Managing Co-Founder Relationship.

The relationship between co-founders can be likened to that of marriage. It could last for a lifetime or a short time. It all depends on the goal of the business in question.

Hence, selecting the right co-founder for your business is important to the success of your business just as marrying the right spouse is for marriage.

The best time to set up a proper structure that will enable your team to navigate co-founder related issues is before you start building. During those early stages when you are exploring your different ideas to work or properly looking at market data to validate your ideas.

Once you hit the ground running, the chances of setting up these structures diminishes.

Do not think you are immune to co-founder issues, because your co-founder is your best friend from childhood. Businesses have broken lifetime relationships.

Irrespective of how complementary your skill sets, gender or age differences are, when co-founders issue hits, the ship comes sinking. 

Most Startups end up solving this problem through what I call the “Jonah’s Phenomenon”. One co-founder ends up booting the other from the company in order to stabilise the ship. 

Sometimes the ship is saved, other times, it's already broken beyond repair. The result? A broken relationship and a failed business.

“Lack of access to capital” is always taunted as the reason why most businesses fail. It might interest you to know that according to Harvard Business School Professor, Noam Wasserman, “65% of high potential Startups fail due to conflicts among co-founders”. 

These issues could vary from Misalignment in terms of roles, company direction, key strategic decisions and time commitment.

But then How do you manage these issues to ensure that it doesn’t lead to the company's death?

Co-founder Agreement:

A founders’ agreement is a contract that elucidates the rights, roles, responsibilities, and obligations of each founder. It is legally binding and aims to safeguard the interests of each founder while forestalling any possible conflict that may arise. - Infusion Lawyers

A founder disagreement protects the interest of the business. It also serves as a guardrail for the founders.

One good thing about founder agreement is that it also sets straight about company ownership. The equity vesting and cliff added to the contract ensures that shares are vested according to the terms stated in the contract.

It also sets the line between personal and professional relationships that exist between the founders.

So when issues come up, it will be handled professionally instead of personally. You have more chances of saving a relationship.

For a Foundership agreement to be effective, it must address the following; Intellectual property right, exit clause, Vesting of Shares and Cliff and Dispute Resolution.

Set up an Internal Dispute Resolution Framework:

When Co-founders have issues, personal relationships are also at stake. Having a prior discussion on how you guys can settle your dispute will be more effective in clearing any form of bias.

While there can be a Corporate dispute resolution framework for the startup in general, co-founders who share deep personal relationships, should literally have a personal level dispute resolution framework.

A startup advisor could be a mediator to ensure that every form of bias is crushed. This will lead to an objective decision that will benefit the health of the startup in question.

Final Note:

Running a business is already hard. Imagine losing a best friend while building a startup. The worst is when the startup crumbles in the midst of the chaos. Lost relationship, Lost Business!
But that’s the task you signed up for the day you choose to become an entrepreneur with a co-founder. {Not a Fan of solopreneurship though}

Abiding by the above can help salvage your relationship and startup. It is necessary to prepare  your mind for hard decisions like “Letting go of your co-founder” for the ship to sail. Ensure that this is done in accordance with the Co-foundership agreement signed.

And what if there is no co-foundership agreement in place? YOYO!