Co-founder Conflict

I am a technical co-founder, and that means I build things. In a conventional co-founding relationship, I am be expected to give my business-oriented partner the final word with respect to strategy or direction, and he defer to me on how to build the product.

At the outset, this puts all the power in technology. Nothing is more important than getting the right product built and shipping on schedule, execution is everything.

Unfortunately, at any significant scale it's all strategy. Technology increasingly becomes a cost centre; either it works or it doesn't, either it ships or it sinks. Strategic decisions begin to lead technology choices, and the CTO drifts away from the locus of power. Even if she's explicitly invited to participate in strategy, the buck stops somewhere she is not.

Influence, and with it ownership and personal investment, whipsaws from one founder to the other with neither realizing it explicitly. Ultimately, technical founders almost always drift away (as we've seen most recently at Buffer) when the company hits scale and they're fully vested. And that sucks - any new blood won't be as naturally invested in the product without further dilution, will lack history with the team, won't know where the skeletons are buried, etc.

I hypothesize that balanced founding teams - two business, two technical, sales & business, etc. would have more staying power in the long run. Cases where there is no default division of labour and influence. I believe I've seen this pattern, but without a neutral data set I can't trust my biases. YCombinator has enough data now to figure it out... (\nudge nudge\)

The tip is to draw up a company organisational chart, as if you were a 20 or 30 person company. Starting from the top, a box for CEO, then break down the other managerial roles, such as Operations Manager, Finance Manager, Technical Manager etc., then under those, further boxes for the sub-roles.

E.g. for 'Finance Manager', you might have Debtors Controller, Creditors Controller, Payroll Manager etc. Under 'Technical Manager' you might have 'Lead Programmer', 'Graphic Designer', 'Database Administrator' etc. as you see fit.

Then, it is a case of filling in the boxes with the name of the co-founder who will be responsible for each of those areas. Sure you may get one name placed more than others, but the idea is to work out the exact separation of duties and who will be responsible for what.

It is also a great technique for working out each others weaknesses - for instance I personally hate accounting related tasks, so I could never be the finance manager, but I am content doing some rote work like invoicing or bank reconciliations from time to time, so I would put my name lower in the order, but be supervised by someone with more knowledge.

In the business startups where I have done that, things have worked out well while we continually referred to it and used it as we grew. As we hired, we removed our own names in the boxes and replaced them with the employee names.

The point is, that this whole concept helps with the communications angle that we are talking about in this thread. Knowing what each person is responsible for, and knowing who is accountable for what really helps with the reduction in animosity between the founders.

But as with most things - constant vigilance is due. Things started to fall apart when we deviated from these simple principles. Human nature I know, but I hope the lessons learned here will help others.

No doubting that a co-founder can make a big difference to the gargantuan task of getting a business to build momentum. It is one of those times when 1 + 1 = 4. But it is vitally important that both (or more) co-founders keep the same vision and goals at the forefront of their minds.

In both my previous cases of co-founded businesses I ended up with the case where each of my co-founders had massive life changing things happen to them personally (My first co-founder had his wife end up in a wheelchair for life). I look back now and think that things could have been handled very differently and perhaps the business could have made it through. I am not naive enough to think I was completely blameless in those situations, but every time I look back on the events, I can see that clear communication could have solved things, as well as taking emotion out of the equation so things could have been examined in a more rational manner. Really wish we had someone step in as a moderator back then.

As an aside, I was an early adopter of Posterous, and loved the platform. I was sad to see it go, and I wonder 'what if' Garry and his co-founder had resolved their differences - would the company ever have continued for far longer that it had?

And make no mistake: almost every start-up will sooner or later face this in one form or another. Simply because goals may be in alignment at the start of a start-up but they rarely if ever remain in alignment over the longer term.

I've counseled/mediated in quite a few companies facing these kind of issues and it is always surprising in some way or another to everybody involved when the root cause of the conflict is finally laid bare.

I could probably write a book about co-founder issues (I gave presentations on that topic in the past, that's something :-).

The best co-founder is someone you worked with before. You know them. Starting something with a co-founder you don't know? It goes downhill very fast.

There is a very fine balance that is hard to achieve. You want to have complementary skills, but still be on the same page. You need to trust the other co-founder and not micro-manage, and get the same trust in return. If you have no shared history, it's extremely hard.

Before anything, set up a written agreement with your co-founder(s) containing

* Founder roles and responsibilities * Expected time commitments * Testable performance metrics or at least testable cases of non-performance

This may be part of the company operating agreement (containing the company ownership structure) or a separate document that any co-founder has to sign.

Unfortunately I learned this the hard way and once ended up with a co-founder that wasn't really committed to the company up to the point where we got acquired (up to which point I've invested about 3x the time as compared to my co-founder). Trust me, getting acquired in that situation did not feel good, not at all.

Money > Contracts

...yet, this is actually not obvious to many co-founders. I angel invest and see this problem over and over -- situations where co-founders are not on the same team but rather on either multiple teams or have misaligned incentives.

before any of what is discussed in the article, co-founders need to ensure -- in writing -- not only their roles/responsibilities but outside commitments, especially paid outside commitments. Companies where one partner takes undue risk (e.g., giving up a job while the other has not) are incredibly fragile, yet this is often not discussed by many. In such situations, the co-founders are not actually on the same team entirely.

EDIT: Another bad situation -- one where one founder has a much longer tolerable horizon (perhaps they are rich, perhaps they have side incomes) and another founder seeks a quick exit at a lower figure (perhaps because they cant stay on a founder's salary for too long.)

...I'll go back to being miserable and lonely now.

An interesting data point is that disputes over responsibility were roughly an order of magnitude more common in triples or quads than doubles.

That's the real problem. When looking for a co-founder, I think it's very important to choose one who shares the same vision about whatever you intend to build. If a potential co-founder doesn't agree with the direction you wish to go, keep looking.

Below is a threat with great recommendations when there are cofounder issues.

https://cofounderslab.com/discuss/how-do-you-deal-with-a-cof...

I wish there was a way to due-diligent co-founders like you can do with business plan.