Step One: Don't Kill Your CoFounders

Step One: Don’t Kill Your Co-Founders

“Never get into business with your friends.” In January of 2017, my friends and I started Modernist Studio. We haven’t killed each other yet.

Based on some of our experiences starting a business together, there’s probably a hint of truth to the underlying idea of separating your friends from your colleagues. But we’ve had a successful experience – we’re still around a year and a half later! – and there are some things we did right that made it work. And there’s a ton that we did wrong that could have caused us to implode.

These are some of the things we have learned from our experience, and they are things I wish someone had shared with us early in our journey.

No matter how well you think you know your partners, you don’t know your partners.

Our partners have worked together for over ten years: at Savannah College of Art and Design, at frog design, at a startup called MyEdu, and, when MyEdu was acquired, at Blackboard. We’ve seen the ups and downs of consulting, startup culture, and big corporate. And we’ve worked intimately, through all hours of the night, through weekends, and through failure and success. We’re tight, right?

Don't kill your co-founders

We weren’t a tight as we thought. At each of our previous companies, we were surrounded by other people, and we could find one or two that weren’t firing on all cylinders – and we could blame them when things went wrong. It’s a fairly typical coping mechanism, to find a scapegoat. “They don’t know what they’re doing”; “They’re getting in the way of my success.” But in a small partnership, there’s no they – there’s only us. If our behavior is focused on external finger pointing, there’s only a few people the finger can point at, and one of them is yourself. If the finger pointing is done overtly, it can be diffused. But when it’s done privately, it turns into animosity or resentment. And that’s a virus.

Takeaway #1

The largest takeaway I have from our experience has been to talk, constantly. We joke that we’re now like a married family. Communication is at the root of most successful marriages, and it’s become the root of our business. We talk about craftsmanship and places we feel projects aren’t going well. We talk about who is doing what, when. We talk about travel, and money, and clients. But most importantly, we talk about our feelings. We used to ask “what are you doing.” Now, we find ourselves asking “how do you feel about that?” Ongoing critique has become fundamental to our work, as has collaboration. Most of our projects aren’t lone-ranger, even if there’s a single project or client “owner.” Instead, we’re constantly exploring each other’s work, and offering direct and sometimes hard to hear criticism.

Talking takes an awful lot of time, and for creative people, it’s time that feels wasted. We could be making things. We could be generating new business, or making our clients successful, or any other thing that needs to get done. And so talking takes overt prioritization. Even though we work within 15 feet of each other, we have three check-ins a week on the calendar where we sit down and talk about our feelings. We informally check in with one-another. And it’s constant.

It’s not the network; it’s the trusted network.

A consultancy is nothing without clients. There are a number of theories about attracting clients. There’s cold-calling, or blind outreach to new people. There’s event networking – going to conferences and schmoozing with other people. There’s friend-of-a-friend that leverages the network effect of sites like LinkedIn.

We tried all of these, with mixed, but mostly poor, results.

Don't kill your co-founders

But what worked really, really well was our prior network: not just our massive LinkedIn connections of loose acquaintances, but our small and trusted network. In 2017, 100% of our clients came from our existing networks. When we did our end of the year retrospective, this surprised me, although it probably shouldn’t have. Our clients included people we had worked with in our previous jobs, people who had attended corporate training sessions that we had led, and previous clients from freelance work we had done. These relationships stretched as far back as 1999. They remembered a positive experience, and either reached out to us, or engaged with us after we reached out to them at the beginning of 2017.

These people trusted us to do a good job because we had done a good job in the past. They trusted our ability to deliver, and appreciated our personality and attitude.

Takeaway #2

We wouldn’t have been successful running an agency if we had tried it a decade ago. We needed the experience to prove ourselves to people, to have those people move into positions of influence and in control of budget, and to then have them need our specific set of skills. That requires both experience and serendipity, and that expands over time. When I was 25 or 30, I just didn’t have the trusting network that I have now.

Another takeaway is, also not surprisingly, good relationships matter. The people who ended up partnering with us trusted us and liked us. They remembered positive experiences from the past. If you know me, you know that I can be blunt and unforgiving. As a result, I’ve burned bridges in the past that didn’t need burning, and that now would be valuable as we grow our business. I had opportunities in the past to build trust that went beyond a strong work product, and I missed those opportunities. If I could go back in time and have a talk with myself, I would offer the advice to be more professionally open-minded about people. Not everyone needs to be a great friend, but there are mutual professional benefits to fostering positive relationships with people early.

Don't kill your co-founders

Cash matters; be frugal.

In late 2016, we landed a great long-term client, and that’s what it took to push us over the edge: that was the motivation it took to start the business. It was a good client, and attached to good money, and it was enough for all of us to feel comfortable diving in without the security of a regular paycheck.

