One of the really sad things I’ve seen as a founder/CEO and now working with other founder/CEOs, is how often founders don’t take their responsibilities as founders seriously. You are literally putting your career and life in the hands of your fellow cofounders.
Your expectation is your cofounders will only join your company if they are in it for the long haul. Yet I’ve seen, time and time again, cofounders betray the trust of their fellow co-founders.
All it takes is for a cofounder not to take this responsibility seriously and your dream is gone. Sadly this happens all the time.
Over half of the CEOs I work with are dealing with founder issues. The founder issues vary from:
- The founder’s are not getting along, to…
- The founder is not working hard, to…
- One of the founders is trying to get rid of the CEO, to…
- Two of the founders are trying aligning with each other to force the CEO to make unnecessary changes that will hurt the company, to…
- One of founders is demanding to be on the board of directors.
I could go on and on.
The point is founder issues happen way too often. And you need to be prepared.
I had founder issues that almost killed my company. Two of my cofounders stole our IP, left me for dead, and then they launched a competing company.
Somehow, I survived and the company survived, but it took perseverance on my part and a lot of luck.
You don’t ever want to get in position I was in. So, the real question is there anything you can do either prevent founder issues before they happen, or, at least, reduce their impact if they do happen?
I believe there are things you can do to help reduce founder issues. It starts with:
A. You shouldn’t drop your standards when it comes to founders.
It’s so tough when you’re starting out, so the temptation is to lower your standards to get a cofounder to join. Let me give you a one word answer:
Don’t reach ever.
You will feel good in the moment when you bring on your cofounder, but your happiness will be short-lived. The problems will start immediately because a founder that can’t carry his or her weight will be a burden.
“But I need someone, anyone,” you’ll say.
I know. I’ve been there too. But the problem is when your cofounder’s work isn’t good, it’s many times worse than having no cofounder at all.
Plus, how well do you think your weak cofounder will be able to recruit?
My bet is not too well.
The old saying that B players recruit C players is true. So now you have the second problem of having more weak people in your company, and…
- Weak people lead to a poor culture, and…
- Weak people lead to a poor execution, and…
- Weak people lead to poor results.
Let’s say you’ve brought on someone you think will be great. Then…
B. You should obey the nine-month rule.
Think of your founder relationships like a marriage, except founder relationships have the added stress of building a company. Is it no wonder that many founder relationships don’t work out?
That’s why I like the nine-month rule. The nine-month rule is simply a reminder that you should take your time before you fully commit to working long-term with your co-founder.
I’m not saying you shouldn’t work together with your cofounder(s) as if you will work together forever. I am saying that you should put safeguards in place just in case things don’t work out.
For instance, make sure the equity of you and your cofounder(s) vest over time. Your equity should at least have a four-year vesting period with a one-year cliff.
This means that you can part company with your cofounder without any negative financial consequences if it is clear that your cofounder isn’t going to work out in that first year.
There’s nothing sinister or wrong about working this way. Indeed, one year vesting cliffs are pretty standard these days.
So what do you if you realize you’ve brought on the wrong cofounder?
C. You need to take action when things don’t work out.
Sometimes you bring on a cofounder that you think will be great and, for whatever the reasons, things don’t work out. I had a cofounder that I thought would be great, but he turned out to be a massive disappointment (read: What’s Your EQ And Why It Matters).
The worst thing you can do is doing nothing.
The problem with your cofounder isn’t going away. In all likelihood, the problem is just going to get worse.
And, you’re not the only one that is noticing there’s a problem with your cofounder. The rest of your team is very aware of the problems with your cofounder.
Yet many people feel they can’t take action against their cofounder. The reality is you have to take action or your company will suffer or worse.
Most of the time, the action will result in your cofounder leaving the company. That’s fine. As I said, over half the people I work with have cofounder issues, and all of these cases have resulted in the cofounder leaving the company.
You know what happens when a weak cofounder leaves your company?
Everyone feels better.
It’s amazing. You’ll likely hear something like this from your team, “What took you so long!”
D. You need to focus on how you will run the company once your cofounder leaves.
You’ll find your cofounder really wasn’t contributing what you thought, and you’ll find off that you can get along just fine without your cofounder.
In some cases, you’ll find you don’t even have to replace your cofounder. I had a cofounder that wasn’t working out, so, after way too long, I fired him.
I immediately starting interviewing replacements for my cofounder, but I couldn’t find anyone I liked. I had his two direct reports working directly for me.
It was obvious that Dave and Shoba were doing the heavy lifting, and “Randy” ,my cofounder, was doing nothing. I decided to promote his direct reports and not replace him.
I’ve had a few of the CEOs I work with report that they didn’t need to replace a cofounder too.
Sometimes not hiring someone can be the best thing you can do.
For more, read: What Are The Eleven Steps You Can Take When A Co-Founder Quits?