage of business growth. Aim for this to be a single minority investor rather than giving away control and a majority stake.

Finally, think about the skills you will be losing from the business and how you replace them — either through reorganising your current team or bringing in a senior leader to take on the role that the co-founder will be relinquishing.

This could be an experienced chief executive, allowing the remaining founder to focus on what they are really good at, such as product design or sourcing. I often hear people proudly boasting of taking the emotion out of work — “business is business”, they say, as if relationships don’t matter. They do. They are a secret of success, as you can’t build or grow a business unless you’re emotionally engaged with it.

Parting ways with co-founders can be enormously difficult, especially if they are family members or close friends. But it can be far better for the business than staying together.

Richard Harpin is founder and chairman of HomeServe and Growth Partner, and owner of Business Leader magazine