Psychologist Matt Jones on Why Startups Fail Due to Co-Founder Conflict and How to Fix It

Matt Jones, licensed psychologist and co-founder relationship specialist, joins Mark MacLeod to discuss the most underserved relationship in business: the co-founding team. Matt shares the startling statistic that 65% of high-potential startups fail due to co-founder conflict, yet most founding teams choose co-founders based on convenience and familiarity rather than strategic fit.

They explore why co-founders are like “a marriage without the sex,” the importance of alignment on degrees of sacrifice and desired outcomes, and how non-CEO co-founders often struggle to keep pace with growth. Matt introduces practical tools, including co-founder dates for meta-communication, his Cofounder Satisfaction Index diagnostic, and containment strategies to prevent conflict from contaminating execution.

He also discusses his book, The Cofounder Effect, and shares why operational disagreements often mask deeper psychological issues around power, recognition, and closeness that founding teams must learn to address directly.

Let’s get into it…

Mark MacLeod:

In this episode, I speak with Matt Jones, who’s a psychologist and coach specializing in co-founder relationships. This is the first time I’ve had a fellow coach on the podcast, and I was really fascinated by this conversation. You know, basically 100% of companies have co-founder conflict along the way.

Matt shared an interesting stat where 2/3 of startup failure is actually kind of at the root cause due to co-founder conflict. So this is his specialty. We went super deep into it. He left some very practical, actionable tips, and he’s written a book as well, called The Cofounder Effect, for people who want to go deeper on this topic.

I really hope you enjoy the episode, and I hope you subscribe to future episodes. Matt, welcome to the Startup CEO Show. It’s a true pleasure to have you here. How you doing today?

Matt Jones:

Thanks, Mark. Doing pretty well. I’m excited to talk about all things co-founder related.

Mark MacLeod:

Yeah, yeah. So this is a first, right? As you probably know, normally I have CEOs on the podcast. The term “Startup CEO Show” might have given that away, but this is the first time I’m talking to a fellow coach, and I think this will be really fascinating. For folks who don’t know you, maybe just give some background on yourself.

Matt Jones:

Sure, so I’m a licensed psychologist, but for the last six years I focused exclusively on working with startup co-founding teams and so kind of found my way to doing this. I was in graduate school while two of my closest friends started a company together. I watched them scale it to a multimillion-dollar success externally, but as you and all the CEOs listening know internally, it was a very different story.

And they came to me kind of sharing a little bit of their frustration with one another. And since I knew them both so well, I said, look, guys, the problem’s not internal, it’s interpersonal. It’s not that one of you is right and the other is wrong. We actually just need to have a group conversation about what’s happening.

And as we were able to lean into that process, they found it really valuable and said, Matt, you not only saved our business, you saved our friendship. And so that’s when I was instantly hooked into trying to help startup founders navigate tension.

Mark MacLeod:

I love that. It’s funny, I often joke that coaching’s not therapy, but it’s not unrelated. And I usually bring that up in the context of like, hey, as you’re choosing a coach and as a coach is choosing you, the fit’s gotta be there because you’re gonna share shit that you maybe don’t even share with your spouse and don’t share with your co founder, but you’re actually coming from a therapy background as well, which is fascinating and hugely relevant.

Matt Jones:

Yeah, 100%.

Mark MacLeod:

And so your specialty is working with co-founders exclusively?

Matt Jones:

That’s right, yeah, yeah.

Mark MacLeod:

Cool. So let’s maybe set the stage. You know, I have anecdotal evidence that many, if not most, co-founder relationships break down, but I don’t know, do you have any stats on this? Can you kind of set a picture for folks, give some folks some context here?

Matt Jones:

Well, I think the most common statistic that’s cited comes from Noam Wasserman’s work on the founder’s dilemmas. And I’ll just actually give you the full context because most people don’t know this, they know the stat that I’ll just say now, which is 65% of high-potential startups fail due to co-founder conflict. That’s the stat that’s most attributed to Noam Wasserman. But actually, as you look into the book, if you read it, and it is a little bit dry and academic, but if you do read it, it comes from a 1989 study that was done, where it was kind of a survey where a whole bunch of investors were asked their perception of what caused failure among teams.

And it was in fact the team dynamics themselves that contributed most often. And the reason I raise this is one, I think that the landscape has changed dramatically between 1989 and to present. Two, a lot of the other modes of failure that we can look kind of objectively and say, oh, they didn’t achieve product market fit or whatever the case, they run out of money. I think there’s a world in which those are simultaneously true and valid, and part of the reason why could have to do with some of the founding team dynamics that might not have been sorted through or certainly not aligned optimally.

Mark MacLeod:

Yeah. You know, it’s funny, I often joke with clients that co-founders are like a marriage without the sex. At least you have sex in a relationship, which can get you through the tough times. I don’t know if you saw this, but YC did a study some time ago just trying to isolate the different factors of success in a company. And the number one predictor of success was how long the co-founders knew each other prior to starting. Wondering if you’ve seen that pattern show up at all.

