What to Do When a Co-Founder Can’t Scale
A high-quality startup problem is when the company starts to scale but one of the co-founders can’t grow at the same pace as the other. It’s a good problem but a real challenge nonetheless. Here are some thoughts on how I’ve seen it handled well (and not).
First, it’s important to note that an inability to “scale” isn’t a value judgment. The notion that every 25-year-old who starts a company is the same as Bob Iger, Ginni Rometty, and others with decades of experience running large organizations is crazy.
Hustling the first million in revenue requires a completely different skill set than staffing, and operating a multi-faceted sales and marketing organization. The hacks that built your MVP will likely prove unsustainable as you graduate to international scale and tight SLAs.
Rarely are all co-founders equally suited to the task of scaling. If you get the sense that one of the founders isn’t up to growing at the same pace as the company, face this head-on with empathy and communication.
Identify & Discuss the Problem
💬 Discuss amongst yourselves
In the best scenario, the founder in question recognizes that they aren’t in the right spot and honest dialogue can be had. If so, consider yourself lucky and think about how to harness this person’s talents for the good of the startup.
🇪🇺 Make the other persons case
In the case of a disagreement about the state of affairs, a useful exercise is to have each person make the other’s case. Hopefully, this act of empathy helps the partners better understand the frustrations and motivations.
🔮 Consult advisors
In the event there is co-founder friction, and the lack of a 3rd co-founder to help add perspective, start by talking to informal advisors and work your way towards your investors. It’s better to first chat with your VC’s who most likely won’t lead the next round.
⚡️ Discern Superpowers
Unless there are unhealthy personality conflicts, the founder who is not scaling can almost certainly continue to add value. Work together to try and determine the person’s “superpower” and how to apply it to new challenges at the startup.
Find a fit for the Co-founder’s Talents
Here are a few common functional roles a co-founder can fit into if they’re no longer the right person to lead a specific functional team at the company.
If the founder in question is technically brilliant, but not able to lead a large engineering org, putting that person in charge of a team working on some smaller new initiative can be a better use of their talents.
This is often hard to manage until the company reaches escape velocity. It’s also important that this group not be a “make-work” project, lest you confuse the team about priorities.
🤝 Head of BD
Often a more commercial co-founder can be a very impactful commercial “pioneer”, mining a new opportunity, establishing new channels and recruiting more seasoned execs as new line of business matures.
Sometimes a founder has a knack for relating to the community of users and there may be enough value in allowing this person to engage with that community on a full-time basis. This is typically true of later stage ventures.
A title that acknowledges status while not stymieing change in the org chart as long as that is hyper-clarified. Ideally this individual can be valuably deployed to help put out fires, test new ideas, and act as a trusted thought partner to the other founders.
A word of warning: this type of role can grate on someone who thrives on managing to clear objectives, or who desires to run a team. But a “minister without portfolio” can be tremendously helpful as new opportunities (M&A interest), or problems (crisis management), emerge.
🏅 Emeritus Founder
If the founder has other interests or opportunities, it can also be useful to have a roving “free agent” singing the praises of the startup from afar. This should be a last resort, but might be the best outcome in some instances.
After You’ve Decided What to Do:
No matter what the decision, once it has been made about the co-founder’s role, it’s important to communicate and operationalize the change. Here are a few tips on how to manage the transition:
✅ Act decisively
If the determination is that a new CTO or CEO needs to be hired, that job needs to be the company’s top priority. Don’t let the decision fester, or let the role go unfilled; otherwise, you’ll simply be revisiting the same problem in a quarter or two.
👥 Clarify who is in charge
Most startups can’t handle political factions. Make sure that early employees are brought into the change and there is no ambiguity about reporting relationships. You don’t want veterans undermining the new or clear leader.
😌 Strive for equanimity
This is typically one of the most emotionally taxing challenges a startup will face. Strive for calmness, fairness, and balance through the process. Make sure all feel heard. It’s important for the founder who is scaling to retain a sense of humility.
It could be that the successfully scaling founder was legitimately better suited to being a CEO, but they should also be cognisant of the fact that they may have been given more opportunities to develop and more attention from the board, known as the Pygmalion Effect.
Learning curves aren’t all linear. It’s rare but don’t be surprised if, as the company grows, the founder who wasn’t scaling manages to catch up and become a perfect fit for a key role in the maturing organization.
Don’t let hierarchy or org charts determine everything. Startups emerge out of the alchemy of 2–3 people working together brilliantly, and if you remove one element or alter the balance dramatically, you risk losing that magic.
As a final note, I’d point you to a wonderful exhibition I once visited at the National Portrait Gallery in London. The photos are of business partners, one famous, and the other who played a critical role behind the scenes.
While one of the subjects is better known to the world, there is an unmistakable sense of empathy and appreciation between the pair. If you approach this challenge with a similar level of compassion, your chances of success will increase substantially.
Managing Partner David Frankel recently shared this as a tweetstorm. We collected the tweets as a post for your convenience. Please share it with any entrepreneurs that might be struggling with the stress associated with scaling.