The majority of startups fail because of founder conflicts. Follow this advice to help safeguard the most important business relationship.
Two best friends decide to start a business together — their big dream. They pool resources and secure funding. Their idea is a good one, and investors are in! Things move along at a fast pace as the two friends work the crazy hours required by the start-up phase. They truly believe that their innovation can change the world and also be a viable business.
After two years, though, the relationship is flailing. The two former friends avoid each other and the tension between them is palpable to their employees. Their families have largely stopped getting together, and one of their investors predicts they may need to break up. The other key employees they hired spend a great deal of energy mediating and running interference between the two founders, who seem unable to agree or align. Both are disappointed that their idea may not in fact change anything; they become disillusioned and unhappy.
The Hard Truth About Startup Founder Relationships
Despite awesome technology, great ideas, initial excitement and energy, commitment, and hope, most startups fail, and many do so because of the deterioration of the partnership between co-founders, which causes loss on many levels, both personal and financial. According to research by Harvard professor , 65 percent of all startups fail due to founder conflicts. It’s a common issue, yet one that can be hard to talk about as it carries a heavy load of shame.
When two people decide to co-launch a business, they almost always have a healthy personal connection at the beginning. Like two people in love, co-founders can’t imagine a time when they won’t see things similarly and share the wonder of creating a company together —and yet such developments are all too common. However, while strife may eventually unravel the bond between even the friendliest initial founders, there are things founders can do from the beginning to reduce the risk that their heartache will bring the company — and the mission — to ruins. It’s in this early phase of partnership that co-founders should get real.
Here Are 5 Specific Ways Social Enterprise Co-founders Can Help Pave The Way To A Better Outcome
1. Start With The End In Mind
The idea or technology you plan to base your business on might be phenomenal, but what are your shared dreams? This is particularly important for social enterprises, in which profit is often not the primary motivator.
Some college friends who formed a high-tech re-seller that created affordable access to productivity software realized a few years in that one of them sought to leave a legacy company behind that changed how low-income individuals could access technology, and the other two wanted a large cash return in 10 years. Only several hard conversations and a refocused dream that met everyone’s needs helped avert a dangerous tipping point.
Taking time at the beginning to discuss where you want to end up prevents misalignment at the many crucial forks you will face together. Better to disagree early and negotiate an aligned future than to discover midstream that you want a different long-term outcome. Knowing what you prefer can be nearly impossible to identify in the early and scrappy days of a partnership, but self-awareness from the beginning is key. Founders can look to their past, their personality, their dreams, and their hopes in order to predict what they will really want when they finally make it big. Is it full control you seek? An accomplished mission? Growth and profit? Securing a specific social vision? Hash it out, be honest, and bring your partner into the inner circle of your deepest motivation.
2. Don’t Be Wed To Anything …
Of course, in the beginning, the founders’ conviction is key to a successful launch — after all, if you don’t believe in your idea, why should funders or customers? But as the company moves to scale, it’s very likely you’ll change strategy, approach, design, or even product. Founders must guard against falling on the sword of their original vision as the entity and they themselves evolve. Many a partnership has gone down the tubes because one partner was unwilling to shift and flex. As Don, co-founder of a now-defunct consumer product company said when he called for coaching, “I realized we were in trouble when my partner got too dug into his merchandising vision. The channel was not there with the original idea, and he could simply not let go of the way we had originally imagined it.”
It’s essential that co-founders start talking about what could go wrong from the beginning, even though they may not be able to imagine things turning south. Preparing for the worst invites exploration of unconscious or hidden roadblocks and concerns. As a result, the partners can create strategies and solutions early which facilitate their ability to flex and move quickly when they need to rethink any aspects of the business.
3. … But Nurture Your Relationship Like A Marriage
Co-founders enter a partnership with each other’s story — and with each other’s assets, both financial and otherwise. The personal-level comfort that often brings co-founders together feels ironclad in the beginning, but can get very brittle when times get tough. Writing down the assets you want to protect and what you each are contributing, just like with a marital pre-nuptial agreement, can help avoid irreparable conflicts later. For consciously formed entities, this includes what you believe and what you treasure. Making sure you see the future similarly early will save time and heartache later.
Additionally, as co-founders get busy with the business, it’s difficult not to neglect your relationship. Make sure that you take time to get together often, specifically and intentionally to nurture the two of you. In these meetings — whether a weekly walk around the park, a monthly retreat, or dinner on Saturdays — use this time to inquire about how you each are doing and what you need from one another, and explore truths that must be said. Jane described it this way as she worked on a granola business with Martha: “When we are connected personally, things simply flow better. When we neglect ‘us,’ small things become big.” You and your co-founder are at the hub of the potential success for your company, your customers, your shareholders, and your employees, and the extent to which you nurture that relationship really matters. Be courageous, be honest, and be connected.
4. Learn Together from Every Small Failure
You can recover from failure — especially when it happens in small increments. The reality is that most startups fail, so it’s critical for co-founders to look at each small misstep as a chance to learn, to pivot, and to grow. Don’t be afraid to tell one another the truth about where you see problems or failures — egos aside. Discuss them sincerely, and proceed. Take to heart the advice of , a Harvard professor of management practice: “In any natural system, failure is the engine that causes growth, that causes new birth, that causes anything to happen.” In consciously founded businesses, the heart and soul are often powerfully engaged, which can make failures even more painful. Talk often about why you got into this effort in the first place so that you can reassure and remind one another to stay the course.
5. Stay Healthy
Each partner must maintain their physical and emotional health — for themselves, and for the sake of the partnership. Depression, suicide, addiction, eating disorders, and stress-related illness are chronic side effects of the work of entrepreneurs, even mission-driven ones. Do not neglect the key elements of physical health, emotional health, and spiritual health with the basics like ample rest, healthy nutrition, and exercise. There is much that neither you nor your co-founder can control about whether or how your business succeeds, but taking care of yourselves and each other is fully within your control. An often-overlooked aspect of staying healthy is admitting that you need each other, which demands that you do not hesitate to ask for help.
Many a partnership has deteriorated because one person got in over their head and failed to expose the situation and ask humbly for help to navigate rough waters. Helping each other goes a long way toward maintaining your healthy partnership. For conscious businesses, which are often formed from deeply personal motivations, this whole-self wellness component becomes particularly critical.
The Co-founder Bottom Line
The ability to nurture the partnership that united you in founding your business and at every step of your scaling journey is a crucial part of keeping the entity — and the relationship — warm, healthy, flexible, and rewarding. You got into this together for a reason. Remember the problem in the world you are trying to solve and why this person was the key one you chose to work with. Stay focused on keeping connected, and you’ll reap the rewards of sharing the amazing journey of entrepreneurship with another human being.