Matt Jones:

I have, and part of what’s really interesting about it is actually it’s related to, but a little bit in conflict with Noam Wasserman’s research, where part of what he found is that companies that are founded by friends or family are more unstable than teams founded by people who didn’t have a prior existing social relationship.

And the reason is that the people with that prior social relationship are more likely to avoid conflict, because for them it’s a catch-22; if you’re giving negative feedback to someone and critiquing their professional performance, on one level, you might also be hurting your friend. And so there’s a fear of, oh gosh, like these interwoven dynamics will make things worse.

But to your point, I think part of what YC knows quite well is that especially teams founded by people who have worked together previously, whether that’s college or actually like a company or whatever the case may be, that actually can be really beneficial because you understand each other’s work styles a little bit more so you don’t have to do like a full work trial like you’ve already done that.

And so then it’s really a matter of having some deeper conversations to make sure you’re aligned on several other really important factors like degree of sacrifice and those types of things as well. But yes, I think that can lead to a lot less initial friction. But it still doesn’t mean that we don’t need to invest in and trying to be proactive and preventative. But it does mean we can hit the ground running.

Mark MacLeod:

I thought it might be fun to walk through the whole life cycle. You know, we’re starting with how to choose a co-founder or co-founders and then how to scale a relationship once the company’s up and running. So let’s go to the beginning. I’m thinking of starting something. I recognize that being a founder is really difficult, and so I want to have some co-founders to go on the journey with. How do I go about choosing co-founders?

Matt Jones:

I think we can talk about this from an analytical perspective of what are some right reasons, making sure we have complementary skills, and maybe they have network effects that I don’t have access to, that could be really beneficial, access to capital. There’s different strategic lenses to view this through. And then there’s also just the emotional reality that a lot of people will default to who they know and who they’ve relied on and who they have in their peer network. And so I think what I tend to see is far more of the latter than the former.

Mark MacLeod:

That makes sense. Interesting. So it’s not an explicit checklist of attributes; it’s more first-degree, I just know these people. It’s familiarity, I guess.

Matt Jones:

I would say it’s familiarity. And then you know, it does depend on the company and circumstances. I think there’s also, especially for non-technical founders, there can be a sense of urgency to find that technical perspective, and so almost an urgency of like, oh you know how to code great. Like, let’s jump into things together without actually going through all these other no-work-trial, no serious questions about values or company building, etc.

And so there’s a lot of skipping levels, let’s say, that I think does ultimately a disservice to co-founders, as, you know, the project becomes real, the financial pressures become real, and then they’re ill-equipped to deal with it because they jumped into a long-term. You brought up the marriage metaphor. A long-term committed relationship with somebody that’s going to go through a lot of ups and downs without having that foundation in place.

Mark MacLeod:

Yeah, 100%. So if I compare that to, I don’t know, hiring an executive, I go to hire an executive, first of all, I may or may not engage a search firm, but you know, with or without a search firm, I’m building a pipeline. It’s pretty exhaustive. I’m thinking about the attributes of an ideal person, what experience, what background, pedigree, what scale they’ve seen. I’m reference checking, I’m doing all this shit that sounds like I’m doing a fraction of that in choosing the co-founding relationship, which is most important.

And then of course, I’m sharing the cap table with these really important people as well. So I don’t know. Do you recommend an approach that’s maybe a little more like hiring?

Matt Jones:

I would love that. And I think the challenge is, of course, because you’re so early, it feels like there’s a different level of urgency to create the idea and to make it real. And so again, that’s where that kind of scarcity of like, oh, first person who comes by who has that complimentary skill that I need, let me just jump in and let’s do this thing together.

And so you do have to fight that impulse. And I do feel for other founders I’ve seen, too, where it’s like they’ve been looking for years, and they haven’t been able to find the right co-founder. And so I think there’s a reality to some of the challenges in place.

But in an ideal world, yes, of course, being more conscious and deliberate and intentional with who you’re selecting, I think, could be a lot better for the individuals and for the relationship and for the company, right?

Mark MacLeod:

Yeah, yeah, for sure. My last operating gig was for this company called FreshBooks. And Mike, who was the CEO at the time, co-founder and CEO, would always tell me, it’s funny, I’m older than him, but it was almost like this fatherly, like, hey, son, let me tell you this advice thing it was like, there’s two things you need to succeed in business and life, alignment and shared values.

You know, if you have that, that’s the foundation; you can figure anything else out. And so, like alignment in the case of context of choosing co-founders, if I want to ring the bell on the Nasdaq and you want to build a lifestyle business, we’re not aligned; it’s just how I make decisions. We have to think that through, we’re not the same, we’re not carbon copies of each other, but there should be some overlap, right? We should value similar things. So I’m wondering to what extent alignment and values show up in your work.

