Co-Founder Feuds, Arguments, and Disputes > Getting to an outcome.
One challenge that consistently arises for newly formed teams and within the first few years of a company’s life is arguments between co-founders. I’ve written several different takes on this topic over the years. If you want to read those, here are the links. While you don’t need to read them for this blog post, I believe they can be helpful.
Have the tough chats, even if you don’t want to
The four phases of a co-founder relationship
Resolving major co-founder disputes
Firstly, I should state that the purpose of this blog post is to provide a pathway to ‘rescue’ a co-founding relationship. If things are so bad that you are already discussing how to break things apart, that’s a different story/plan for a different day. Rather, this is more about how you might possibly turn things around for the better.
Secondly, this will require work by all parties involved. You can’t have one person chasing and the other person avoiding. Make sure you both arrive at a point where you are at least willing to engage in a solution process, without that willingness to engage, it’ll be near impossible to start and work your way through an improvement process. In other words, if this sounds like marriage counselling speak, its because in some ways, when you share a cap-table with someone, you have made a commitment which comes with financial consequences if it dissolves.
So, let me get into the items that I’ve noticed from being involved in many co-founder disputes over the years:
- The source of truth in an argument— As an outsider looking in, I’ve never been able to fully get to the source of truth of an internal conflict. Having experienced my fair share of these and seen some from within (yes, I do get into arguments with my colleagues/partners as well), I’ve seen how it can take years before you realise the series of events (and their interdependencies) that led to the final few arguments that effectively ‘break things’. My point is here that you will rarely be able to get to the concluding smoking gun and identify who is to blame categorically, and thus you should not seek to get to that clarity to start trying to resolve things between the parties involved. There are cases, naturally, where fraud/crime is involved, and I’m not dealing with those here. I’m specifically addressing the compounding effects of perceived disrespect/disregard/dismissiveness that can lead to a decline in relationship quality, that leads to an action, which then gets a massive argument going. Whilst it can be useful to understand the history and elements that led to an argument, don’t let that process stop you from actioning a solution right now.
- Involving & Recruiting others into your argument — Another paralysing temptation to taking action right now is involving everyone around you in the argument as a way to get allies in a quasi-bombing campaign against your identified co-founding opponent. Remember, if you are seeking to have a functional relationship with them AFTER this dispute is over, what you’ve now done by involving others is creating factions that will simmer for much longer than the argument itself. Be careful when you involve others and why. If you feel you are ‘weak’ in your position and that you are being bullied into a final outcome that is clearly unfair, sure, involve others, but make sure they are the right people, with the right level of maturity and actionable authoritative measure to step in without then aggravating the problem. Also, keep in mind that when you involve others, you are also having to share in what might come out as an agreement/negotiation between more parties being involved. In effect you lose complete agency, as a team, in the outcome of any solution because you are effectively asking others to step in and play whatever role you’ve brought them in to play as part fo the argument. Btw, this doesn’t mean I don’t think it’s important to involve others when the need arises: trusted advisors, shareholders, etc can be hugely helpful in the resolution of an issue. I’m merely highlighting the facts and implications that come with their involvement.
- Egos at Play— Once an argument is underway, keep in mind that everyone has an ego, and will react accordingly to the level you showcase yours. In other words, choose your words wisely, your explosions carefully, and your actions with caution. This is not about not having an ego or suppressing your personality or who you are, it’s about not being stupid and aggravating things by going off-piste and closing doors in conversations. Another part to Ego is to understand what each person values and how that affects things in an argument. For example, one classic dispute if about titles and whether someone is actually ‘good enough’ for the title they sometimes are given in early days of a company’s foundation when ‘titles are cheaper than salaries’. It might actually be the right thing for everyone for a title change, but how do you help address the ego-deflating moment of having someone’s pride and joy (in this example, the value they place in the title they have as a source of pride and achievement) being removed? How can you help address that and provide/showcase a way through it?
- How conflict can show you someone’s strengths — For this particular point, you really really have to put yourself in the mindset that you are having these conversations to come out the other side of the argument in a better place, because it will be painful to do think about what I’m going to say next in the middle of an argument: Conflict can shed some light on the best qualities of the person you are arguing with. Yes, that sounds nuts even as I write it. However, as unlikely as it sounds, when the dust settles, conflict can showcase the strengths your colleague has. It can show you how they have also investing in resolving things for a start. It can show you how they choose to argue and defend their arguments (useful in future commercial negotiations), it can show you how they empathise with others (useful in future HR related matters), it can show you how facets of their ego (also useful in future HR related matters). My point is conflict teaches you as much about them as it does about you, and it’s important to keep that in mind as a hopeful thought for when things are ultimately resolved.
- Re-aligning around a common goal and/or commitment — The final point is that whilst it may not always be possible to have a conclusion to how something started and who is the worst transgressor, you do need to have a common goal and or agreed commitment to move past these doldrums. You all need to agree on what is most important and start from there. For example. Say you are in a dispute with a co-founder about how much work someone is putting into the business vs. someone else. You have to establish first what the commitment you’ve made to your customers and employees are first and from there start unpacking the issue, otherwise it can mean that you too quickly are addressing the issue at the ego level vs. the outcome/goal level. A good metaphor that I learned from, un-ironically, a marriage counsellor, is to pretend you are sitting on a bench alongside your co-founder, and looking at the problem vs. sitting at opposite sides. Once you’ve identified the shared goal/outcome/commitment, you can then start unpacking how that affects each of you individually and what compromises you each have to make to enable that to happen.
In conclusion, while there is so much more that can be said about co-founder conflict resolution (and as more ideas come up, I’ll add to the list above), it’s clear that this topic is fraught with emotions and complexities that can make it difficult to navigate. However, by understanding the landmines identified in this blog post, you can hopefully significantly increase the probability of achieving a positive outcome. Remember, effective communication, mutual respect, and a willingness to compromise are key to resolving disputes and fostering a successful partnership. For more insights, be sure to check out my previous posts on this topic.
Update: After posting this blog post, my friend and SC Alumni Sal Matteis added-
I’d add that you can be very consciously allow for source of mis-alignment to pop up in a <safe space>. To do that I recommend setting at least 1-per-year ideally twice-a-year session away from the office for a few days. For example have a 3 days-on-a-boat trip with your cofounder. The value of doing this is in the fact that you’ll reconnect as a human-first. Then you can use the environment to literally <hold a space> for you both to be lowering guards, temper the ego and then openly looking out at the problem out in the sea 🌊 Debate is fundamental. Over the years I have learned that emotional spikes (which often comes as a byproduct of ‘intensity’) can be managed in many ways.
To comment on Sal’s point, recent evidence has shown that time together synchronizes people’s brains. It’s an interesting read with big implications.
Similarly my friend, and SC Alumni, Anthony Gale added-
I’d add two key points: Firstly, no co-founders should be equal in terms of decision-making authority. There should always be someone who heads the company — regardless of equity or company history. The key decisions, where possible, should be made by the head of the company. It’s why they were put in that position in the first place. Secondly, there needs to be a clear disagreement resolution process established from the very beginning of the journey. This should be in place before any tough decisions arise, ensuring everyone knows how conflicts will be managed. Not only does this clear stuff up, but hopefully it means it can be cleared up quickly.
To comment on Anthony’s first point, in a previous blog post I wrote about the importance of setting a RASCI structure in general, but if you’re in a company where the relationship is more of ‘partner’ or co-founder with equal decision making, it’s critical you spend time on creating a clear RASCI structure on parts of the company where each of you have decision making authority, or you will have paralysis.
