Welcome back to Startup Curious, where we discuss things you should know if you’re thinking about working for or starting a startup.
Today, I want to talk about a topic that’s not all that fun: co-founder breakups. Co-founder breakups happen all the time and can truly kill an early company, depending on the circumstances. They can take a huge emotional toll, leaving even the founders remaining with the company feeling burned out and not passionate about continuing.
So… how do you avoid co-founder breakups? Before diving into that, I want to say: similar to a divorce, there are many, many situations where a co-founder breakup is best for everyone, and you should not stay in a co-founding situation that is actively harmful to you, your mental health, etc. It won’t do anyone any good.
And, again similar to a divorce - co-founding breakups are best avoided by picking a good co-founder to begin with. In the most ideal case, it’s someone you know well and have worked with before. They’re equally as passionate about the problem you’re trying to solve as you are as well as equally willing to do what it takes to make the company successful.
Of course, for many people that’s not a realistic goal, so the next best thing is to find someone you seem to click with, who has some skill set that your founding team needs… who is equally as passionate about the problem you’re trying to solve as you are as well as equally willing to do what it takes to make the company successful.
The equal passion piece is especially important because if co-founders feel like there’s someone not pulling their weight it can lead to resentment, which is never good for a relationship.
Okay, so you’ve found someone who you think may be a good co-founder - what’s next?
A lot of possibly tough conversations. You should spend some time really getting to know one another. This is still true if you’re working with someone you already know - you need to get to know them in relation to being a founder. What’s their ideal company culture? What does success look like to them? How long are they willing to work on the company if things don’t seem to be working out?
Your answers likely won’t match on every single question, and that’s okay - but you should line up pretty closely. If one founder is hoping for an IPO and the other is just looking to build something for a quick acquisition… it’s likely not going to work out long term.
You also need to have a pretty important conversation around who will be the CEO. This is a big mistake I see often. It’s easy to put this conversation off for quite a while, especially when you only have 2 founders, but the truth is - the sooner you can establish who is ultimately in charge, the sooner you can figure out if that dynamic works. It doesn’t always work, and it’s better to know that sooner rather than later. Once you’ve figured out who will be CEO, you should also discuss who is responsible for what on the team.
And, of course, once you have that conversation, you’ll need to discuss equity if you haven’t yet. Equity is another potential sore spot. In general, the equity situation should be fairly equal if you’re all starting around the same time and putting the same amount of effort in. If there will be a situation where the equity is very uneven, it should be discussed thoroughly to make sure the person with less equity is truly okay with the situation. If not, they may bail at an inopportune time and leave the company high and dry because they’re not that emotionally or financially invested.
Okay, you’ve found a good co-founder, you’ve worked everything out. What about later? How do you avoid a co-founder breakup down the road?
Well, the answer is… more conversations. Or, really: communication. Once things start picking up at the company, you and your co-founders may find yourselves working fairly separately a lot of the time, which can end up causing misalignments that lead to issues with your co-founding relationships. To avoid that, you should check in often with each other, not only about tactical & strategic things but also about how you all are feeling, about the company, in your personal life, etc. This will help you all quickly identify issues and hopefully work through them before they become too big to fix.
To help maintain this level of conversation, especially about deeper topics, many co-founders set up recurring meetings, at least a few times a month. Ideally, these take place in a more social setting than at the office - someone’s house, a restaurant, etc. This helps everyone connect a bit more as people, not just co-founders.
Unfortunately, co-founder breakups are not always preventable - and as I mentioned at the top, sometimes they’re actually a good thing. If you feel like you’re headed in that direction, try to figure things out as quickly as possible. The longer things are drawn out, the worse it is for everyone.
If you have employees - do your best to leave them out of it as much as possible. Watching a co-founding relationship deteriorate can be pretty anxiety inducing for them. Partially because it’s just uncomfortable to watch people snipe at each other but also because they’ll likely be aware there’s a chance that the company - and thus their job - won’t survive it.
Okay, to summarize: the best way to avoid co-founder breakups is to pick co-founders you’re compatible with and never stop talking to them… and also, some co-founder breakups shouldn’t be avoided at all and that’s okay too!
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If you have a topic you’d like to learn more about, or you’re a founder who would like their story featured on this show, send me an email at v@thescrappyoperator.com.
How do I avoid a co-founder breakup?