How to Avoid Co-Founder Disputes

Startup co-founders choose each other for many reasons:

Sometimes there is great synergy between them off the bat. Perhaps one brings in the technical knowledge, while the other is the business mind of the venture. Or maybe even they’ve already worked together, creating a minimum viable product that scaled at an alarming rate and now they want to reproduce that success again.

Whatever the reason, as the new partnership energy fades, and the trials of launching a product begin, co-founder disagreements can spring up.

Left unmanaged, unresolved disagreements can derail a product’s timetable, affect the venture’s bottom line, or even scrub a launch altogether — all because the co-founders were unable to move past their differences.

While co-founder disputes are unavoidable, there are things one can do to make those uncomfortable conversations productive and resolution-focused. Below are some tips for successful conflict management.

1. FIND THE RIGHT FIT

“You are only as strong as your weakest link.”

And when it comes to finding the perfect co-founder, you want to make sure he or she is the right fit.

How do you know?

Think beyond the technical or professional skill set they are bringing to the table and consider the following:

1. Personality: are they personable or do they easily clam up?

2. Values: do they value profit above all else or are they more interested in being altruistic?

3. Work Ethic: are they workaholics or do they desire a work-life balance?

Building the perfect co-founder team might take some patience, but the synergy and liked-mindedness achieved through finding the right fit will come in handy if and when disagreements do arise.

2. WRITE IT OUT

Ambitious Millennials are quickly getting into business with one another because of the value that startups offer. That haste of excitement, however, means that many do not spell out the details of their professional relationship via a partnership agreement, describing the roles, duties and expectations of each founder.

The best time to write up a partnership agreement is at the beginning, when that new partnership energy is fresh and everyone is the on the same page.

While consulting an attorney to help devise a legally sound partnership agreement is costly, creating an agreement for the beginning stages of the startup can be done individually via the founders and should include the following:

1. What are the roles and duties of each person?

2. Why is it that everyone involved is coming together to form a partnership?

3. How will profits or shareholding be allocated?

4. How are decisions made? What happens if there is a deadlock?

5. What should happen if a partner wants to leave or the partnership is terminated? Include the circumstances that might lead to that.

3. DECIDE BEFOREHAND HOW DISPUTES WILL BE HANDLED

As part of the partnership agreement, procedures should be spelled out for how decisions about the business will be made.

At a minimum, it should describe if decisions will be made unanimously, or, if three or more co-founders are involved, through majority vote.

Other things to include are the objective criterion that the partners will rely upon for making decisions (such as if a design decision is based more on aesthetics than something concrete); who and what kind of third-party will be used for consultation should an impasse occur; and how the founders will move forward, especially the “losing side,” in order to preserve the working relationship.

Figuring out a system for handling disputes beforehand will help expedite the process of resolving the issue will also guaranteeing that everyone’s position is heard and respected.

4. RESPECT DIFFERENCES & BUILD TRUST

When issues do pop up, the founder’s history of how they treated each other up to this point will be the basis of how they conduct themselves.

Therefore, if the talks are to be productive and solution-focused, the founders need to learn to respect each other and their differences, which includes hearing the other side out even when one or more of the founders believes they are in the “right.”

This builds human and relational capital between the co-founders that can be utilized later to “cash in” when there are problems, as each person advocates for the position they believe in. Through the active problem-solving process of their conversations, and the differences of opinion that are articulated, a solution could come about that is better than any one individual position.

5. DON’T TAKE THINGS PERSONALLY (OR MAKE IT PERSONAL)

Nothing derails a conversation more than when things become personal. A co-founder accuses the other of being childish, and the other retorts that his lack of hygiene drives business away. Back and forth they go until they are lost in a verbal wrestling match, forgetting that the conversation was meant to solve their predicament.

When this happens, instead of resorting to name-calling or underwriting someone else’s contributions, the founders should check their word choice and use conciliatory gestures to de-escalate the situation.

Being tactful and diplomatic requires that the founders involved in a difficult conversation recognize and acknowledge the unique perspective of the other without resorting to making the issue personal. It is only then that the conditions are ripe for conflict resolution and they can move forward past the issue.

Bottom Line: the “how to” avoid co-founder disputes requires spending some time and energy beforehand to set up procedures for decision-making, which should be decided upon as early as possible by the partners. Write it out, and make sure that when issues do pop up you resort to that agreement to guide a conversation that is based on mutual respect and understanding. And, above all, don’t make it personal!

Visit Workplace Collaborations to learn more about startup conflict resolution.