It’s been a while since I’ve written but then again it’s been a busy start to the year. I have a lot to tell you.
2012 has gotten off to an incredible start. I stuck to my New Year’s resolution to quit being a “wantrepreneur” and actually start a business whatever the consequence. I thought I had figured out what skill sets I had and what I needed so I asked Katherine Ferdinand, a friend that I had gotten to know casually over the last few months to be my business partner.
What motivated me to pick her and ask her to be a Co-Founder? Well, I knew that I didn’t have all the strengths to do it alone. I felt I could be open with her and that she possessed the strengths of creativity, focus, patience and experience in start ups that I lacked. To be honest pure gut instinct. Thankfully for me she agreed.
I’ve been advocating recently that knowing yourself and your strengths and weaknesses is incredibly important. I am starting to realise that is much easier said than done. It can be a very testing and painful process but being open to criticism and listening should help.
Everyone says that running a start-up means you’ll face a lot of business related challenges. Actually the real challenge is the business relationship.
Katherine, I am learning is a truly unique individual/mature business partner and it is because I respect her that I take on board her criticisms. She recently told me in exasperation that she feels like she’s my “guinea pig” business partner. I felt a little taken aback but she had a point. As the weeks go on I’m realising that she has had a very powerful and profound influence on me in a business/non-business context.
I’m starting to understand why that choice of business partner is so crucial. She’s made me realise a lot about my personality/approach when working with her that so many people before her would not have the patience to put up with or the ability to confess without offending me. I have made a conscious effort to learn quickly. In order to be a better person in business and to be honest with myself I’ll openly share them here…
1. Learn to commit everything to paper:
The Business Plan
I had the musings of an idea and had done a considerable amount of research. I had gone over a twelve month period through the following industries: travel, finance, fashion and finally travel. I knew the travel industry best and had found a pain point. I thought more about my solution and had a semblance of something. As I wrote the business plan it never quite seemed right. I will always advocate that doing a lot of research is key when you are starting any business but it left me with a problem.
The problem: I had done so much research I couldn’t see the wood for the trees.
I had a problem committing or structuring all my research/thoughts to paper.
This is where Katherine has been key in getting rid of the “fluff” around the initial idea. She’s telling me to always keep it simple. I verbalised my research, the findings, complicated methodologies and personal actions to her. She was then able to pick them apart, structure them into a customer proposition that made sense to someone else and help me really shape what we were building here. Without her I would probably still have been on my millionth iteration and never really have committed to starting.
Having Katherine around also means I am forced to commit everything to paper so that she rightly so can buy into what we are building here.
We have very different working styles. I like to bombard her with everything I find. Lots of interesting market related stuff and she only sends me what she thinks is relevant after prior assessment. Hence, I also like to know everything that is going on and she is happy just letting me get on with it and see the final product… We need to come to a compromise.
With our continued discussions TravelClouds has gone from being something small to something that could potentially disrupt a whole market. All because one day in Nando’s I was talking about some things I do when travelling and she said one thing to me “that’s not normal” - that was our eureka moment for TravelClouds. She told me I hadn’t realised it but I was “unconsciously competent”. Would I have been able to get there without her? The honest answer is NO even though I like to think otherwise. Just took me a while to realise it.
2. Do not act rashly:
When I asked Katherine to be in a partnership with me I wanted it to be on an equal footing because I genuinely believe that the branding/customer engagement is equally as important as how the product makes money. So we had a 50%/50% partnership. We didn’t sign a partnership agreement. We incorporated the company and it was all go. My tip to anyone is signing a partnership agreement makes it so much more real so make sure you sign that legal documentation first and that you discuss how you will give up equity as you raise capital/what the equity split will be and who is accountable for what in the process. Think about all this stuff long and hard. Be aware that it is not something that you will necessarily be able to go back on afterwards.
Hindsight is a wonderful thing. To be honest it was all too fast. Katherine hadn’t even found her feet in the travel industry and wasn’t fully aware of what we were trying to achieve before we were all over the press. Her experience was telling her that things were moving way too fast. Unfortunately, due to point one I went to her with not a lot of written down stuff. I had lots of research and the basis of the problem and then my solution. I went to her with features but the core of the proposition I kept to myself. In hindsight it was a very odd move. Since I hadn’t committed all my thoughts to paper I had my vision of what the product could be and what I felt the customer proposition was but Katherine wasn’t buying it. She wanted to really delve deeper. Here I have to add I was unfortunately trying to do her job for her. By not sharing the core functionality with her I wasn’t fully allowing her to do her job. This frustrated her no end and I can understand why.