Matt Jones:

I think it’s a great kind of tool to think about co-founding teams. And so in terms of alignment, I think you need to be really aligned on degrees of sacrifice, like how much time, energy, effort you’re willing to put in. And, by the way, everything I’m about to say can also change as you continue scaling. And so that’s where we need to have some flexibility to revisit these initial agreements.

But, yes, degrees of sacrifice, desired outcomes. You know, do we care about trying to have a lot of control over our business and ourselves and our time, or do we want to play the venture game and swing for the fences and have this massive wealth opportunity? And I think being clear about all that ahead of time is really important.

In terms of the shared values, too, this is one that I think is very interesting. In the book, I talk a lot about conflicting values because we all have different kinds of personality traits and styles, ways of making decisions, and ways of thinking through problems. And it’s not necessarily that there’s one inherent good way or bad way, but I think what’s really important is that in these areas of difference and misalignment, we’re really clear about how we solve that or how we manage that.

Because one difference between a marriage and a co-founding partnership is that with a co-founding team, a decision has to be made. We can’t just punt it forever. Like, there’s something that we must decide on about the product and the direction or whatever the case may be that actually then matters quite a bit. And so, how we make that decision, therefore, matters a lot to both individuals involved.

And so, what I really care about is not saying let’s only default to Matt because he’s really quick and iterative as opposed to being more deliberate. But instead, in these areas of difference, let’s create the scenario so that we’re really clear about when we default to one person or the other, so that when we disagree, we can do so with integrity and commitment while we’re not building resentment or internalizing those issues. And so those are some of the things that come to mind.

Mark MacLeod:

So it’s coming up with some kind of framework for how we make decisions and which ones we agree on versus which ones we just disagree and commit, that kind of thing.

Matt Jones:

Yeah, and so I mean, just to use that as an example, you can talk about one-way door or two-way door types of conversations and decisions. And you might have a protocol that says, okay, look for two-way decisions that are easily reversible, we can default to the person who has domain ownership or domain expertise.

However, if we’re talking about something that is existential to the company that we cannot easily reverse, then we actually either need consensus or we need to at least have a longer-term deliberation to make sure that all voices feel heard before we proceed with that. And so I think just being really clear about those types of protocols can be really helpful.

Mark MacLeod:

So maybe let’s move on to scaling because it sounds like people are going based on familiarity, convenience, speed, perceived need. They don’t think I can run an exhaustive search. So let’s assume they’re making suboptimal co-founder choices. So now we’re in the scaling.

You know, I’m guessing you don’t call a therapist when everything’s right in your marriage. So I’m guessing people call you when shit’s going down. So I don’t know, maybe just give us, I guess, patterns you see for when things start to go awry. This could probably be an entire episode in and of itself. But yeah, just curious what you’re seeing.

Matt Jones:

It certainly could be. Let me back up just for a second because I do think that this is an interesting meta point that’s worth naming. Part of what’s so cool about co-founder coaching as a category of services. Because a lot of people don’t know that this is something that exists. And I think that that’s understandable because it’s been underserved as a unit.

Like we have a lot of individual coaches who work with CEOs, whatever the case may be. There are also some who might specialize in team and kind of off-sites or whatever that looks like. But actually focusing on this unit, I think, is the most important relationship in business. And if we get it right, there’s kind of this multiplier effect where it buffers us from those ups and downs of the entrepreneurial journey and make sure that we are in lockstep as we’re scaling.

And so there’s a sense of momentum, and we’re all rowing in the same direction with the same cadence. And on the flip side, wherever we get it wrong, then we’re staying up at night replaying an argument with our co-founder instead of thinking about the product. And it can get a lot worse. That’s just like a low-grade frustration. But this can really multiply and be an existential threat to the company.

And so I bring all of that up because whenever I started this work six years ago, I only found like five other coaches internationally doing this work, specializing in it. Now there are 30 as of 2025. And so I’m seeing this growth, which I think to me is very exciting. But you know, some of the signs and symptoms that I see, because people do come to me disproportionately whenever there’s a conflict already existing. There are other coaches who specialize in getting things set up before there’s a conflict, which is incredible work too. But the things that I see are recurring disagreements.

So the types of conversations where let’s say we’re arguing about a product roadmap or some kind of decision, but regardless of what that content is, we’re stuck on it. We keep finding ourselves going in the same loop. We had the same conversation last week. And that type of frustration to me often signals that there’s something deeper going on under the surface that we haven’t been able to name and address. And if only we could actually do that, then all of a sudden the business issue takes on much less importance, and we can make that decision more clear-headed and more effectively.

Mark MacLeod:

How similar is this to couples counseling?

Matt Jones:

There are a lot of similarities in that some of the different kind of theoretical ways of thinking apply, and so do some of the tools. So to be really direct, this is part of what I went through in my book was to kind this very question. And where I’ve landed is because the co-founder relationship is what I argue an attachment based relationship.

