About the project
Apple, Airbnb, and Ben & Jerry’s
Besides being successful companies that were founded in the United States, these three companies share another commonality: They were all founded by friends. These success stories are not unlikely, considering that around 40% of entrepreneurs found together with their friends. While this has advantages like faster team formation and functioning, founding teams only formed by prior social relationships are associated with less founding team stability, more founding team turnover and less success in crowdfunding and entrepreneurial competitions. This shows that while founding with friends is quite common, the associated risks with this entrepreneurial team constellation can also be detrimental for new start-ups. The aim of the friendrepreur project is to understand how mixing friendship and business influences the start-up team and their start-ups’ risks and success.
Friend-Friendly Founding: Role Conflict and Boundary Management in Start-Ups founded by Friends
Founding with friends is blurring the lines between a friend role and a business-partner role, creating multiplex relationships. We even argue that this blurring of the lines is more pronounced when founding a business with friends. Especially in the early stages, when office spaces are often not established, and founders/friends meet at home or in cafés, or when the start-up is still a passion project on the side next to a full-time job. Blurring roles can create role conflicts for the founders and influence them in two possible directions. On the one hand, the friend relationship could influence business decisions. For example, when assets and decision-making power are distributed equally because of two founders’ kindergarten friendships and not according to proper business considerations. On the other hand, business decisions could influence the friendship, for example, when disagreements over the business aim and values differ between founders, as with Apple founders Steve Jobs and Steve Wozniak, who ended their friendship because their opinions about the firm’s ethics and values diverged after the first significant investments. These examples show that risks among founding friends often spring from role conflicts between friend and business roles, emphasising the importance of the founding team’s boundary management.
Using a boundary management approach, we want to examine the conflict friend-founded start-up teams encounter between their role as friends and their role as business partners and what strategies these start-up teams use to integrate or segment these roles.
Trust-Founding: Investment in Friend-Founded Entrepreneurial Teams
Sufficient capital and investments are crucial for start-ups, and there are multiple ways for a start-up to acquire resources to grow. On the one hand, there is the capital founders’ own capital, which they can use for self-funding. In entrepreneurial teams, the investment of personal assets in terms of money, time and other resources gain meaning as it demonstrates a commitment to the start-up and the belief and trust in the team and its vision. On the other hand, external capital can be acquired through sources like VCs, crowdfunding or other investors. These investment decisions are based on investors’ trust in and impression of the entrepreneurial team. We want to use a social identity perspective to examine investment behaviours in and to entrepreneurial teams and examine how group identity and trust influence self- and outsider investments in friend-founded entrepreneurial teams.
Contact us
If you are interested in taking part in our research (e.g., as a start-up, cooperator or through an internship), please contact sophia.humps@psykologi.uio.no.