The 5 Types of Co-Founder Break up
As a founder coach, I’ve often delved into the dynamics of co-founder relationships. These partnerships are crucial yet complex, akin to a marriage with the startup being a shared child. Despite starting with optimism, many of these relationships, unfortunately, end in a “divorce,” contributing to the failure of 65% of startups.
Why do these crucial relationships fail? Let’s explore the common patterns:
1. Divergent visions
Co-founders fundamentally have different long term goals in mind for themselves and/or the company
Get rich quick or change the world? The first time I sit down with a co-founder team I ask them to define their personal idea of success and the idea of success of the company. Is the purpose of the company to grow fast and get acquired in 3 years or is it to help as many people as possible? If we have to pivot, but can still grow a great company, is it still what we want?
Often in the early days, there’s so much excitement and possibility in the air that it’s easy to look over the fact that you want fundamentally different things.
Remedies:
- Share what personal success looks like for each of you. How important is money, work-life balance etc?
- Talk about what at its core is motivating you to work on this startup. What would happen if there was a significant pivot?
2. Founder / non-founder mindsets
One founder acts as a founder. The other acts like an employee.
The founder mindset is characterised by ownership and delayed-gratification. A founder will typically have to work long hours with less pay to play the ‘startup lottery’ of achieving a big exit and having an outsized impact on the world.
Being a founder is different from being an employee in that you have ultimate ownership and responsibility for the company, in good times and bad. You can’t treat being a founder like another job. You need to constantly put in the extra effort and set an example for the team.
Remedies:
- Create a shared understanding of the values you’re going to work by and your ways of working
- If a co-founder is not meeting those expectations, give timely and direct feedback seeking to understand and help
3. One outgrows the other
A founder can’t grow as fast as the company needs.
A startup is supposed to grow exponentially and so must its founders. Sometimes, however, a founder can’t keep up and is no longer performing at the level required for the startup. This is most commonly seen in non-CEO’s as people who start off as ‘doers’ need to transition to the new skill of managers.
When this happens, the founder may begin to be sidelined or bypassed. This can result in defensiveness in the form of withdrawal or anger.
Remedy:
- Create a personal growth plan together as a co-founder team
- Give honest feedback
- Equip the co-founder with a coach or external support
- If the above doesn’t work, consider a role change or a step down for that person
4. Power struggles
There is a struggle for dominance between two or more co-founders
For many co-founders, the startup becomes their baby and they have very strong opinions about what’s best for it. If you have two big personalities in the room, arguments can be very heated.
It’s good to have the difficult discussions about the big things, but if you find yourself arguing too intensely, too often about almost every topic, this is a sure path towards a breakup.
Remedies:
- Agree on a protocol of what to do if you disagree
- Bring in a third party to moderate heated discussions
- Agree on who has responsibility and final say in what areas
5. Dishonesty and the breakdown of trust
A co-founder goes behind the other’s back
A few times I’ve witnessed a co-founder betraying the other by changing a term in the funding contract or lying directly to their face. Once this happens, trust is broken and it can be hard to recover. If one co-founder is undermining the relationship, there is little incentive for the other to invest in it.
Remedies:
- Sit down and have an honest conversation about what happened
- Create strong agreements around standards for honesty and directness for the future
Co-founder breakup is cited as the most common reason for a startup to fail, but I think that’s a little conflated. If the startup is going well, it’s easier to patch over the cracks. If things are going badly, it will put pressure on everything. Remember that your relationship will need extra attention when things are not going well.
Which is the biggest risk for your co-founder relationship?
As you navigate these waters, remember: awareness and proactive management of these risks can strengthen your co-founder relationship. Discuss these issues openly within your team to prepare for and mitigate potential challenges. This approach is not about fear but empowerment and resilience.