Meaning that when you go through hardship with somebody, when you’re in this committed relationship for years on end and your identity is tied up in it, your financial livelihood is tied up in it, you inherently want that person that you’re partnered with to be reliable, to be responsive, to be available. And so if you feel like those things are not being met, it’s going to trigger this deep fear response of like, oh no, like my livelihood’s at stake. You know, this is unacceptable.

And so in that way all the different patterns that we see playing out in marriages, and I can go into more detail here, but like the pursuer and withdrawer dynamic being one of them, all of those kind of relational configurations do show up in the co-founding teams. And so I think there are a lot of areas of similarity.

Mark MacLeod:

Yeah, makes a ton of sense to me and which is why I tell folks that it’s like a marriage without the sex. And you know, it might be a little bit different now in this post-Covid world, where a lot of people are remote. But the other interesting guess comparison between these co-founder relationships and our romantic relationships is we probably spend more time with our co-founders, especially where we were in work, like in an office, we spend most of our waking hours working. So again, just really, really important to work on that relationship.

A pattern that I’ve seen over and over again. I’m curious if you’ve seen it and if you have any thoughts is where you’ve got a co-founding team, one of whom is the CEO, and of course, the others have other roles. And then you know, I only work with CEOs of companies that have raised venture capital or private equity. And once you go down that path like a CEO, whether you like it or not, you’re getting a ton of input. You’ve got VCs on your board, they’re introducing you to portfolio companies, you’re meeting other CEOs. You’re basically being surrounded by smart people all the time.

Now, some of them are telling you to go right, some of them are telling you to go to the left. That’s a separate topic. But either way, you’re getting tons of input, whereas if you’re the CTO co-founder, you’re not getting that same level of input. And I find almost universally what happens over time is the CTO or whatever, the non-CEO co-founder, just struggles to keep up. And I feel like, in part, it is because they’re not getting exposed to that same level of input. I’m wondering if you’ve seen that and what your thoughts are.

Matt Jones:

See it all the time, especially series A and series B in particular. And I think it’s exactly right that the CEO gets 10 times the input easily. And I think part of where I see this, and of course, especially within CTO, not to stereotype, but there’s also different options there where some people might want to stay more in the IC as opposed to going to more of a manager type of role. And so I think that’s a transition to pay a lot of attention to and to know yourself really well about your areas of interest.

But I agree that actually to continue scaling as a non-CEO co-founder requires an extra investment in self-growth, in kind of getting your own executive coaching and starting that process sooner rather than later. And I think it requires seeking out more of those growth opportunities in such a way that that’s more inherent and natural to the CEO position. And I think without that, it can create a lot of challenges, especially as the organization grows.

If that non CEO co-founder is not getting feedback, I think that’s something else that I see as being really important, where all of a sudden they kind of get put on this island where, you know, the CEOs, people are back channeling, telling the CEO issues with the CTO as opposed to going direct to the CTO. And I see that as being. It makes this issue that you’re pointing out so much worse. And so I think there’s also a need organizationally and from the CEO’s perspective to always coach people to go back to the source and to not isolate this person.

Mark MacLeod:

Yep. Yeah, for sure. So maybe let’s talk about the causes of co-founder conflict. I think we’ve identified a couple. One is, well, probably the biggest one is you don’t realize it out of the gate, but you just have the wrong co-founder. Not the same levels of input or just investment in their growth. What are the other big kind of causal factors here?

Matt Jones:

I mean, there are many, and I guess just to back up for a second, lots of different arguments can take place. Various topics like roles and responsibility, equities and compensation, kind of hiring and firing dynamics. Like, there’s strategic alignment, there’s all these different buckets of categories that we argue about.

But at root, I think part of what’s often happening is that we’re speaking different languages, where one person is arguing about product roadmap, going back to the example, but what’s happening under the surface can be things like power disputes where I feel like I ought to have more of a say in this decision-making process.

Could be things like recognition or not feeling like my contribution is being really valued and appreciated. And so I’m like fighting to have that acknowledged more. It can be things like closeness, where I feel like you’re micromanaging me, and so I actually want you to step out of my lane. But we’re talking about roles and responsibilities, but what we’re not naming is that I actually don’t feel like I want you as close or whatever the case may be.

And so I think a lot of the job, from my perspective as a coach, is getting teams to transition from that operation, what I call operational language, to psychological language, to be able to talk about some of the unspoken emotional dynamics. Because if we can do that and unlock it, like I said before, it can make the actual business decision so much easier.

Mark MacLeod:

So how do you help folks make that transition?

Matt Jones:

So I created a system called the Cofounder Conflict Navigation System, and it walks teams through how to prepare for challenging dialogue and then, like the actual conversation itself, how to structure it, especially if tensions are high, and then how to build systems of accountability to help the partnership scale after those types of conversations. But I think really it comes down to first, I think it’s building awareness.

And in particular, what I mean is sometimes I use some diagnostics, like I have this thing called the Cofounder Satisfaction Index. It’s a measure I created that gives me a high-level snapshot of the strengths and weaknesses of the partnership. And so as I kick off an engagement, I’ll share an overview of where they’re aligned and misaligned across multiple domains.

