Starting a small business or startup will dredge up a lot of emotion. It’s exciting, scary, empowering, and thrilling, usually all in the same day. The moment you have your first win – a new partnership, a great deal from a supplier, your first customer – is one of the most memorable moments in any entrepreneur’s life.
Working with a cofounder can help hedge bets, bring in valuable skills and insight, and add overall strength to the venture. But what happens when your cofounder(s) stop playing nice and you just can’t agree? Stop pulling out your hair and read further for some things to try based on my own experience and stories that I’ve gathered on my podcast.
Find a Mediator
Depending on the stage of the argument and the nature of the conflict, you may need a mediator. After my cofounder chose to leave my startup, he refused to sign non-compete papers. Myself and my remaining cofounder didn’t have the legal knowledge it would take to convince him, so we asked our lawyer to mediate. Our lawyer had been walking through the startup process with us from the beginning, so by this time he was trusted by all three of us. He was able to act neutrally and explain why it was in everyone’s best interest to move forward with the non-compete.
If you have a neutral party involved, especially one of authority, their mediation can be invaluable to resolving conflict between founders. I also suggest hosting the meeting at a mutually neutral location so no one feels threatened.
Conflict can often arise when two parties disagree on how to handle overlapping tasks. While you may believe two heads are better than one, it may be time to create a hard line between duties. If the conflict doesn’t run too deep, this may resolve the issue – but make sure you stick to it! Even if you have an opinion about the way your partner is running your social media, don’t step in. Voice your concern and then leave them to it.
Get Skin in the Game
This is more of a preventative measure, but it could also be useful if you start seeing an imbalance arise between partners. If one or more founders don’t have any financial investment in the company, they may not feel the same urgency for success as those that do. This is a fast track to resentment. While at the start, an idea may not seem serious enough for everyone to back it, the day will come when they need to. Start the conversation with the premise that you have reached that benchmark, and that everyone needs to invest in order to continue.
It may be hard to remember why in the world you started a business with this person. Take a moment to backtrack to the day you made the decision. What were their winning qualities? What made them seem like they would be a valuable asset? Compare what you thought to what you know today: Has something changed, or were you simply misinformed? If something about them has changed, this may be the best place to start a conversation. A death in the family could mean they’re hanging on by the skin of their teeth because they feel obligated, but your blessing is what they need to let go. If you were misinformed, the conversation gets harder but no less important. Ask if the cofounder is really up to the task, and be sympathetic. Admit that you thought things might go a different way, and ask for their input on next steps. Hopefully you can find a new place to meet in the middle.
Rethink the Split
Two founders, 50 / 50 split; three founders, 33 / 33 / 33 split, right? Maybe not…
If your conflict is arising from time put in not equaling equity split, but you don’t want to boot your cofounder, it may be time for a change. It’s easy to get the feeling that you are carrying the bulk of the weight on your shoulders, even if the quantity of the tasks is equal to the others. Reevaluate just how much time each founder is able to contribute, to what areas of expertise, and how valuable each is. Maybe your cofounder only has time to manage the finances – well, that’s a pretty big significant item. It may be equal to the worth of several smaller tasks. Work together to list the major tasks of the business, and add weight to each one. From there you’ll be able to make distribution choices based on numbers rather than emotion.
The startup is going great, and it’s growing. You’ve brought on new people, but it seems like your co-founder has reached a bottle neck. S/he isn’t juggling the work load, or isn’t thinking big enough. Regardless, you’ve reached a difficulty in scaling. As I’m sure you know, scaling is critical to a startup’s growth – in fact, it’s one of the defining factors, especially when investors are involved. So what do you do?
Talk to your co-founder. Avoid getting angry or pressuring them. Remind your co-founder of the original idea, the reason you got into it in the first place, and the vision you both had for the future. Your future vision was probably aligned at the beginning, at least to some respect. If your co-founder still seems to be unreceptive, offer the opportunity for an out. Ask if where the company is going isn’t what they had envisioned, if what you’re doing is working, and if it’s the best thing for the both of you and the company. Sometimes a person in a leadership role doesn’t know how to get out, especially when it feels like they made a commitment at the beginning of something big. Or your cofounder simply didn’t sign on for the new direction, and a change is necessary.
When All Else Fails
It sucks to have to part ways, but if your cofounder is being stubborn and can’t seem to work with the team in spite of your attempts, it may well be time for a split. Try to look for the best option for you both. If you want to continue the business, you will have to buy your cofounder out. Allow for time for this decision on both sides – you need to decide what is fair for the business, just as your cofounder needs to decide what is fair for them. At this point, you’ll have to get separate lawyers so each party’s needs are covered. This sounds scary, but lawyers are a much better option over doing it yourself and getting it way wrong. They will help avoid a fight and close the deal in an orderly fashion.
Did I miss anything? I’m happy to do a follow up if you’re experiencing something I haven’t covered. Please comment below.