Managing co-founder relationships

First some blindingly obvious truths: Startups are hard! Relationships (in general) are hard. Relationships with business partners are (often) hard. Especially when the stakes are high.

Marriages have a 50% success rate. 50% for a relationship where you are in love with the person and you get to have sex with them!

I’m not sure what the success rate is for co-founder relationships, but it must be lower. And even if the arrangement doesn’t actually end over the lifecycle of your company, it will be stressed and tested many times over. Very few sets of founders grow in the same direction and at the same speed over the life of a startup.

Here are some thoughts on how to manage co-founder relationships, not just to have them survive but actually thrive.

Going in: Ensure you are aligned

FreshBooks’ co-founder and former CEO Mike McDerment used to tell me all the time: “there are two things you need to succeed in business and in life: alignment and shared values.” So true!

As you get started, ensure there is a great fit between you and your partners. Discussing your values and the intersection of your values helps assure that you have overlap in what you each consider important. You have common ground. Common preferences and priorities.

Alignment is many things. For example, does one of you want a lifestyle business and the other wants to raise as much capital as possible? If so, you are not aligned and this relationship (and perhaps business) will not work.

Separate ownership from operations

As active co-founders in your business you are both owners and operators. The two roles need to be managed separately. As owners you are peers. As operators you are not. Not making this distinction clear is the source of many conflicts.

I suggest meeting periodically (2 -4 times per year) as founders. This is not to discuss operating issues. This is to discuss ownership issues, including the health of the co-founder relationships. Go away together and re-align. Re-confirm your shared values and goals. Re-commit to the cause.

Look for issues before they show up

I don’t recommend worrying incessantly about your co-founders. That is a waste of time. I do recommend systematically checking in (monthly) on whether there are any issues, big or small, that are getting at them. Small things, left unaddressed, become big things. This is actually why most marriages end. There is no big issue. Just small compromises, small nits that pile up and create scar tissue and distance.

Related to this is the notion of proactively working on the relationship. Again, this is separate from the running of the business. When my own marriage ended in 2019 I reflected and realized that while I said that the relationship was deeply important to me I gave it a lot less proactive intentional effort day to day than I gave to business. This was a mistake.

It’s the same thing with co-founder relationships. Ideally you actually enjoy hanging out together and do so regularly. You are friends. Your friendship is separate from the business relationship. You work on it like you would anything else that is important to you.

Have realistic expectations

Finally, even if you follow all the above suggestions, recognize that one or more of your co-founders may leave the business before you reach the finish line. Be ready for it so you can make the transition as pain-free as possible.

Part of this is having vesting for founder shares. If you raise venture capital you will have to do this. Consider a period even longer than four years. Most startups take double that time and more to get to an exit.

Questions to consider

Have I ever had an explicit conversation with my co-founders around values and key goals?

Do we want the same things? Do we have the same definition of success? Same priorities?

When is the last time I met with my co-founders just to discuss founder topics?

When is the last time we hung out or met just to have fun?

Am I tolerating anything that I have not brought up with my co-founders? Have I asked the same of them?

What do I like and not like about my co-founders and about our partnership?

What would I change?

What can I do to make that change?

Knowing everything I know about my partners, would I start a business with them today? If not, what are the implications of that given that we are in business today?

Photo by Cytonn Photography on Unsplash