There’s stuff like that that can be helpful, but I think more than anything else is pinpointing the moments where it’s like we’re two ships in the night just passing each other. Like what happened in that moment. If we can examine it and then discover it together that exact moment, then we might have a better hypothesis about those dynamics going on under the surface and how to change them for some people, by the way, I think this is quite difficult because you know, whether again not to stereotype.

There are some personalities that I’ve seen very detail and process-oriented, who kind of care ruthlessly about efficiency but might undervalue some of the touchy-feely stuff that I’m getting into. And yet part of what I’ve seen over and over again is that if we can build in some level of awareness to these dynamics and stuff, it actually makes the entire process more efficient.

And so we’re actually creating net inefficiencies by not acknowledging some of these emotional dynamics. And so I think presenting that as an argument, and like you know, meeting people where they’re at and just reorienting people to understand the value of identifying this work, I think is kind of step one.

Mark MacLeod:

Thinking about the running of the company, right? Like a CEO. I’m both a CEO and a founder, let’s stay with that example. The CTO has a CTO and a founder, and I’m wondering to what extent, like where and how, they should interact as co-founders versus just as members of the executive team along with other members who are not co-founders. Does that make sense as a question?

Matt Jones:

It’s a fantastic question because part of what you’re pointing out is how there ought to be, at least we could say the team should operate at a co-founder level and have some cross-functional visibility, thinking about company-wide objectives and priorities and making sure that you’re really aligned on some of those. And those are co-founder-level conversations.

Then there are more of the executive-level conversations of owning your domains and departments. And then sometimes there’s also a friendship level. And so there could be multiple levels that might at times have conflicting understandings or needs. And so I think part of the complexity of the co-founder relationship is being able to be really specific.

I don’t think necessarily I should prescribe and say this is the right way. This is a co-founder level conversation, this is an executive, this is a friendship. But making sure that there is awareness that there are these different levels and that each one, the teams themselves are the ones who need to be able to define and say what kind of topic of conversation or level of importance should map into those different areas.

Mark MacLeod:

Back when I was a VC, I invested in this company, Unbounce, and they’re still around, and there were six co-founders, so that was pretty wild. And to be honest, a piece of friction for me investing, like getting my head around how that’s going to work. But kind of what got me over the hump, other than their traction, which was phenomenal, was how much they invested in the co-founder relationship.

And how they thought about it is, I mean, you brought up an important word, which is friendship. And so they recognized that was a thing to build on. It was a thing that brought people together in the first place. But then they didn’t want to have two classes of management team members where the co-founders might be perceived as more powerful, having more authority than the non-founder executives.

And so what they did was they would get together for dinner once a month. And that served two purposes. One, continuing to build the bonds, the friendship. The other, it was like this was the forum to discuss things with our founder, Hatlund, and the way they thought about it is that we are the owners of the business. And so it’s through that lens as an owner that I am bringing this topic up versus my lens as CXO. Like the CXO discussion, that’s for our broader leadership team meeting.

The owner discussion, as an example, should we raise more capital? Is now the right time to sell our overall level of burn? You know, like these kinds of bigger, broader topics versus, I don’t know, setting next year’s budget or competitive landscape review. You know, those things are more for the team as a whole. It certainly seemed to work for them, but that’s a sample size of one. I’m just curious how you react to that description.

Matt Jones:

I love and appreciate how you articulated it because to me that was a really clarifying way of operating, because I’ve had a lot of conflicts where team members are like the co-founder piece is missing, and they’re kind of like they’re not actually stepping out as company owners to have that high-level conversation, they’re not feeling included in.

And so I think part of this ritual of meeting once a month for dinner is a powerful one that maps onto broadly what I recommend for all teams, regardless of kind of size or scale. And I call these co-founder dates, and the reason I call them that, just for context, there’s the obvious marriage parallel here to the Gottman State of the Union meeting. The reason I call them dates is because I was describing this to a team once, and they said, Matt, sounds like we’re like an old couple who lost the spark and you’re trying to get us to date again.

Mark MacLeod:

Yeah, date night, yeah.

Matt Jones:

Yeah, it’s not too far off. And so it’s basically I talk about these meetings again, kind of having a dual function. And I’m curious to hear your thoughts because it’s very much related to what you’re just describing, which is I want to be doing something that is kind of not work-related. So for some teams, this is going on a walk, a hike, playing games, playing video games, or pickleball. I’ve kind of seen different versions of what this looks like for the team, but doing something together outside of work.

And then the secondary component is all about meta-communication. So talking about how we’re communicating, how we’re working together, how we’re making decisions as a team. Because my theory is much like that kind of adage of not working in the business, but on the business. Similarly, I think we need to be working on the partnership and not just reacting within it.

And so part of this is asking each other how are we doing, how are we communicating? And if we can create that space and dialogue to think about that and talk about it, it opens up the opportunity to change it. And so that’s part of what came up as you shared that.

