Founder Conflicts and Business Forks

Founder conflicts are more frequent than most of us care to admit. Our people-pleasing nurture and conditioning only make this worse - with early conflict and friction being brushed under the carpet only to rare its face as a much larger demon down the line. Understanding why these conflicts occur and how one might navigate them is crucial for a shot at long-term success.

In my anecdotal experience - its more typical to see these in the early years (two to three) of a company, with situations becoming untenable if unaddressed around a five year mark.

In addition to observation - in but not limited to portfolio companies, I do speak from direct experience as well. Ankit Pandey and I dealt with our fair share of friction and conflict while building Bold Kiln. Something that eventually led to him leaving the company, and a major crack (since repaired) in what was then a 15 year close friendship. [realised while writing this we go back 22 years now!]

Why this happens

1. Vision v2.0 Misalignment

• Companies, industries and markets evolve. The set of assumptions, strategy and direction you started with may no longer hold ground. Especially in these contexts - Founders may develop differing visions for the company’s future, leading to disagreements on strategic direction, focus areas and priorities.
• This presumes that the vision and derived strategy and direction, formed at the outset was jointly developed and agreed on (which if not done, well ????♂?)

2. Role Ambiguity

• During the -1 to 0 stage of a company, roles and responsibilities can be loosely defined (if at all) because everyone is doing everything. At this stage, this is more feature than bug. However, this feature, if sustained as the company grows and matures, becomes a bug. Leads to friction as founders step on each other’s toes, make assumptions of of each other, critical items slip through the cracks of misunderstanding.

3. Equity and Compensation Disputes

• This is admittedly more common with first time founders, with fewer years under their belt (I was one such). Not seeing eye to eye on how equity should be split or how much each founder should take as compensation are seeds of massive discord that frequently come out in every other form imaginable.

4. Commitment Questions

• Again, one of those I think more common in younger and first time founder teams. Real or perceived differences in levels of commitment, hustle, work taken on, and the sense of 'all-in' drives resentment at the core, especially if one party feels the other isn't pulling their weight.

What makes this worse

1. Communication:

• Many of us suffer from poor communication skills, both sender + receiver; and often an inability to give and receive feedback, and differing opinions constructively. Will almost always exacerbate existing conflicts and amplify friction.

2. Conflict Avoidance and People Pleasing

• Most of us are nurtured and conditioned for avoiding conflict, and with people-pleasing behaviours. This is the opposite of what one needs to deal with all of these kind of issues.
• People-pleasing can only last so long, before it reached a break-point of tension with our own desires and priorities. And running away from a problem - ah well, if only that could solve things.

3. Stress and Pressure:

• The high stress, pressure-cooker environment of a startup never does help does it. :) Stating the obvious, I know - but just something to be further cognisant of.

Navigating Founder Conflicts

1. Open, Honest and Early Communication:

• This sounds so incredibly academic but its astounding how much we tell others to do this but usually end up doing a shabby job of it ourselves on the relationship where it matters. We default to assuming things are understood, that they're fine, that people will and do understand etc. NO! NO! NO!
• Setup regular, structured communication - help yourself and your co-founders voice their concerns, challenges, feelings early, before they escalate. Make it a safe space to be authentic, raw and vulnerable, and a place where we don't lie to ourselves or to one another. Part of this is frequent check-ins, with the specific intent of uncovering areas of potential conflict early.

2. Clearly Defined Roles and Responsibilities:

• Every now and then, as the company matures, you add more people in the team, and check-off milestones (and create new problems to focus on); revisit the roles and responsibilities allocated to founders, address any gaps and solve for accountability between each other.
• An aspect of this - founding teams built from friendships, often move ahead with a presumed 'equality' amongst founders. This is bad planning. It's imperative to define clear roles, and not try and create a democracy, but have a clear line where the buck stops and someone who is steering the ship.
• Related - inevitably, often one of the founders becomes the face of the company, is more recognised, gets PR, attention and what not. Important for all founders involved to be savvy to this, and that this may cause heartburn. Do leverage this where it moves the company forward, but strategically, and never excluding others from the limelight.

3. Shared Vision and Values:

• Similarly, with the market, space and company evolving - (at least every 6 months in today's fast moving world) to invest time on re-checking the base assumptions and vision set for the company. Is that still the north star? Does the strategy and direction still make sense + make sense to everyone (founders)? Wherever not - take that back to the drawing board, align and set direction acccordingly. Always having a jointly-agreed upon North Star will almost always help resolve most other conflicts.?
• I believe there is an opportunity here to make board meetings early on in a company's journey also focus on this. Far too often they're either perfunctory at worst, or just an 'investor update' at best. Efforts (from founders and investors alike) to ensure this strategic alignment on every other board meeting would go a long way I warrant.

4. Formalizing Agreements:

• Formalising agreements regarding equity, salary compensations and macro roles, and responsibilities is always a good idea - in any form (founders agreement, SHAs, other legal docs).
• That said, I honestly do not think this helps resolve conflicts in an amicable manner. It may define the guardrails and 'answers' to conflict, but resolution is a different flavour of sauce.

5. Conflict Resolution Mechanisms:

• We usually spend time and effort building process and workflows for most business problems, but rarely do that for 'conflict resolution' as a problem in and of itself. Give this the gravity it deserves, and take time to establish the mechanisms for conflict resolution you need to. Could be many - e.g. involving an impartial (as much as possible) third party, looping in the board / advisory board / advisors, using a professional coach or therapist, and other codified methods to help address things.
• When the colloquial shit hits the fan, you don't want to rely on what either party 'feels' like doing. You'd do better to have a playbook in place, to rely on.

6. Empathy, Maturity and Trust

• Startups are incredibly hard and stressful. Each of us is built to manage and deal with this differently; add to this the fact that we have different and changing realities, constraints and challenges outside of work we juggle - its but obvious we will end up seeing other founders quite different from how we see ourselves.
• It's here where building a deep sense of empathy for others, defaulting to trust and belief in them and their 'all-in'ness, and the maturity to not react emotionally to perceived or real gaps but go back to open communication.

I'd go as far as to say that founder conflicts are almost a given, in any startup's journey. Recognising this, planning for it, and managing them well can be the difference between a bitter and brutal journey and end; or a happier and pleasant one (and the end in either case could be failure or success).

More often than not though - founder conflicts can drive company death.

Build the systems to solve for them before they happen.

Nip in the bud if they do.