How Co-founder Disagreements Led to Company Failure (or not?)

Here is a story of how it goes with co-founders…

You have a co-founder

Imagine, for a moment, entering into a business partnership with someone you’ve just met. The world of co-founder relationships, especially with those you barely know, is pretty much like venturing into uncharted waters. The excitement of a new venture is met with the unease of the unknown: Will we work well together? How do we align our visions? And most importantly, how do we ensure success, and what does success mean for each one of us?

Joyful beginning

As initial weeks go by, it becomes apparent that while both co-founders are passionate and committed, they have different working styles, areas of expertise, and availability. Without any prior relationship or work history to fall back on, misunderstandings arise.

Who is responsible for what? Why is one founder spending more hours than the other? And, as a challenging decision about the company’s direction looms ahead, the realisation hits: they haven’t set a clear framework for navigating these murky waters.

Resolving conflict

Recognising the potential pitfalls ahead, our co-founders sit down for a strategic meeting. Their first order of business? Documenting expectations and agreements.

This will act as a compass, providing direction and clarity. They delineate roles, ensuring each founder knows their area of responsibility. Next, they discuss time commitments, ensuring both understand and agree on the time and effort needed.

Aware of the differences in their contributions, they also set up a system for addressing potential disagreements, particularly when making pivotal company decisions. An agreed-upon process ensures that conflicts can be resolved swiftly, preventing them from becoming insurmountable obstacles. And for those unforeseen challenges, like one co-founder being unable to meet their time commitment, a contingency plan is put in place, perhaps allocating funds for temporary assistance.

Happy ending

With these expectations and agreements written down, the document becomes their anchor, a reference point to ensure they remain aligned in their journey. Both founders feel a renewed sense of partnership. With clear communication and transparency as their guiding stars, they set forth, more confident than ever, in the shared venture they’ve embarked upon.

In the end, while their relationship might have begun on uncertain grounds, their commitment to open communication and strategic planning paved the way for a successful and harmonious partnership.

The moral of the happy-ending co-founder story

The story above has a happy ending, but most of the time, when co-founders let things escalate, it ends up not so nice. It also does not end well if you spend too much time discussing every possible scenario and downside early on.

I have experienced the co-founder issues several times, once to the point that the venture didn’t even take off. That’s how much we got stuck on discussions about potential scenarios of downside and upside and each others’ responsibilities.

When I recently helped a client resolve their co-founder drama, I realized I should talk more about what co-founders can do early to prevent misunderstanding and messy separation fights. After all, most businesses are not one-man shows.

I’ll return to this topic to summarise what co-founders should discuss and agree on when they start working together. I get asked about that a lot.

If you have questions or comments, just hit me up here or on X (Twitter) @NewFounderCoach!