Mark MacLeod:

Yeah, that makes a ton of sense. You know, as you were describing that, I was like, that kind of meta working on the relationship, to me, is something that should be done not just between co-founders, but the exec team at large.

If I were to boil down the root of every issue and every opportunity in a company, it’s people. And a CEO is only as strong as the people that report to the CEO. That’s their leverage. And if I had a pie chart of all the topics that I discuss with my clients, by far the number one topic is their leadership team, who were great but are no longer great, who are missing the skills. They may or may not be co-founders. It kind of doesn’t matter.

And there are separate considerations with co-founders. You know, a thing that I push my clients on is don’t treat your co-founder any differently. Like, they’re subject to the exact same quality bar and the same standards as everyone else. And if they’re not, your other leaders will see that and it’ll be a bit demotivating. So tough. So, anyway, just made me think that that kind of meta working on it could be applied even more broadly.

Matt Jones:

I completely agree, and I really appreciate the point too, of holding your co-founder to that same standard, because I agree that not only is it demotivating, but, I mean, that sounds like such a negative signal because it’s immediately undercutting whatever type of cultural process you’re trying to establish, and that just compounds.

If you don’t fix your problem before you scale, you will scale your problem. And so in a situation like this, I often see teams where there could be a reluctance, again, especially due to the fear of how this might impact their friendship. I also work with teams where they’re related or they’re dating or whatever the case may be.

And so when there’s a fear of kind of giving this difficult feedback and it compounds. And this is just a brief tangent. I call this emotional debt because these little moments, where there’s misalignment and something’s not being discussed, ultimately end up building the frustration.

It acts like a magnet where all these other negative thoughts and feelings come and kind of coagulate, is the word that came to mind, it kind of hardens into resentment. And that resentment is quite toxic. And so then it’ll come out in these more intense ways that then kind of actually creates the very problem you were trying to avoid, which is pushing the person further away from.

I bring all of this up because if you’re not giving that person feedback, like we were saying before, it isolates them. It decreases their probability of success to continue scaling. And then, yeah, it kind of demotivates everyone else. And so I agree that this actually is a massive problem if you’re not being proactive in some of these conversations.

And so if you’re making exceptions for your co-founder, you’re ultimately doing a net disservice to your company. And I see a lot of teams. I work with a team presently, where this has been a problem for the last three years, and they’re still reluctant as a co-founding team to face it. And yet it’s leading to employees burning out, to employees kind of playing this parentified role of intervening, and it’s actually toxic, and it’s contributing to their lack of success.

Mark MacLeod:

Yeah, makes a ton of sense. I’m curious, you’ve come to this focus that you have from the psychology background, happened to get connected to some co-founders, found this fascinating, now you’re in this startup world, whereas I came at it totally differently. I was in the startup world since the 90s. At this point, it’s all I know. I’d be useless outside of that context.

And so I’m just curious, like, what are your observations on the startup world? Because I think we do some batshit crazy stuff. Like, there aren’t other verticals where you just, I don’t know, set a few million bucks on fire month. So it’s like, yeah, what are your thoughts about this crazy industry that we’re now both in?

Matt Jones:

There are elements of it that I really love and appreciate that feel aligned with, like the teams that I love working with, those led by people who, at their root just want to grow. And it’s like I want to grow personally, I want the business to grow professionally, I want to make an impact on the world. Like, just everything is about growth.

And so that means doing self-work along the way to make sure that I can fulfill this mission. That’s something that I find deeply inspiring and that deeply resonates with the core of my being. There’s also some shadow material here that I think is challenging in the startup space of whether that’s kind of avoiding our own relational traumas and wounds and trying to kind of get away from them through this achievement and grandiosity.

There’s also, in this space, one thing that I find really frustrating is just within my work in particular, a lot of teams will give me testimonials, but make them anonymous, not because they’re not proud of the work, but because they’re afraid of sending a negative signal to investors.

And so I think again, there’s this stigma, like, oh, we’re going to say that there’s something wrong with us, but by kind of endorsing this work, when in fact I could argue the opposite. Doing something about it is definitely going to improve the likelihood of success.

And so I think that there are elements like that where I think part of my biggest challenge are the ways in which I see some hypocrisy or misalignment between supporting founders and saying, yes, we’re pro-founder mental health. And then on the other hand, the way that some of the perhaps also from the VC side of things, there are different incentives. And so some of those are not always in complete alignment.

Mark MacLeod:

And that’s fascinating. I’m amazed that attitude still exists. Like, I bought my first book on coaching in 2002. I was just somehow intuitively drawn to coaching, but concluded I lacked the gray hair or moral authority to be ready as a coach. As you can see, it’s white now, so check. But back then, I think there was a stigma to coaching. If someone said, oh, you should get a coach, you’re like, oh, what’s wrong with me? Whereas I feel now it’s just like, oh yeah, you’re investing in yourself. Like you recognize the stakes, and therefore you’re investing in yourself. That’s great.

