Not Made in Heaven: Co-founder conflicts

When I was building my company, it wasn't unusual for me and my co-founders to argue over things. For those of you who know me, I'm someone who rarely fights, however, I still remember that day when I decided to storm out of the meeting feeling frustrated, flustered, angry and overwhelmed with emotions.

It was a rare day and I wouldn't lie, I've reflected on it many times.

Was it professional for me to behave that way? Could I have handled it better? Should I have just stayed quiet and pushed the issue at hand under the rug?

TLDR: My company didn't shut down because of a co-founder conflict, there were many other reasons and maybe I'll write about that some other day, but I just wanted to stress on the fact that working with your "made-in-heaven" co-founder isn't always going to be rosy.

In this banter, I'll try and share certain situations that result in co-founder conflicts and how one can navigate them.

PS: If you've already tried and tested everything and are just looking for tips to resolve an unresolvable conflict (ironic, isn't it), you can skip to the last section.

1. When things aren't going right

I honestly believe that this is 90% of the underlying reason for co-founders to have conflicts. Think about it, if things are going great and each vertical is hitting its desired goals, why would one want to fight?

But building a startup isn't like that, you're not always hitting it out of the park, and that's natural.

Given that founders are extremely passionate about their company, they gravitate towards the following positions to protect themselves from the realities of building a startup

Blame

The easiest way to deflect a problem from yourself is to blame the other. The tone goes from "we" to "you", the targets move from "ours" to "yours' and so and so forth.

Taking up responsibility for certain areas is a pretty common thing to do, and I'm not denying that there shouldn't be individual deliverables/responsibilities for co-founders, however, when things aren't going right, it's more important to see how you can solve problems together rather than just expecting one person to solve it. Even if it requires everyone to do everything, do it to solve the problem.

Lack of trust

The core principle of finding a co-founder is finding someone that you can trust.

When trust starts getting questioned, it's natural that the foundation of the relationship between two (or many) co-founders is lost. The shift here is that one co-founder might start thinking that the other doesn't do what he/she says. One starts ignoring the external factors that might be resulting in the deliverables/tasks not getting completed and starts questioning trust as a whole.

This is a slippery slope and you don't want to be sliding on this one. It's important to understand the perspective on the other side, not only from the other co-founder but the entire team.

Delusion

What's that saying - "delulu is the solulu" - well not in this case. Everyone is working hard in a startup, but just one co-founder thinking that they are doing all the work is an unusual reality.

Letting go of your ego is the more important aspect here. Thinking that whatever you're doing is the right thing and what the other is doing is wrong, is just something that solves nothing. Give feedback like how you would want to receive it.

2. Pivot/Change in vision

When a company decides to pivot, it's probably one of the most important decisions that the founders are making. But there are times that it might result into different founders thinking about different paths.

If all the co-founders aren't aligned towards the "new/pivoted" vision and are not 100% on board with it, it's natural for it to cause friction.

So let's break it down;

Before the pivot:

• Never make this a one-person decision, speak to every stakeholder possible that you think would be able to guide you in the right direction - of course this also includes your customers
• Back your decision with data
• Ask your other co-founders to share what they think should be the right path for the company - weigh that opinion in as much as you can.
• Ask them to carry out the same research for them to back their position on the pivot

When you've decided on a pivot

• Get the entire team on board and aligned
• In case your co-founder is not aligned with it and say possibly dead against it (which isn't rare) - seek a potential path to an exit for him/her. Speak to your investors and share both positions. Usually, we've noticed that only one founder is talking to the investors, it's equally important for others to have the stage as well.

3. Culture misfit

Team culture is something that is set right in the 0-1 journey of a company. It's usually set by the co-founders and it is extremely critical for the success of a company. Given that there is a high chance that you and your co-founder have not worked together in the past, there is a possibility that the work culture might come as an unexpected curveball.

I would urge founders to start defining the values by which the organisation should run at day 0 itself. Not when you get PMF, not when you get funding, but when you start your journey.

This way, you and your co-founder(s) are aligned towards certain working principles on day 0.

4. Communication

At the end of the day, if co-founders don't communicate to each other, it's very likely that things will start falling apart. This is sometimes the root cause for many conflicts as founders just keep going about doing what they think is right without understanding where they are going wrong.

It's really important to have a heart-to-heart conversation with your co-founder once every week/15 days. Keep these without an agenda and around anything and everything that one feels is going right or wrong.

I tried all of this...but it's just not working out.

Okay cool, so, you and your co-founder(s) have tried everything out. You've had multiple conversations and say reached a point of "no return"

What do you do now?

1. Inform your investors/Board

I'd recommend this step actually to come before reaching the point of no return. You don't want to surprise your investors suddenly by saying "Hey, what's up, we're breaking up"

As soon as you have foresight into a situation where you feel that you might have to take drastic steps, speak to your investors before that.

Why?

Firstly, your investors are investing in you as a team - not one person but all of you. You wouldn't want to surprise them with such information out of the blue.

Secondly and most importantly, your investors would usually have a birdeye view of the company. They will help you to zoom out and possibly arrive at an amicable decision which is fair to everyone.

2. Seek guidance

Speak to people who you know who have been in similar situations (many have) and ask them how they navigated it.

This will help you get ideas on being creative with finding a common ground.

Also, I believe that even when you're building a company with someone, it can still be a lonely journey. There can be a time when you don't know whom to talk to - you don't want to worry your team and your investors and hence, you don't really have anyone to share your perspective with. Having a mentor in such cases (and generally too) can really help!

You can also try out therapy tbh. If getting things across to each other directly is difficult, maybe bring someone who can help you do that.

3. Document everything

See, if things go south and you have a situation where lawyers are involved, it's very likely that there might be a "he said she said" situation where there is limited evidence. Hence, it is very important that you start documenting everything from meeting minutes, board resolutions, performance, chats etc to have an objective repository of proceedings to help you arrive at a resolution.

4. Negotiate

The most amicable way is possibly the best way - for everyone - the founders, the team, and all the stakeholders.

Try and reach a ground where you can settle the conflict with either you or your co-founder(s) walking away in such a way that both parties feel that its' the fair way to proceed - I know this sounds way too ideal, however, you should be prepared to lose some, to win some.

5. Understand your Term Sheet better

Usually, when you've raised a round of funding, your SSA/SHA will include clauses such as vesting, exits, non-compete etc. These clauses implicate implicate the negotiations heavily!

So, it's super important that you understand these terms really well. You can consult your lawyers who helped you draft these documents to get a better sense, however, involving lawyers is the last resort.

6. Try as much as you can to not involve lawyers

I know I mentioned that lawyers are the last resort, and I think I'll stand by it. But there are times that you're not able to reach a stage where nothing is working and lawyers seem the only way out. But honestly, it depends on the stage of the company - sometimes, fighting a conflict legally can be so detrimental to a startup, that it might make sense to return the capital back to your investors, help your team members get jobs elsewhere and move on to the next chapter.

Some good practices to avoid co-founder conflicts

1. Clear responsibilities + unconditional support

2. Have a heart-to-heart conversation once a week / 15 days

3. Get a mentor/coach to resolve technical/business conflicts

Other BFF Banter;

1. Join the Crosstalk WA community!
2. The Future of Personalized Healthcare in India

"Don't fight a battle if you don't gain anything by winning."

- Erwin Rommel