A Startup is like a fluffy puppy dog and then Co-Founders fall out. How to fix it.
My inbox goes ping, and there’s another deck from another early-stage company with a few co-founders. I speak to the co-founders and it’s all patting each other on the back, the world is a wonderful place, nothing can go wrong and all that other fluffy puppy dog stuff. I sit there and go oh that’s nice and start wondering what the agreements look like for when they have the ultimate fallout.
And it happens, a lot more than people will admit. See 3 years, 5 years, 10 years of a business a lot can happen, and I mean a lot. You can have numerous financial issues, product issues, staff issues, motivation issues, and yep, people get married in that time and start a family. Things really change.
There are disagreements, then there are lots of disagreements that leave co-founders throwing darts at a dartboard with a photo of the other co-founder in their head.
As long as you accept that fallouts will happen and worse case you will part ways then you shouldn't get blindsided.
A couple of key points to always have in your head at a basic level:
If you are a super early startup, have not even done an MVP, and are having disagreements, then you may as well stop what you are doing now. Seriously life is too short and something else awaits you.
If you have shareholders, then “it is not your company” and “sort your shit out” and grow up.
Now I have had my dad moment, lets now map out some things to help the pain if things get bad:-
Make sure your legal agreements are watertight on deadlock, exit, and all that stuff no one wants to talk about. I have seen expensive lawyers deliver agreements that are not worth the paper they are written on when things have hit the fan later on.
Define roles and responsibilities. It sounds basic, but the number of times I meet founders that either step on each other’s feet, or worse think the other is dealing with something and it falls through the system. Like you would with a Project, use a RACI which covers how people are consulted, etc
Make each co-founder accountable towards the company goals
Have a catch-up and not just about the business. Even when it's all stress both in and outside of the company, that's the time more than ever you need to keep good communications. Any founder who thinks outside events don’t influence the inside of their business is deluded.
If you find yourself not spending time with your co-founder outside of work, or you keep communication to a minimum then you are avoiding conflict.
Embrace conflict and not give up what you know is right. We all have beliefs and sometimes we are right, sometimes we are wrong. Don't sacrifice what you believe in just to have a bit of brief harmony with your co-founder
At the same time don’t be the bully in the debate trying to force-feed your agenda. You need to listen to the other balance to your view in the room.
Remember you all want to win. You are on the same team. It goes back to my ship phrase that everyone drowns if it goes down.
If it still continues to go badly then you probably need to get help, that could be::
Reach out to your advisors. They have probably already noticed.
If you have a trusted investor then speak with them.
Get professional help into the business. If your marriage is going bad, you go to a counselor. Same for startups.
Mediation - I am not a fan of this as a) it costs quite a bit of money b) Every meditation I have sat in, I have basically made it my way or the highway c) I have never seen founders come out of it without it at least damaging one party more than the other. But that's just my view and might work for you out there.
So you still are not getting anywhere after you have exhausted the above, what options does it leave you:-
Option 1 - One founder takes the leadership role and the other(s) take more of an operational role.
Option 2 - One of the founders leaves the business.
Option 3 - The founders agree to bring a leader in.
Option 4- You close down the business or just watch it disintegrate over time anyway and trust me, I have seen that happen 100s of times.
And if you are reading any of this and thinking “that won’t happen to us” then get your head from out of the ground and smell the coffee. Co-founders falling out is one of the biggest if not leading reasons that startups fail.
The Grumpy Entrepreneur
Co-Founder of Pario Ventures
Chairman of a few.