And probably half of my clients come from VC, so I don’t feel like there’s stigma there. Now, when I think about it at the co-founder level, it’s inevitable. Like, I bet you if you polled a VC, they’ve got co-founder conflict in 100% of their companies. Like you can’t double or more every year and not have some friction along the way. So yeah, I’m just surprised that there would be any resistance at all on either side to the notion of co-founders working on that relationship.

Matt Jones:

Yeah, and I’d be curious. I mean, just in transparency, it could be like another way of saying it is internalized fear on the founder’s part that may not be based on the reality of the situation. On the other hand, it doesn’t make the kind of fear or stigma that’s been internalized less real, kind of on the founder end.

And so, yeah, it is an interesting setup where I certainly agree that on the individual level, individual coaching does seem to have a green light, full support. And I still do have questions about the co-founder piece too, because whenever I have talked to various investors, it seems like a problem that is ubiquitous, that’s seen. But again, I don’t necessarily see a whole lot of desire to support co-founding teams because it’s almost looked at perhaps as a lost cause.

Like, if the team’s not right, then this just means this is not going to work, and you know, this is just the six out of 10 that won’t have any return at all. And so I’ll just move on to the next.

Mark MacLeod:

Yeah, there’s a lot of pattern recognition going on there, for better or worse. You know, one of my companies I was involved with early on was Shopify. And Shopify is one of the few standout examples for me where the three active co-founders were crushing it in C-level roles at the time of IPO. And I’ve thought about why that was. It wasn’t just that they were smart people. Yes, they were very smart. But they all got coaches early on.

Tobi, who’s still running it, was the first to get a coach. At one point, he had two coaches, but his first coach started coaching some of the other C-level leaders, and then they brought that person on, and he built out a coaching department inside Shopify that they call talent acceleration. So it’s a thing that’s separate from HR, and it was born out of necessity. At the time, they were based in Ottawa, which is a really small town, and there just wasn’t talent who had seen their scale, so they had to create it.

But you couple that like an investment with coaching with revenue growth. So the thing I tell my CEOs all the time is like, you can have all the coaches, all the advisors, you could read all the books, all the blog posts. It’s all useful. But the single biggest thing that will grow you as a leader is to unlock revenue growth and hang on for dear life.

The biggest recent example of that is Lovable, which went from zero to a hundred million in revenue in eight months. Now, anyone from the outside looking in would say, like, anyone who can grow that amount of revenue in eight months is clearly a great leader, but it’s chicken and egg. That person now has experience that they didn’t have eight months ago, just because they unlock the flywheel and just hung on, you know?

When you’re not growing, when you have these really smart people and they’re beating the head against the wall, and you’re not growing, that of course is going to create conflict, especially when you raise capital. You got these tensions and expectations. Conversely, when you are growing, I don’t know, growth just forgives all sins. So yeah, I’m just wondering what your thoughts are on how the growth of the company factors into all of this.

Matt Jones:

Yeah, it’s a fascinating thought because I certainly see a spike in conflict both in low-growth and high-growth moments. And I think there is that sense of everything being under a microscope, everything’s very frustrating whenever it’s not working. And on the flip side, that oh my gosh, we’re so in over our heads, but we’re holding on for dear life on the other hand.

And so both are right for conflict. The piece that I’ll bring it back to, though, is earlier on we were talking about how to find a co-founder, and we mentioned that there’s kind of a convenience factor that goes into that. And one thing that I often see is one of those initial expectations agreements like we were talking about before, values alignment, it’s not made as explicit or concrete as it should be.

And so, like just as a brief aside, in the book, I have what I call partnership term sheets where we start to kind of document this very early on so that it’s clear for all parties. But the thing that becomes so important, especially as you start entering that hyper growth, is revisiting and revising those agreements.

Because what I often see is another way of talking about this is there are unspoken agreements and expectations that take place very early on, where we assume various aspects of how the other party will behave. And then once the pressure hits and all the pressure starts going up, then all of a sudden we have these outdated agreements and expectations that are creating a lot of friction.

And so what we actually need to do is sit down, have a set aside time to address some of those things about, again, revisiting the degrees of sacrifice, the desired outcome, and just making sure that we can get realigned and our relationship can evolve into something new. Because the relationship that got us 0 to 1 is not the type of relationship that’s going to get us one-to-N. One-to-N is going to require a fundamentally different way of relating. And so how can we embrace that and do so intentionally?

Mark MacLeod:

Love it. So you mentioned the book a couple of times. Maybe tell folks about the book.

Matt Jones:

Sure. So I wrote a book called the CoFounder Effect, how to Diagnose, Fix and Scale Healthy Communication for Startup Success. And it is the deepest, most robust psychological analysis of the co-founding team dynamic that exists, which is not saying much because there are no real books on it. And so I’m excited to start doing more of that work and trying to bring more awareness to this topic.

