Starting a business with a friend: how to do it right

Executive overview

Most people advise against starting a business with a friend. Blake Mycoskie argues the opposite — a long friendship gives you real knowledge of someone's strengths and flaws before you're locked in.

The risk isn't the friendship. It's vague agreements. Crystal-clear roles, equity splits, and legal documentation protect the relationship.

Friends who know each other well can be better partners than strangers — if the terms are explicit and fair from day one.

Why friends can be better co-founders

• Years of observation outside a work context reveals the good and bad before you commit
• Fewer hidden surprises once working together compared to a cold hire
• Untangling a bad partnership is hard — prior knowledge reduces that risk

Getting terms right before you start

• Be more specific in the agreement than you would be with a regular hire
• Cover roles, compensation, and equity splits explicitly — leave nothing to interpretation
• Use lawyers to document everything; ensure contracts are unambiguous
• Actively ask the other person: "Do you feel good about this? Is there anything you're not saying?"
• Watch for unintentional power imbalances — the money partner can pressure agreement without meaning to

Setting equity splits fairly

• Instead of setting a number unilaterally, ask multiple outside investors what terms they would offer
• Benchmarking against real market rates removes personal bias from the negotiation
• The same principle — seeking outside non-biased input — applies to other major business decisions