In our ignorance, we didn’t know or think about terms of payment. Just because we started working with a client on January 1st didn’t mean we had money on January 1st. Contracts have payment schedules – “net 30” or “net 45”, describing the number of days it takes to get paid. And this is after invoicing the client, which often happens after the work is completed.

We didn’t actually have cash on hand for weeks because we didn’t get paid for weeks. In the context of a fragile business, where our hopes were high but confidence low, that very pragmatic and very simple fact almost broke us. There was a lot of scenario-based worry. What if they don’t pay us on time? What if they don’t pay us at all? What if we suddenly need to spend thousands of dollars on a personal expense? What if, what if… Each of us is in a unique financial decision, but the worry was shared.

Takeaway #3

The fundamentals of operating a business should be easy to predict, but we didn’t consider them. Had we known that we wouldn’t have cash in the bank for weeks, we may not have started the business at all, and so perhaps our ignorance worked in our favor. But we also may have taken another approach and stashed away some money prior to starting.

The other thing we learned is to structure contracts with a percentage of payment up front. We push for 25%, net 30, upon signature. This means that we receive enough money within a month to cover late payment. And we’ve had late payment. Nearly every one of our clients has not actually paid us in the amount of time dictated by the contract. I think this is just the reality of working with large corporate clients, where the procurement and payment machine is long, arduous, and often anonymous. We’ve learned to be patient, and now we have sufficient money in the bank to help cool (but not eliminate) out financial anxiety.

Know why you are being hired

We’re craftsman, and we make things. The things are products, or services, or strategy, and we’ve always viewed our value and role as one intimately tied to work product. That continues to be true. But we’ve discovered that the more strategic and high-profile our work, the more it carries non-content based weight.

Don't kill your co-founders

One thing we’ve learned is that we’re nearly always hired to be a personal partner with our primary stakeholder. They may be looking for design work, but they’re also looking for someone to brainstorm with, to vent to, to lean on, to strategize with, and to act as an ally. Conversations become as important as traditional design artifacts. Often, the things we make prompt discussion, but the discussion may be around internal political positioning or organizational dynamics, and not about the actual product or service at all. To excel in these roles, our skillset has evolved to be more cognizant of the political environment of our clients. We help them navigate a path towards success, and that often means success not just for the product initiative, but also for the client’s personal career trajectory.

Another thing we’ve learned is that we’re sometimes hired to be the provocateur. Our role is to challenge existing beliefs and to push the thinking of an organization further, often well beyond their comfort zone. We may paint pictures that are technically infeasible, politically dangerous, or that fly in the face of business assumptions.

For designers who are used to shipping products, and used to the real-world pragmatics of bringing products to life, this is an uncomfortable place to be. This isn’t just vision work – it’s work that often makes us appear ignorant. It may seem as though we aren’t aware of the “big picture” or that we don’t really understand all of the complex interdependencies that make large corporations work (or, in many cases, not work). We need to accept that we aren’t going to be perceived as the smartest people in the room. Instead, our goal is to provoke those smart people the challenge their smartness and to reconsider their stance on key business issues.

Another role we’ve found ourselves in is that of guide. Instead of being hired to make something, we’re increasingly hired to help our clients figure out what to make and how to make it. In these contexts, our role is that of a strategic facilitator. We’re teaching the process of creativity in traditional, conservative business environments, and then helping to mesh product vision with emergent business challenges. How can we address declining market share? How do we integrate a new company that’s been acquired into our existing product portfolio? What do we do with blockchain, or AR, or a chatbot, or any of the latest buzz?

These are conversations that would traditionally be held by subject matter experts, business owners, and directors. Now, design techniques that were used to make things are being applied to strategies. Our ability to draw, to tell stories, to practice integrative thinking, and to drive a user-centered agenda become integral to strategy definition and planning.

Takeaway #4

The takeaway from these observations is to know why you are being hired, and to realize it may be something that traditionally has been completely unrelated to a given profession. I went to school to learn to design things. Now I find myself acting as a guide, a visionary, a naive explorer, and even as a therapist. This is the breakdown of disciplinary boundaries and the evolution of the corporate business environment.

Don't kill your co-founders

I started a company once before, a school called Austin Center for Design. I was in my late twenties, and had the chutzpah that comes with naivety and age. Probably no one should start a school, but I did, and it sort of worked. But somehow, I managed to forget all of the things I learned from this first founder experience. I suppose that’s part of the journey; you are running so fast that it’s difficult to reflect and realize all you’ve learned.

And, this second experience is different, because this is a partnership. When I started the school, I largely did whatever I wanted (much of which was outright dumb). But here, we’re partners, and the complexity grows exponentially. It’s emotionally, logistically and creatively difficult: it’s really, really hard.

Jon Kolko

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