If I’ve learned anything over the years, it’s that you should only do business with friends: with people you trust, admire, enjoy being around, and with people who make you laugh. Of course, there are good ways and there are bad ways of going about working with friends.

Below I’ve included four major things I’ve learned from trial and error about diving into working relationships and partnerships with those I consider to be my closest friends.

1. Communicate. Communicate. Communicate.

The importance of sincere, authentic, and frequent communication cannot be understated. This is always the case, and its importance is only amplified when working with friends. Often times, because you are friends, you may not want to be confrontational. In the short term, this may feel better, but in the long term, this is a recipe for nothing short of disaster (both for your organization and your friendship).

The importance of sincere, authentic, and frequent communication cannot be understated. Tweet This Quote

I’ve learned this the hard way and today, baked into the reality of all the companies I’m a part of is a disciplined “communication architecture.” I do weekly 1-on-1 calls with all my partners and teammates, together we do weekly tactical meetings, every day we do quick standing meetings, once a month we do 48-hour work sessions, and once a quarter we all go on a proper trip together for a longer retreat. The content of these meetings and calls is always around both what is good, and equally important, what is not so good. We talk about points of tension, points of gratitude, concerns, “yellow flags,” life beyond work, personal goals and aspirations, etc.

It may seem excessive, but I’ve seen this level of communication pay dividends and ensure that tensions never build up and that our team culture values authentic, frequent, and honest communication.

2. Vest your ownership.

Most co-founders start their companies by evenly splitting their ownership in the business between the friends they start the company with. This seems like the right way to go. But often, this ends up in a disaster. For example, if you start a business with your best friend and split the equity 50/50, what if one year into the business your friend decides to take a full time job on Wall Street? They will still own 50 percent of the company, and now that they aren’t actively working on the business, this will likely ruin your friendship.

If you and your co-founder’s motivations aren’t aligned, whether it’s in a few months or a few years, your partnership will undoubtedly fall apart. Tweet This Quote

Instead, I recommend you vest equity over a four-year period and install what is called a one year “cliff.” This means that if any of the partners leave the company within 12 months of starting it, they will not get any equity. If you go in 50/50 with your best friend and co-founder, and they leave two years into the company, then they would have just over 16 percent of the company instead of 50 percent. By planning not just for the best (which is what most friends do), but also for the potential of plans changing, you will save both your friendship and, likely, your company in the process.

3. Make damn certain your motivations are aligned.

A good friend of mine had a brilliant team behind a new startup, and everyone was motivated to make it happen. But when she sat down with her co-founders, she realized their motivations were not synchronized. Immediately, she listened to her intuition and decided not to continue with the startup.

If you want to live with your friends and co-founders, do so with an exit strategy in mind. Tweet This Quote

Typically with friends, it’s easy to dive into a startup opportunity or a working relationship that is exciting, fun, and potentially lucrative. But if your motivations aren’t aligned, whether it’s in a few months or a few years, your partnership will undoubtedly fall apart. It’s just not worth it. In short, make certain your motivations are aligned and if they don’t feel synchronized, don’t work together—just continue to be good friends.

4. Don’t live together for too long.

When founding the Unreasonable Institute, there was a period of time when co-founders Teju Ravilochan, Vladimir Dubovskiy and I all lived under the same roof. We would work upwards of 18 hours a day, 7 days a week, and being best friends, roommates, and co-founders meant we were together almost every waking minute.

Although it’s a fun way to start a new business, and it ensures you are all fully immersed, my feelings are that if you want to live with your friends and co-founders, do so with an exit strategy in mind (i.e. give it a set time commitment and after 6 months or 12 months, plan on living elsewhere). You will still likely see one another 16 hours a day, but giving yourselves just a little space is important for any relationship.

Working with friends is a lot of work, but it’s a great investment of time. Tweet This Quote

Reflecting on what I’ve written, I realize it sounds like working with best friends may be a lot of work. In some ways, to ensure the friendship remains sacred and the partnership thrives, it is. That said, I can’t imagine a better investment of your time. For me, I could never do what I do if it weren’t for the friends I consider myself lucky to know as partners, investors, co-workers, and co-founders.


A version of this post originally published in April 2014. It has been updated and reposted to inspire further conversation.

About the author

Daniel Epstein

Daniel Epstein

Daniel has an obsession. He believes to his core in the potential of entrepreneurship to solve the greatest challenges of this century and he has dedicated his life accordingly. Today, he is the founder of the Unreasonable Group, of the Unreasonable Institute and a number of other "Unreasonable" companies.