And so yeah, it goes into all of these unique dynamics from a psychological perspective and tries to look at their various impacts on the individuals, the organization, the cultures involved. And it tries to be very tactical in helping teams not only diagnose what’s happening but then find their way out of it to improve their alignment and then ultimately the kind of the culture of the organization.

And so, that’s the journey that I hope teams will lean into more and more, and then certainly I hope that there’s more books and concepts and tools in the works because I think, like I said, this is the most important business relationship, and it’s also quite underserved.

Mark MacLeod:

Yeah. How epic was it to write a book? I write a few LinkedIn posts here and there about writing an entire book is a bigger undertaking.

Matt Jones:

I mean, it felt like I was looking up at Mount Everest every day and just slogged my way through it at various points. There were some elements where I will say, I personally felt a lot of gratitude for it because it connected me with my mission a lot more than just kind of doing other types of sprints.

And so, doing that deep work was something that I found personally inspiring. And there were certainly moments, especially towards that latter fourth of it, where I was like, okay, I’m done. Like, I’m so done. I heard a really good quote that said most great works of art and books in particular are not finished as much as abandoned.

Mark MacLeod:

Yeah, yeah, yeah, that resonates for sure. So folks should obviously read the book, but in advance of that, and some of this has come up in our conversation, but I don’t know any suggested best practices that you just want to share with folks today on the conversation?

Matt Jones:

I’ll share two. I think one is what we already covered, so I won’t go into too much detail, but the co-founder dates are one that is low-hanging fruit. That’s a system that you can add in, and for some teams it is once a month, for others it’s once a quarter.

But whatever that cadence is, I think agreeing to that time and not just punting it because again I think it’s very easy, especially at various moments in the business, to just say, hey, look, this touchy-feely stuff, no big deal, let’s just punt it to the next one. And yet I actually think based on our conversation, it’s absolutely essential to maintain alignment. So I’d say do those co-founder dates. And again, the main question there is just how are we doing? Right, let’s talk about that.

The second practice that came to mind, as you asked, is what I call containment. So how do we contain conflict? So to give you an example, I’ll say that my fictitious co-founder, Mark, just interrupted me three times in our all-hands meeting. And so I’m at the deepest level, I’m feeling deeply hurt because Mark’s also my friend, but superficially I’m quite frustrated, and so I’ll just stick with the anger.

And so after that call, I might contact Mark and be like, Mark, like dude, why don’t you care what I have to say? You know, why are you being such a dick? Like, this is ridiculous. I can’t believe you did that. That’s not containing conflict. And what I’ve learned with teams is if we don’t contain the conflict, it contaminates our execution.

And so part of what we actually need to do is to. A much healthier way of doing this is for me to hit Mark up and say, hey, Mark, listen, I’m having some feelings and reactions to the all-hands meeting. I would love it if we could debug and realign. I’m looking at the calendars now. Do you think you could meet with me on Friday at 2 pm? So what I just did is I contained the conflict. I gave it a time, I gave it a space. Mark now knows that Matt had some type of reaction to this, and he wants to process those with me.

And so then that helps us both enter that dialogue with more clarity, more intention. Gives me a chance to kind of center myself a little bit. And then I might try to stick on my side of the net and say things like, hey, Mark, when you interrupted me those three times, I felt really frustrated because to me it’s absolutely essential that you and I are presenting a united front and that we’re in lockstep to our company. And so are you open to adding another, like 5-minute sync before the next one, just to make sure that we’re aligned before we actually kick things off?

So now Mark can hear that, he can digest it, he can respond more appropriately, and that makes the entire process of conflict something that is healthy for the organization and for the people involved. And so I think if we can make that shift, then that’s what I see in the most productive teams, it’s not that they’d never have conflict. They’ve learned to have them more effectively.

Mark MacLeod:

I love it. Well, people should obviously go read the book, but if they walk away, even just implementing those two things, they’re going to have gotten a ton of value from this. I really enjoyed having you on the show, Matt. You know, there are lots of coaches out there, but you’ve picked a pretty interesting specialty. I wanted to have you on because you and I interacted before, but you have that distinct specialty. You’ve got a TAM that includes, I think, every startup out there because every startup has co-founder issues. So yeah, I think it’s fascinating. For folks who want to learn more about you, how do they find you?

Matt Jones:

Sure, you can find me at cofounderclarity.com, that’s my main website. You can find the book there, some additional tools, a couple of free downloads, or if you want to look for the book on Amazon again, just type in the Cofounder Effect, and it should pop up for you.

Mark MacLeod:

Amazing. Thanks for coming on the show, Matt. Really enjoyed it.

Hey, thanks for listening to the Startup CEO Show. If you’d like to connect with me, be sure to visit my website at markmacLeod.me, or follow me on LinkedIn at The Mark MacLeod, or X account @markmacleod_, and if you want to tune in again next week, be sure to subscribe on YouTube, Spotify, Apple, or wherever you get your podcasts. We’ll see you next time!