It is already too late if you have already been thinking about it.
You would have all these excuses in your head on why you shouldn’t break up with your cofoudner. Sadly, if this thought of breaking up ever creeps up on you, you have already lost confidence in your cofounder. Act and focus on the next steps instead. It’ll be a relief and you will be surprised by the productivity you gain back.
By the way, your team or your investors may have already expected the breakup. They will lose more faith in you if you tolerate it and don’t act accordingly. Show them you can make tough decisions and regain their respect.
Having a bad cofounder is worse than not having one.
You may feel that the breakup is the end of the world — but it’s not. Startups don’t die unless founders quit. There is always a way. While there is life, there is hope — Stephen Hawking.
Once you have decided to take actions, your first priority is to protect the company from any potential legal consequences caused by the breakup. This means a proper separation agreement and all necessary board consents to ensure a clean cutoff. Get your lawyer involved.
Your second priority is to address any concerns from your team and investors. Usually the breakup comes during down time. Don’t sugarcoat the situation. Be decisive on your next steps, and be especially clear about the transition plan.
Consider bringing someone new onboard.
If you are “pivoting” or building something new, seriously consider bringing on someone new as a cofounder (even as a junior one). It’s never too late and you absolutely do not want to be a single founder. After the breakup in my first YC startup, my ego took over and I deceived myself into thinking I would be capable of turning the company around as a single founder. I thought I could work twice as hard to compensate. It may work for others but I was just not single founder material. It won’t be easy bringing someone onboard at this stage as you probably don’t have much leverage, but then again nothing about startups is easy.
If you are downsizing at the same time, consider restructuring the cap table and promote senior members of your team. Some of them may be also be a good fit for a minor cofounder if you are building something new.