Mar 16, 2020
Co-Founder Conflict: Resolving Business Dilemmas Like a Boss
It’s an age-old entrepreneurial dilemma — how to deal with co-founder conflict. If you’re a founder, chances are you’re familiar with these types of dilemmas or it’s just a matter of time until you experience one.
Because new ventures are often a labor of love, it’s understandable that entrepreneurs become emotionally attached to them. This attachment can produce great success but it can also lead to the demise of a business. In fact, team and co-founder conflicts are the third most common reason that startups fail, right up there next to financial problems and a lack of market need.
And while you might assume that two heads are better than one — more resources, more human capital, more access to financial capital, and bigger networks — there’s also friction that occurs. So, some founders choose to go at it alone (even becoming unicorns). Others need a founding team to operate. If you’re the latter, knowing how to engage in conflict is essential to surviving and thriving as a startup.
While we won’t cover every single detail or scenario in this guide, we do give a comprehensive overview of how to embrace conflict, establish boundaries with your founding team and what to look for in a co-founder (if you don’t already have one or need a new one).
How to Embrace Conflict
It’s natural to think that the best-case scenario is to minimize all conflict, but that’s not necessarily true. Successful startups are run by founders who aren’t afraid of conflict and have learned to embrace it. In fact, in order to have a healthy and functioning business relationship, you need to learn how to argue (fairly) and come up with a solution that you can both live with.
With that in mind, there is a best course of action for founders and co-founders to resolve dilemmas with one another.
1. Have a Plan of Action (In Writing)
We’ve established that conflicts are inevitable and oftentimes necessary for startups to evolve, so it’s best to be prepared for those circumstances when conflict arises.
Being prepared by having a written agreement that outlines your individual roles, profit, liability, and work-load distribution. This is also a good place to outline a conflict-resolution game plan. This way, when conflict inevitably occurs, you have a founders’ agreement to refer to.
2. Address Conflict Head On
It’s a natural human tendency to avoid conflict and, by doing so, you might feel like you’ll salvage your business relationship. The harsh reality is that if you prolong addressing conflict, you’re only likely to escalate the problem, repeat it someone down the line, or — worse — damage your company beyond repair.
Addressing and embracing conflict head on is not only positive for founding partner relationships, but it can actually set a good example for your team — that is, if you and your co-founder can come to an understanding.
Co-founder conflict should always be discussed away from employees, since conflict in the open is a fast way to reduce morale and lose the respect of your employees. When it arises, take the discussion to a private place.
3. Work to Understand Your Co-Founder’s Point of View
As a founder, it can be easy to make the mistake of thinking your point of view is the only correct one and, in turn, vocalizing that to your co-founder(s). After all, you’re emotionally attached to this business you’ve poured your blood, sweat, and tears into. However, only seeing your side of things damages working relationships. Make the effort to put yourself in your co-founder’s shoes and truly listen to what they’re saying during times of conflict.
You’ll win some arguments and lose others, but at the end of the day it’s important to remember that your goal is to run a successful business.
4. Come Up With a Solution
The same logic can be applied to co-founder conflicts as driving in bad weather conditions — steer into the skid. If it’s your first time in a co-founder dilemma, it unlikely that you’ll navigate the waters as a professional. It takes a bit of practice to arrive at a solution.
Don’t agree on something? Don’t leave the room until you have a resolution.
This might mean you need more than a one-hour meeting. Perhaps you need to venture outside the office to resolve this conflict. In this case, cancel your weekend, go on a hike, and work through the dilemma together.
If it’s more severe, you might need to seek professional guidance.
How to Establish Boundaries
While conflict is a natural part of co-founder relationships, fighting all the time is also a recipe for a strained relationship.
In fact, conflicts are such a frequent problem that 43 percent of entrepreneurs end up parting ways because of internal arguments — many being forced to buy out one another or call it quits. Of these startup leaders who split, 71 percent said their co-founder breakup was due to differences of opinion on the company’s direction and 18 percent felt it was because the ousted co-founder didn’t share the venture’s values.
So how do you prevent becoming one of the above statistics? If fighting is a common occurrence between founders, it usually means that their individual roles aren’t well-defined. Here are five tips for how to help establish boundaries and navigate the murky waters of co-founder conflict.
- Make a list of all of the areas needed for your business. Then figure out who is best at each part, and assign one person to it. The beauty about having a co-founder is that there are two people to bring different skill sets and strengths to the table. Capitalize on this instead of letting it divide you.
- When a big decision arises, everyone should agree to hear each other out. Once the owner of that task makes a decision on which direction to go, all debate should be over.
- Agree to move on. Again, once a decision has been made, it’s time to bury the hatchet. Don’t continue to surface an argument or this will only lead to a lack of trust.
- Don’t let disagreements fester. Have those difficult conversations as soon as they arise or you’ll just be looking at larger conflicts and problems that are more challenging to resolve later on.
- Don’t choose a co-founder who’s the complete opposite of you. Many people think that a compatible co-founder has to be the polar opposite of themselves for their startup to succeed. But the reality is you need to share values with your business partner — not to mention, your work ethic should resemble your partner’s or it’s going to be tough to spend your working hours together.
Make sure you can respect your co-founder’s approach to business, personality and skill sets.
What Does It Mean to Embrace Conflict?
If you’re new to the game or it’s your first time experiencing conflicts with your co-founder, it can be difficult to understand how to embrace conflict and fight fairly.
Don’t Abandon Your Stance Once the Conflict Starts
Some founders know their stance is the right decision, but they give up before the fight starts. True, there’s a great deal of value in a harmonious relationship with your co-founder, but this doesn’t mean being a pushover. Don’t sacrifice what you know to be right or swallow your words the second an argument ensues.
