images-1I wonder if anyone has ever done a study on the start-up community on how many co-founders survive the first stage of growth.

Co-founders are usually not equal.  In general there is one person who takes more equity and leads the team yet many investors and incubator programs want to see co-founders.  I get it.  When you are solo there is an echo chamber in your own head and people want to see a team.  You really do not want to lean on someone who is part of the company to discuss how to deal with investors or managing the group.  The team is great for a brain storming strategy around the vision but it stops there.

Why many companies co-founders part ways is simply because as companies evolve the expectations of that co-founder are not met due to their expertise not being needed anymore or what they were supposed to manage  is not essential at this time. Why pay that salary give them that stock if you are going to need to hire someone who fits the needs of the company when cash and stock is tight.

The most important thing is divorcing amicably.  It is not easy but in the long run makes for a better working environment and I do believe never burn your bridges.  I have seen many boards fearful of getting rid of a founder or getting rid of a co-founder because the team will leave or it will kill the company.  What usually happens instead is the team lets out a sigh of relief because they are just as frustrated if not more than the investors or the co-founders.  I firmly believe that if you are honest and transparent that people know that it is not working out.  They might not want to but at their gut they know it.

As our lives become more blended between our personal and business lives the parting of ways becomes even more difficult.  When you spend 24/7 with someone in a start-up you end up as friends.  It is hard not to.

There is something to be said for that quote in the Godfather, “It’s not personal sonny, it’s just business.”


Comments (Archived):

  1. William Mougayar

    Yep- I’ve seen upclose a co-founder break-up in a 3 co-founder team, and although it was filled with good intentions on the part of those that stayed, there was some bitterness with the departing one.

    1. Gotham Gal

      the hope is that the bitterness goes away at one point.

  2. zainabz

    My startup story – its birth and death – completely revolved around the relationship between my cofounder and I. We were never able to rise above the complications of our relationship and build a successful product. It was destined to fail but it is my fault for I should have realized this and walked away the first time my cofounder started banging the table with both fists and yelling at the top of his lungs. But I stayed around for 3 more years and was emotionally, financially and intellectually drained by that time. You are exactly right in that, cofounders are not equal and because of that they are unable to develop a mutual respect for one another. Without the solid foundation of mutual respect, no cofounder relationship can succeed. And after 3 years of heartbreak and humiliation, it is just hard not to walk away with embittered feelings. I wish more people would talk about this and share the stories of their cofounder relationships. It can really make or break a startup yet there is just not enough focus on understanding cofounder relationships.

    1. Gotham Gal

      definitely more conversation needed

  3. Laura Yecies

    Noam Wasserman’s Founder’s Dilemas book includes an analysis of exactly the question you asked up front. He tracks success rates for companies with/without cofounders and different types of cofounders – friends, coworkers, strangers etc. Highly recommend his book

    1. Gotham Gal

      thanks laura

  4. David Miller

    I’m betting that there is little research on co-founders. Books like Ben Horowitz’s “The Hard Things About Hard Things,” most blog posts, and all other dialog on Founders describe the experience from the co-Founder/CEO’s perspective; but in co-founding teams, there are 1+ other co-founders who have a very similar experience without the title whose story doesn’t get told. We’d rather learn about how to be a Steve Jobs or a Bill Gates when more of us are a Woz or a Paul Allen.I was a co-founder for 11 years before I left day-to-day and managing my relationship with my co-Founder was as big a part of my job as managing strategy and product, and consumed endless time for the Board and Sr. Team. It is never easy. Luckily, in our case, we were able to focus on our business and it has prospered.If I ever get around to it, I’m going to write more about the co-Founder experience – it’s very different than the experience of the CEO, unglamorous to most outside the company, indispensable to the success of a company, and relevant to more Founders – remember, only one Founder is usually CEO; more than one are non-CEO co-Founders.I’m guessing one of your investments is experiencing high levels of “Founder Drama” right now. I hope they have a strong enough business to survive it.