After that eureka moment in Nandos of which there are probably several in business I came to an awful realisation that in fact Katherine was trying to build me into a product. Which wasn’t a nice feeling. We were automating something that I naturally do. I didn’t speak to her for two days in anger that she had challenged me so much and knowing that I had just given away 50% of a company where the goal posts had suddenly changed. It was not what I had gone to her with. Realising that I had given away 50% of a company so easily I panicked. I started to doubt all the decisions I had made and even what value she was adding.
Katherine is potentially the most honest and honourable person I know. She allowed me to renegotiate my business agreement to a 60% stake to me and 40% to her on that basis. Did she feel I had belittled her in the negotiation process. Of course. Was she doubting whether she wanted to be in the business with me anyway. Yes. Note to myself I can be very harsh in negotiation and she felt like I had questioned her worth. I realised after reflection that is how it had come across. Not a pleasant ordeal for anyone.
3. Know your business partner is irreplaceable:
A potential investor asked me an interesting question:
“If I gave you £50k right now for 10% of your company then would your business partner who is responsible for branding, customer engagement and product development be worth the £250k?”
I had a product that was basically based on my actions so no one could copy it… This would mean that if I had £250k I would then be able to outsource and buy in experience to an entire team: a design house, get a web developer on board (something we would need to do anyway), media agency, UX professional to build the product. It was an interesting way of looking at things. Instead of telling them that Katherine was irreplaceable I asked Katherine to prove herself. I wanted her to show me that she truly was worth that much equity. This kicked off our equity renegotiation discussion. It wasn’t pretty. Which she was very insulted by because I didn’t stand by my original business decision. She told me that it would have been a non-question for her if someone had asked her if they could outsource my input. I felt guilty and bewildered that I didn’t have the strength to stand up to my original decision.
Sometimes, I had the urge and did tell Katherine I could do some of the tasks that she did i.e. writing a creative brief to be given to a designer. She rightly questioned whether I truly understood what she did or her worth. I realised I had hired a designer before. A cheap one that didn’t understand what a truly “multi-channel” logo was. Probably because neither did I. When you understand that someone else has skills you don’t possess it doesn’t always mean that you understand how difficult it is for them to do what they do. I kept stepping on her toes. I wreaked havoc with the launch page of TravelClouds. She had carefully selected the copy and the photo (a man overlooking the sea). I replaced it with a photo of Rio… She wasn’t impressed. I can now see why. I was messing with her branding strategy because I didn’t understand it.
I was micromanaging her. For someone who hates to be micromanaged myself I was doing it to someone else because I felt like I was losing control. Something that is inevitable in business. Adam Smith advocated the Division of Labour for a reason.
4. Sometimes the only person to listen to is yourself & your business partner
I go to a lot of talks and I speak to a lot of people about entrepreneurship or the problems that I have been facing with Katherine as a business partner. It’s upsetting for Katherine because she feels like I am questioning her worth and maybe with the way I phrase it it comes out like that. Talking to other people is almost like talking about the problems in your marriage to someone outside of it. Rarely is that going to help the situation. Also, people have different motivations (something else that Katherine has highlighted to me to take into consideration) so each person challenges or tries to give me advice that in the end I need to have the conviction to refute or not.
Instead of having an internal debate about this or thinking it through I directly go to Katherine and try and tell her what people have been telling me or suggestions they have had. This is because I want us to have that open dialogue. One thing about Katherine is that she couldn’t care less about book based “theories” or what other people think. Katherine is a grafter, she’s strong minded on this and she tells me I have a vision and should learn to stick to it. In essence, I should care less about what other people think and be confident in the decisions I make. Running a business will test you to your core. There’s a difference between being agile in product development and being all over the place because someone tells you you should be doing something.
Overall, is this business relationship broken or irreparable. Honestly, I hope not but it has been a huge learning process. Acknowledging all these issues early on I hope will only make the relationship stronger. I would rather have them all now instead of way down the line. Most businesses fail because that relationship wasn’t tested or strong enough in the first place.
The one thing I’ve learnt most is remember really it’s about you and your business partner against the rest of the world. Being in that relationship is like being in a marriage: choose very carefully and treat it as sacred. When the going gets tough it’s about openly talking about it and choosing whether you both want to fight for it enough.