Don’t Bulldog Your Way to a Decision
On the flip side, the loudest person in the room shouldn’t necessarily and automatically win. Even if you’re sure your point of view is the correct one, there’s no downside to hearing out your co-founder.
Arguments Should be Collaborative and Data-Based
This means that you need to discuss problems as part of a process, allowing different viewpoints to be aired and evaluated directly. If possible, come to the discussion with data to support your argument.
Be Open to Getting Professional Help
If you and your co-founder have worked through these exercises with no resolution, it’s probably time to seek out professional help.
- Executive coaches are always a great resource since they’re objective and unattached to the outcome of your startup.
- T-groups are training groups that teach people how to fight fairly in a business dynamic. Initially developed for the Stanford GSB’s Interpersonal Dynamics program, the nonprofit InnerSpace regularly hosts them, and many founders describe the experience as being extremely valuable for their co-founder and team relationships.
You’re Having a Conflict, What’s Next?
If you’re unable to resolve the conflict with your co-founder and the relationship is in danger of poisoning your business, it might be time to move on. In fact, 23 percent of startups said that not having the right team contributed to their startup failure — you don’t want to be part of this statistic.
Finding a new co-founder or even a good one can be like spotting an exotic animal — i.e., they’re not usually going to be someone you spot on the street. So, where do you find your ideal partner?
Prior to going on a (new) co-founder hunt, you’ll want to:
- Know what you bring to the table — Startups aren’t without risks, so you’ll need more than just an idea to convince someone to join you in a leap of faith. Consider what you have to bring to the table — do have an established customer base? Experience with startups? What about funds that you’ve set aside?
- Have something to show — Maybe you don’t have a product or service yet, but do you at least have something tangible to show a prospective co-founder? What about a landing page, business plan, or a pitch deck? Not only are these things signals that you’re serious and committed, but it makes the process of explaining your vision to a prospective co-founder much easier.
Where to Find a Co-Founder
People you’ve worked with are more likely to be good co-founders than strangers. This is typically because you’re familiar with the other person’s work style or have developed some level of trust.
But finding the ideal co-founder can be a long process. Whether you’re on the hunt for a new co-founder or you’re looking for the right person to embark on your startup journey with, there are some additional places you can seek out a co-founder outside of your existing network.
When you think of job boards, it’s probably during the search for new employment, so it’s unlikely that you’ve thought to post a co-founder “job” there. Think again!
Because most people don’t utilize job boards this way, they’re a very underrated place to find co-founders, so you’ll easily stand out when you do. Write a job post that details what you’re looking for in a co-founder, including a description of your company, job responsibilities, and qualifications.
It’s worth noting that many popular job boards don’t let you post unless it’s a salary-paying job. Craigslist is one such exception.
Founders aren’t just limited to the working world. In fact, many successful businesses have been founded by college students. Take these successful billionaire founders: Snapchat’s founder Evan Spiegel, Steve Huffman and Alexis Ohanian of Reddit, and of course, Mark Zuckerberg.
Even if you’re no longer in college, it can pay to get in contact with the MBA program director at your alma mater and ask if they can spread the word about your “co-founder position” among its graduating class. You might just get connected with a student who has an impressive business background.
You’ve probably heard the term “hackathon” before, but unless you’re involved in the tech scene, you might be wondering what it is and why it would be a good place to seek out a co-founder. Hackathons are events — usually hosted by a tech company or organization — where computer programmers and other people in software development like graphic designers and project managers collaborate on projects.
Hackathons are essentially a sandbox environment to form a new team or connect with others as you build and present a company idea by solving a particular problem. They’re a great way to meet new people and learn about each other’s skills and interests while seeing if you could actually collaborate in a long-term capacity.
Maybe you don’t know enough people within your current circle or the people you do know aren’t the kind you want to work with in the trenches. If this sounds familiar, an incubator program might be for you.
You might be familiar with incubators as programs that provide guidance to startups. While this is true, they also support entrepreneurs with resources, mentorship, and sometimes even office space, making them a great resource to scout out other hungry and ambitious individuals.
Startup forums and events
If you live in a major city, chances are startup events are happening on a weekly basis. Sites like meetup.com are a great way to find entrepreneurship and business events to network with like-minded individuals. If you live in one of the eight major cities on builtin.com, we recommend utilizing their events platform — you can filter by sector and interest like hackathons, networking, or founder-specific events.
These events can be a great way to network with entrepreneurs, but they also have a downside. Because big startup events are so popular, it can be difficult to stand out in a crowd. Entrepreneurs often get lost in the noise and competition. That said, they’re still a great opportunity to network and make connections with like-minded individuals.
Founder dating apps
Much like the dating game of the 21st century, there’s a multitude of platforms to find prospective co-founders.
Just like the above resources, prospective co-founder platforms have pros and cons, but they can still be an effective place to find talented individuals. Here are five different highly rated platforms.
Finding a prospective co-founder is much like finding a life partner — you’ll want to date first and get to the core traits that are essential for your startup and compatibility together.
Once you find someone for the startup journey, it’s always a good idea to experiment with the process of making decisions together. This is often where hack weekends come into play — because these are typically marathon sessions of work time with your potential co-founder, they can give you a good idea of how you work under pressure and solve problems together. Another good way to test the waters with your prospective co-founder is through a provisional 30-day working period.
Once you start compiling your team, you and your co-founder(s) will need to consider things like Directors & Officers insurance that protects the assets of your board of directors. Embroker is your go-to resource for staying up to date on trends in the VC ecosystem and getting you set up with custom coverages like Legal Professional Liability and Workers’ Compensation Insurance.