Jumping into any sort of venture is always exciting at first. We’re in a creative headspace, and anything is possible. We don’t want to get hampered by minutiae, because that’s the fastest way to kill a good idea. We need space to contemplate, ideate, and co-create. We need to permit ourselves to be buoyed on the updraft of possibility, before letting the gravitational pull of reality begin to constrain our thinking.

In short, we need to believe that the challenge we feel motivated to disrupt, and the opportunity this presents, can be at least in part addressed by our venture.

After all, that’s the entire point of starting something, right?

But creativity can be a powerful narcotic, and it’s far too easy to get caught in a creative loop. The consequence of an unwillingness or inability to deal with effective operationalisation can be terminal to the success of any endeavour.

While there are ten discrete elements in the model I use to work with impact entrepreneurs - values, culture, purpose, strategy, structure, governance, operations, communications, capital, and scale - one area that demands thoughtfulness before everything else is having a framework for the formation of clear agreements between co-founders.

Too often, co-founders proceed solely on the basis of trust. And of course trust matters. Without it, we cannot even begin. But trust is not static - it changes due to both the dynamics at play in the ‘web of trust’, as well as outside forces.

There’s a wonderful proverb that says:

“Trust in god and tie up your horse”.

And trust only goes so far. This is in large part because human’s aren’t hyper-rational machines - we don’t have perfect recall, and we’re subject to acting emotively. So in the mid-to-long-term, conflict is almost inevitable. And where these conflicts arise is typically when people feel as if their wants and needs are at risk.

One simple way to mitigate the risk of conflict is to invest appropriate time in codifying agreements. But before that, co-founders need a way to come to a conversation with a clear picture of what they’re looking to achieve for themselves. A necessary function of the organisation, that often gets lost in the stupor of all the good we’re going to do, is in how to best meet our individual needs without any sacrifice required from any party.

Unsurprisingly, every time I’ve facilitated a group of impact entrepreneurs and asked them what they need, the answers are always organisational.

“More customers/partners/funding/resources” etc. But that’s not the question. Organisations aren’t people - they’re comprised of them. So when I ask “you” I really mean “you”.

Tell me what you need?

We must get better at asking this question of ourselves and of each other. Too many impact entrepreneurs wind up broke, angry, and disillusioned, because they unwittingly sacrifice the things that matter to them as a human on the altar of their organisations purpose.

As with everything else I write about, I know, because I’ve experienced it.

As I mentioned in my last newsletter - The high cost of seeking integrity in impact entrepreneurship - for the last 15 years, regardless of what roles I’ve taken in co-founding other ventures, I’ve maintained an independent consulting practice under the brand of Uncompromise.

Unsurprisingly, I simply cannot abide compromise.

I appreciate that I’m not a relationship therapist, but I don’t believe that compromise, which is the typical end point of negotiation, is a functional or loving way to relate. From my perspective, it’s a process in which every participant comes away feeling acceptably dissatisfied.

If that was how we approached our most significant relationships, I suspect we’d all be extremely lonely.

Of course, it’s not a requirement for founding teams to all be close friends - although that seems to often happen. But at the very least they need to be friendly, and it’s significantly easier to behave that way towards people who have your back; people who understand that as much as you’re showing up in service to a shared purpose, you’re also showing up in service to your self, and by extension, those who are closest to you.

Most of my business partnerships over the last thirty years have turned out ok. That doesn’t mean that ego - my own or others - didn’t create suffering. But there was one case in particular where the partnership was so fundamentally misaligned that it resulted in significant (and costly) legal action, ending with me seizing control of the company in order to minimise the risk to hundreds of current clients.

And I vowed never to wind up there again.

Being clear about what you want and need is essential for the formation of healthy relationships.

And while in the world of dating it seems like people are increasingly clear about what they’re looking for before they start, in the world of professional dating/networking, it seems to be not so much the norm.

So I developed a model for forming and maintaining partnerships, that is grounded in mutual trust and respect.

It asks co-founders four questions, in sequence. It’s designed to help each individual gain a clear understanding of what matters to them, in order that co-founders can create agreements in how they structure, govern, and operationalise the entity.

Instructions for use:

Be as detailed as possible

Do this first in isolation, after which you can refine it through discussion with loved ones

Do not discuss this (in the first stage) with your co-founders, especially if you’re in a personal relationship with them already

Bring your answers to a (facilitated) group discussion

Refine and then codify these answers as agreements between the organisation and the individual(s)

• Be as detailed as possible

• Do this first in isolation, after which you can refine it through discussion with loved ones

• Do not discuss this (in the first stage) with your co-founders, especially if you’re in a personal relationship with them already

• Bring your answers to a (facilitated) group discussion

• Refine and then codify these answers as agreements between the organisation and the individual(s)

6. Repeat annually to ensure ongoing alignment.

The group discussion provides the opportunity for co-founders to gain greater clarity about what each other are seeking, and provides a container for the discussion of hopes, fears, and frustrations (once through the formation period) that is entirely self-owned.

And forming the agreements with the organisation ensures that the organisation, not its co-founders, is responsible for maintaining the integrity of these agreements. This minimises the potential for disagreements to become personal.

Contribution - what am I willing to give?

Compensation - what do I want to get (especially include all non-financial forms of compensation, such as professional recognition, learning new skills, time to pick up kids from school every day etc)

Culture - what is the experience I want to have? Remember this is about you, not the organisation - you can deal with that later. But misalignments on culture are best shaken out before getting too far in case they're seriously incompatible

Control - how do you want to ensure that the answers to the first three remain true. This helps to start the process of defining the structure and governance of the organisation, and helps to inform shareholder agreements, and roles and responsibilities of the co-founders.

• Contribution - what am I willing to give?

• Compensation - what do I want to get (especially include all non-financial forms of compensation, such as professional recognition, learning new skills, time to pick up kids from school every day etc)

• Culture - what is the experience I want to have? Remember this is about you, not the organisation - you can deal with that later. But misalignments on culture are best shaken out before getting too far in case they're seriously incompatible

• Control - how do you want to ensure that the answers to the first three remain true. This helps to start the process of defining the structure and governance of the organisation, and helps to inform shareholder agreements, and roles and responsibilities of the co-founders.

I believe that robust public discourse is essential, and that impact entrepreneurs can and should find ways to learn from each others challenges and successes. What has your experience with creating healthy co-founder agreements? Where have you struggled, and what have you learned? Please share your experience in the comments below.