From the altar to IPO: Doing business with your partner
Wednesday, February 13, 2013/
For Julia Hartz, co-founder and president of Eventbrite, the event and ticketing web platform, starting a company with her husband, Kevin, was not exactly part of her master plan.
“Part of me has actually blocked out the decision-making process I went through before going into business with my then-fiancé,” she says, only half-joking.
“We had been dating for two years long-distance; we got engaged, and I was debating whether or not to take this particular job in San Francisco. His alternative to my taking it was coming to work with him.”
“Part of [the reason that he is] such a good entrepreneur is that he has an eternal optimism that sometimes transcends common sense… I remember thinking: Maybe it’s not a good idea to move in together, get engaged and start a company together all within three months.”
Six years later, however, Eventbrite is a powerful force in the online ticket industry. The company, which has 200 employees, has raised more than $78 million of venture capital and has processed more than $1 billion in gross ticket sales.
“We were very pragmatic,” Hartz notes. “Early on, we had conversations about what would happen if this didn’t work out. We said, ‘Let’s take it month by month’. And it just kept working.”
Couple-run companies are a familiar feature in the business landscape. While most husband and wife-run ventures are small businesses, some, like Eventbrite, are household names.
Gary Erickson and Kit Crawford are the married co-CEOs of Clif Bar & Company, for instance, while Andy and Kate Spade started the eponymous handbag company together.
Lynda and Stewart Resnick are owners of Fiji Water. Genevieve Thiers and Dan Ratner founded Sittercity, the babysitter finder service.
Like political power couples and celebrity duos, husband and wife business partners are an object of fascination.
For some, the notion of working with a husband or wife and spending every minute together building a business is a desirable personal and professional scenario.
But for others, the prospect of a co-worker spouse is cringe-worthy. Regardless of which camp you fall in, it is natural to look at husband and wife business partners and wonder: How do they make it work?
For many entrepreneurs, being married to their business partner is an asset to both their professional success and personal relationship, according to Stewart Friedman, Wharton practice professor of management.
“The trust you have in [your spouse as co-manager] is greater than you are likely to have with any other business partner in your life… It can be exciting to share the joys of accomplishment together. And as a business professional, you’re apt to learn more and faster, and to see different perspectives, because you’re able to be so vulnerable with each other.”
Yet the headaches associated with starting and running a company are ever-present, and they can be exacerbated when the business partners are also life partners.
Financial pressures are greater: Not only are the fortunes of the couple bound up in one business and one (sometimes non-existent) income, but it is often harder for married business partners to raise money from outside investors.
Hiring new talent is also a challenge, as many job candidates are wary of entering family businesses.
Then there is the emotional strain; some couples find it hard to separate what happens in the business from what happens in the relationship.
“The big issue has to do with boundaries – how consciously and deliberately the couple manages those, and how mindful they are at tending to the different roles they’re in,” notes Friedman.
“On a daily basis, it is helpful for there to be time for the couple to be together without work.
“Otherwise, the exigencies of business crush everything else. When you get into this game, you have to realise that there is never an end of things to do. And this doesn’t stop, especially if you’re successful.”
Who’s going to fire their wife or husband?
Many couples don’t have the “hard conversations” before taking the plunge, notes Wharton management professor Laura Huang.
“They haven’t necessarily talked about what happens when they need to make changes to the business model, or what the right exit strategy is.”
“They make an assumption because they think they already know and understand the other person, and they assume they already know his or her perspective. These issues end up destroying many start-ups, regardless of whether the business partners are married.”
Things can get ugly. Case in point: Tory and Chris Burch, who founded the preppy-chic fashion empire Tory Burch in 2003, divorced in 2007. The pair is currently embroiled in nasty, he-said/she-said legal proceedings.
The dispute centres on whether Chris Burch, in creating his own store chain named C. Wonder, copied the Tory Burch business by using some of her signature looks and certain design features of her retail shops.
Indeed, couples who go into business together must do so with care. Money, at least in the beginning, is often very tight. Steve Broad recalls the early days of starting Annie Chun’s, the all-natural Asian food brand, with wife Annie.
Broad graduated from business school in the early 1990s and had hoped to start a career in finance or biotech, but his employment prospects in those recessionary years were dim. When he wasn’t looking for a job, he helped his wife sell her Asian sauces at local farmers’ markets in Northern California
“In the beginning, it was block and tackle,” he notes. “We were going to farmers’ markets two to three times a week and we were hand colouring our own labels. For the first 10 years, we didn’t make any money. We borrowed, put it back into the business and took it out again.”
This particular story has a happy ending: in the company’s 11th year of business, it rang up $775,000 in sales; once it introduced packaged soups, sales soared to $2.5 million. In 2008, Broad and his wife successfully sold Annie Chun’s to CJ, Korea’s largest food company, and today the brand is available at Trader Joe’s, Whole Foods, Target and Walmart.
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