At the beginning of a new project everyone is super energized, hopeful and ready to bleed for the end goal. Hopefully those days will never end but if they do, you have to be prepared and protected.
You have to do an explicitly targeted work to keep the relationship with your business partners healthy. You have to truly care about their wellbeing and you have to mean this. It has to come from the inside and you have to make time to talk about it regularly.
The above advice will keep you from ever having to recur to the legal papers I’m talking about here. The order is important. Invest in your relationships first so that you don’t have to fall back to the legal documents ever.
Having said that, every aspect of your business deal must have a paper counterpart. How much everyone owns, vesting periods, what happens if someone decides to leave, how to decide if someone is no longer a fit and what to do about it, how is decision power divided, how to fire a cofounder, how to handle dividends, how to decide if you want to sell the company, etc.
This post is not about creating a comprehensive list of the things you need to consider for the contract between you and your partner. It’s more about bringing to your attention that you need to protect yourself and everyone involved by having all rules of the game very clear from the very start.
Remember that creating a startup is already stressful. You don’t need yet another worry to your anxiety bucket if for any reason something unexpected, like a cofounder wanting to leave, happens.