Fighting between cofounders: one of the main reasons that startups fail

****French version available here****

© Franck Boston - Fotolia.com

© Franck Boston – Fotolia.com

With 13 years of experience as a business angel  (200+ investments) and almost 4 years as a full time angel, I have finally discovered one of the main reasons that startups fail: conflicts between founders.

Yeah, often the problem isn’t launching a bad product, burning too much money, hiring bad people but the founders destroying their own company.

First, we have to say that managing a startup is clearly not “fun”. It needs a lot of work, focus and organisation. Founders need to manage cash flow efficiently to be able to keep the company alive until a potential success.

A real startupper is working a lot, is constantly facing a lot of problems (cash, hiring, technical, marketing..), is not sleeping enough and is sometimes destroying his personal life as a consequence. There is so much constant pressure for a long period of time.

I am regularly receiving phone calls or meeting with founders who are almost crying as they tell me the difficulties they are facing.

(I will talk about the life in startups in a future post)

When you are facing problems in a company or in your life, you have 2 ways to apprehend them:
(A) The problem is someone else’s fault: “I’m working so much, I’m sure I’m doing my ‘job’..so someone/something else is the cause”
(B) The problem is part of life: it is not insolvable, so let’s see how we can solve it.

In case of (A) at a startup, the founders are almost always looking at their cofounders to see how they work…and for sure, they will always find many things that are not perfect so…HE MUST BE THE CAUSE FOR OUR PROBLEMS!

Sometimes, they will say that their cofounder is working too slowly, is not doing “his” job, is taking too many breaks…

Last year, the cofounder of one of our startups told me: “You know, I’m coming at the office at 8am and leaving every day at 11pm. Do you think it’s normal that my cofounder is coming only at 10am and leaving at 9pm? Why do I need to work more than he does?”

I answered: “your cofounder is doing the right thing. You’re not.”
Beside the fact that working at the office from 10am to 9pm is already too much, I can tell you that the most productive entrepreneurs/workers are not spending all of their life at the office. (I will write about this in a future post as well).

In this specific case, the conflict between the cofounders was so hard that we needed to split the activity into 2 companies to separate them. I don’t think that this solve anything and it’s clearly possible that the second founder will succeed more than the first one.

Another time: a founder told me: “My cofounder is really bad, he made an horrible mistake by sending a newsletter to all our userbase (including unsubscribed users) by mistake. It’s a nightmare”.
I answered : “Every human in this planet is making mistakes so why do you think he’s so bad? He developed 95% of the code of the company. 99% of your users will just delete this email in 1 second.”

These are just small example but I can spend days telling you stories, things like this happen all the time at startups.

But there is a secret.

In the Talmud (Kidushin, Daf 70B), we can learn something that I almost always find relevant. It says : כָּל הַפּוֹסֵל בְּמוּמוֹ פּוֹסֵל

It means that if someone is invalidating someone else for a specific reason or default, it’s because of his own (same) default.

So in our case, when Founder A is thinking that the other Founder B is not working enough or not doing his job correctly, it’s probably because founder A is not working correctly.

I will not say that we will never see a case when a cofounder is really not a good one, but, most of the time, we would discover this very quickly at the early stages of the company. If it’s happening after 6 months, most of the time it means that he’s not the reason or, in any case, the current failure of the company is not his only fault.

Fights can also happen when a cofounder is working on another side-project without the approval of the others. In that case, yes, you have a real big reason to be upset (these kinds of things need to be written in a cofounder agreement in advance).

So how to manage this kind of situation ?
If you are Founder A, focus only on what you are doing and what you have to do. Don’t always check what your cofounder is doing. Don’t always try to correct him, change him like a father.
Like in a couple, it almost never works and that kind of situation are always finishing by a big explosion.

If you think your cofounder can improve things, go to a restaurant, talk together and ask him first:
– How do you think we can improve the company ?
– How can we solve this problem ?
– How can we hire this type of guy ?

Discuss together about all these subjects.

Never talk about him personally because at the end, what you both want is for the company to succeed.
After this talk, write on a piece of paper who needs to do what and agree together on a due date for each part and then stop thinking about him completely. As I told you, most of the time, he’s not the problem at all.

If after a few months, if you still think that there is a real problem, talk with another entrepreneur/mentor first and ask him for advice. Don’t be upset by this situation, being upset will not help.
If you find that everyone agrees that he is a problem, talk with your cofounder…and help him improve the way he works.

Trying to fire a cofounder almost never works and most of the time will kill the company.

I heard a story a few weeks ago that a founder wanted to fire his cofounder and finally the shareholder investors fired him instead… 😉

A last word: I clearly recommend to launch a company with at least 2 cofounders, ideally 3. When you will have difficulties to solve, you will be a lot more efficient by working together. I will clearly write about this soon.

Don’t forget to negotiate and sign a founders agreement defining exactly the role of each founder. A template is available here

I haven’t spent a lot of time on it but it seems that this one is missing an exclusivity clause saying that founders will not work on anything else beside the company without the authorization of the other cofounders. For me it’s really very important.

Good luck!
Thanks to Vincent Jacobs for the rewriting

Leave a Reply

  1. Great insight! you don’t mention the 50/50 split case between two founders in the post. What’s your take on it? Is it for a future blog post?

  2. Running a startup is high pressure, and pressure generates conflict.

    I’d also suggest engaging the services of a trusted third party — maybe a mediator, or an executive coach — if conflict starts to harm the partnership.

    I’ve mediated several partnership disputes, and they really resemble marital disputes more than commercial contract disputes. It’s about trust and open lines of communication.

    Lots of good resources available at mediate.com if you’d like to learn more. I’m happy to answer questions, too: crule@modria.com