    1. Gotham Gal

      you should write that book. the co-founder can be the backbone of the business sometimes.

  5. LE

    I have seen many boards fearful of getting rid of a founder or getting rid of a co-founder because the team will leave or it will kill the company.I once got rid of an employee that had outlived his usefulness and gotten stale when I found him another job as follows:He had a vacation coming up for 2 weeks. I had a friend in a similar business and I was honest and explained that the employee was pretty good and did excellent quality work (ran a printing press) but felt that both of us needed a change. So we setup this scenario where the employee (who always needed money and lived hand to mouth) would work in my friends business on his vacation.At the end of the vacation if my friend was happy with his work he would offer him a job. That’s exactly what happened. I think the employee figured out the ruse but in the end was ok with it (after all he had a new job that paid equal to or better).I guess the only difference between what I did here and what happens in larger companies or in other situations was that I wasn’t upfront with the employee as far as what was happening. The upside was he didn’t have to tell his wife that he lost his job and was fired. So he kept his pride. (Not like this stuff makes it to the newspapers or anything like that).

    1. Gotham Gal

      it certainly does not make the newspapers

  6. LE

    I firmly believe that if you are honest and transparent that people know that it is not working out. They might not want to but at their gut they know it.Some people can easily sense things without any words. I could always tell when an employee was going to leave or was looking for another job just by how they reacted and how they made eye contact. It was so simple. I would imagine that many employees are the same on the other side as well. The ones that aren’t are probably going to get blindsided.

  7. LE

    As our lives become more blended between our personal and business lives the parting of ways becomes even more difficult. When you spend 24/7 with someone in a start-up you end up as friends. It is hard not to.Along the lines of my other comment “make the newspapers” in the past there were many things that could be done that nobody would know or ever care about at least in small business. But today, with blogging and an overwhelming openness that many people have come to accept and parrot, you have to be so much more careful of everything you say and do. I know that’s obvious but it presents real challenges of having to be, I think, overly cautious or packaging what you do appropriately for mass consumption and to avoid criticism (which takes much effort which detracts from doing business).I mean I’m sure when you write your blog or Fred with AVC in no way can you be 100% honest in the way you might be with a friend while eating dinner.

    1. Gotham Gal

      I am pretty damn honest. What you read is what you get.

      1. LE

        I am pretty honest in my online prescence as anyone who reads my comments can tell. (You can’t make this shit up!) But there are definitely things that I say in private that I wouldn’t say online, no question about that.What’s good though is on both your blog and Fred’s you can say whatever you want. On Hacker News you can’t even come close to that you will either get voted down, hell banned, or get a rath of negative replies. Paul Graham ends up missing valuable feedback because of that system they have over there. Freedom of speech does not apply on HN either dejure or defacto.

  8. Lisa Abeyta

    One of the reasons I wanted to acquire my husband’s company wasn’t just because of their technology and talent – it was the fact that he and his two cofounders launched three successful startups together and had worked together for over 20 years. The stability that brought to our blended companies was a huge asset.It’s also one of the reasons I find it interesting when investors make blanket decisions to not invest in any business where couples are involved. When you have two people who have been married for years, raised children together and survived the stressors of startup life in the past, I’d think they’d be a much better bet than two cofounders who don’t have the same level of commitment or willingness to be “all in” when the going gets tough in a startup. I’d be curious the ratio of startups that implode because of a marriage falling apart versus those with cofounders who turn out to be a bad fit.

    1. Gotham Gal

      interesting. sometimes it does work and sometimes it doesn’t.… here is where it definitely worked.

  9. David Ehrenberg

    This definitely won’t avoid all issues, but alignment on vision at the outset and documenting your agreement on roles, ownership, and exit strategy will go a long way to at least parting with a minimum of acrimony and complications if things don’t work out.

    1. Gotham Gal

      Legal docs are so important