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Starting a Business With a Friend? Here's How to Remain Friends

Cornell college buddies Niraj Shah and Steve Conine have started three Internet-related businesses (one of which while still in school) over the years. Their most successful venture to date is the online furniture retailer Wayfair.

Over the past 10 years, Wayfair, originally called CSN Stores, has grown to roughly $500 million in revenue.

The secret to staying friends and partners is the mutual respect they have for each other and their strengths, Conine says.

In their senior year in 1995, the friends took an entrepreneur and enterprise class where they were charged with coming up with a business plan. Given the fast-growing interest in the internet and later e-commerce, Shah and Conine came up with a business that built websites for small companies in the local college area.

After they graduated, the two moved their business to Boston and continued to work tirelessly throughout the summer and after that. By the time the company was sold in 1998, the partners had added several large clients, including Time Warner, the New York Times, and Merrill Lynch to their portfolio.

"The first three to four years (of working together) were probably the most challenging of our relationship," Conine says. "It takes a while to build up a mutual respect for each other's talents and figuring out what each was good at. The closest analogy to working with a friend is marriage. It's a very similar dynamic. With any relationship you got to put effort into it and you got to care about the person you're building the relationship with."

After selling the company the pair split up for a couple of years but found themselves both back in Boston and both wanting to work together again, continuing on their e-commerce theme. Wayfair came originally from another idea to cull multiple websites selling goods into one architectural framework.

At Wayfair, Shah takes the title of CEO, while Conine is its chairman and chief technology officer.

Even after the dot com bubble burst, the pair was inspired by Amazon's (AMZN - Get Report) success and kept seeing the trend toward e-commerce and decided to acquire many of the online small businesses and move them to one online storefront to sell their goods.

At one point, the predecessor to Wayfair had more than 200 separate websites, selling every kind of product imaginable. Slowly they began to collapse the websites and rein in what the website was selling to mainly furniture and décor. Just last September the company changed its name to Wayfair. Going forward, the company will be focusing on expanding awareness of the online furniture retailer.

Putting aside your pride is very difficult to get used to, but critical when first starting out, Conine says.

"When you go from being a friend to working in an environment where your career and livelihood depend on each other, you start to be more critical. In the early years together we would have meetings where we would just want to punch each other. It takes a while to get to the point where you start to see where he is trying to be helpful and has your best interests in mind," Conine says.

-- Written by Laurie Kulikowski in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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