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Mike Assad (L) and Jon Voigt (R) at the Hilton Papagayo in Costa Rica (Ben Voigt/Courtesy of Agility)
Mike Assad (L) and Jon Voigt (R) at the Hilton Papagayo in Costa Rica (Ben Voigt/Courtesy of Agility)

Case Study

Breaking up is hard to do, but it worked out fine for this startup Add to ...

Agility Inc. is a Toronto-based company that provides content management tools for their clients’ online presence.

The company was founded in 2002 by Jonathan Voigt and Michael Assad to develop customized websites. A year later, the co-founders moved into office space shared with another company, and they were regularly asked by that company for help in updating website content. This was a tedious job, Mr. Voigt recalls.

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“We decided to build a software tool so they could update the content themselves,” he said.

This experience was the catalyst that changed them from a firm offering customized services to one that provided content management platforms.

Their decision to pivot was positive. The company grew and took on prestigious clients such as Corus Entertainment and Cineplex. However, as new opportunities arose, Mr. Voigt and Mr. Assad found themselves disagreeing more and more on which opportunities were worth pursuing and where they wanted to take the company.

By 2012 the tensions between them were affecting morale. How could they move forward?

THE BACKGROUND

Although Jonathan Voigt and Michael Assad went to high school together in Arthur, Ont., they didn’t reconnect until after university when they coincidentally moved into the same building in Toronto. They were both working as software developers at the time and started taking on small contracts to work on together in the evenings.

When they started getting some big contracts, they quit their daily jobs and founded the company. Mr. Assad was the CEO, in charge of marketing and sales, and Mr. Voigt was the CTO, in charge of operations and the technology.

The platform they developed, now called Agility CMS, is a software-as-a-service (SaaS) cloud-based platform. It was initially developed for the small and medium-sized business market, but soon gained traction with large corporate clients as well. The company’s rapid growth was publicly recognized by their appearance on the Profit Hot 50 list in 2005 and 2006.

By 2012, the co-founders’ vision of the company’s future had started to diverge. Mr. Assad wanted to reduce their service offerings and become more product oriented, while Mr. Voigt wanted to retain more services. At the time, the company had 18 employees and their differing views of the company’s direction started to impact morale.

“Reducing the services we offered meant letting some people go. Some people were worried they’d be asked to leave, and so they started looking for other jobs. There was a great deal of uncertainty about what key decisions would be made,” said Mr. Voigt.

The co-founders knew that something had to be done to resolve the tension so the business could move forward.

THE SOLUTION

Mr. Voigt and Mr. Assad realized that it probably wouldn’t work if they both stayed at the firm, because their visions of the company’s future were incompatible. However, as friends, they wanted to ‘break up’ gracefully.

Neither of them wanted to leave Agility, and so it took a year for them to arrive at a solution. Thinking things through for a year made them both aware of the value of the company and the different options that existed outside of it. By the time Mr. Voigt finally made Mr. Assad an offer to sell, Mr. Assad had identified had an opportunity to pursue in a different industry.

Even though it took a year to figure things out, once they had decided on a direction, they moved quickly. Mr. Voigt says this fast pace is one reason for their successful split.

“If each person draws things out to get the best deal for themselves, people will get upset, but if you both push to do things fast, it will even out to the best deal possible for everyone anyway. Start with the premise that each party needs to be compensated properly.”

It took only three weeks for them to do everything, from deciding that Mr. Assad would leave to signing the final legal agreements.

To ensure that things don’t get bogged down, Mr. Voigt recommends that people agree on everything up-front before getting the lawyers involved.

In addition, Mr. Voigt points out that you don’t need to break ties completely. He found it particularly valuable to get feedback from Mr. Assad in the transition period right after he left. Mr. Assad still owns some of Agility and so has tangible interest in its success going forward.

THE RESULT

Mr. Voigt says that the company is much stronger now that there is a clear and unambiguous direction. “Morale is great, we’re hiring and expanding our offerings, we’ve refocused the brand and we’ve had the best quarter in two years.”

Amazingly, the business break up didn’t affect their social relationship and they are still great friends. In fact, Mr. Assad is going to be in Mr. Voigt’s wedding party later this month. Mr. Voigt reports, “We talk about how this has turned out to be the best result for both of us.”

Becky Reuber is a professor of strategic management in the Rotman School of Management of the University of Toronto.

This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Report on Small Business website.

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