Why co-founders split
Co-founders split when working together becomes intolerable. We have already discussed how co-founders can flourish. Unfortunately, that often does not happen. On the overview page to Session 12 we mentioned the statistic that only 1 in 4 founding teams stay together for more than four years. We can also add that co-founders splitting in the first four years is the biggest cause of startup failure.
The two biggest reasons co-founders split are:
they come to fundamentally disagree on a shared vision for the business, or
they no longer trust one another.
All the other reasons co-founders can be a curse that we listed in the previous blog post tend to be ultimately accepted as annoyances and do not usually cause co-founders to take the drastic action of insisting, “Let’s split.”
The vision for how a business will make certain people so happy that they gladly give their money in return is the fundamental shared objective of any co-founding team, and the two co-founders must always cooperate on how they describe this shared vision. It is the vision that must be cooperatively shared. It is the “what” of the business, and not the who, where, when and how of the business that has to be a cooperative shared objective.
Yes, there ultimately must be agreement on the who, where, when and how, but that may be reached competitively (i.e., my way beats your way) or by one founder retreating to let the other founder resolve the pay offs of the shared objectives (i.e., I don’t care which way we do it).
Founders that thoughtfully and effectively compete to determine the best who, where, when and how of implementing their joint business vision ultimately create more productive, competitive and profitable enterprises.
The other major cause of co-founders splitting is the loss of trust. This usually comes from the strong negative feelings that are generated by covert competition on one or more shared objectives. Covert competition is when there are one or more shared objectives where one party secretly tries to shift the pay offs from what had been assumed or agreed to.
For example, when both founders have overtly agreed on an objective, but one founder tries to surreptitiously undermine the agreement and therefore the expected results and payoffs. This covert competition does not have to be associated with the vision of the company, but could be on any one or more of their shared objectives.
The covert competitor may not even realize what they are doing, some people instinctively use manipulative techniques such a passive aggressiveness to defend themselves from emotional situations they fear. And if there are shared objectives that extend beyond work, as with friends, family, and lovers, then the loss of trust in the sharing non-business objectives can spill over to loss of trust in achieving shared objectives associated with the business vision.
Discuss shared objectives to make them clear
The best why to avoid splitting with your co-founder is to be open and explicit about your shared objectives, their pay offs, as well as where you are cooperating, competing, and retreating. If you feel you are cooperating while your co-founder is retreating or competing, then call them on it. If they are covertly competing then nicely call them on it by respectfully disagreeing. Many people use manipulative covert competitions to get their way and do not realize it. Passive aggression, name calling, uncontrolled anger are all covert competitive strategies. There are many articles and books on how to deal with manipulative personalities, which almost always suggest making clear versions of: what are your shared objectives and here are our pay offs; do we agree on them. If so, how can we unemotionally work together or in parallel to achieve our shared objective.
Ultimately, it really helps to write down all your important shared objectives and share the list with the people you count on the most in both your business and personal life. Don’t force them to make their own lists, just describe what the list means to you and how it impacts your priorities.
Friends and lovers are special types of co-founders.
Friends and lovers have shared objectives that transcend the business and that adds risks to the involved co-founders dissolving their business partnership.
Basically, friends have very important shared objectives to do things together that bring happiness, help one another process strong feelings and emotions, and to protect one another from things they fear. Ultimately, true friends trust one another to act in one another’s best interest. We would place married couples in the true friends category, noting that they have many additional shared objectives around creating and maintaining a happy family life.
The priorities of the shared objectives associated with being friends and family always intermingle with those of creating and growing a startup. In our blog post describing relationship building skills and our description of cooperative shared objectives, we noted how much effort and personal energy is required to maintain the cooperation. Nobody can maintain many high-quality cooperative relationships at once. What happens is that you naturally retreat from many of these relationships, by not putting in the energy or effort to maximize the payoffs for the other person that is part of that cooperative relationship. These retreats, if they are prolonged and involve not putting in the expected effort into achieving the shared objective, create tensions that weigh on both the personal and business side of the friendship. Too many retreats or one retreat on high priority shared objective can destroy trust between the parties (e.g., “you were not there when I needed your help the most”). When friendships are involved, it is even more important to discuss your shared objectives and discuss when and how you may retreat from some of them from time to time.
Lovers add yet another dimension. They have intensely felt shared objectives to explore the limits of their feelings and experiences when together. The challenge is that these shared objectives can shift quickly and emotionally from being cooperative to being competitive, when one party no longer agrees with the payoffs of the shared objective. Those competitions can get very emotional and spill over into no longer wanting to share business objectives. Startup co-founders rarely survive being lovers.
Family members are special types of co-founders
Family members have even more shared objectives that exist before any business is founded than friends. Families have a complex web of cooperative, competing and retreating shared objectives with a wide range of potential payoffs between each and every family member. These shared objectives and payoffs exist at many different levels as described in the How To Spot And Create Shared Objectives blog post. And many payoffs are emotional rather than material, so there are often many covert manipulative competitions going on to get parental attention, adoration or independence. All these existing familial dynamics with whom from the family is on the founding team are superimposed upon the shared objectives the founder has with everyone else on his or her team.
How you deal with family dynamics is beyond the scope of what we can help you with. What we can say it that the presence of family members on the founding team makes it even more important to have explicit discussions among the business team, including the family members, about what are everyone’s business shared objectives. You want to create a shared objective with each key team member along the lines of cooperating to keep family dynamics of business decision making. The payoffs are reduced tension and higher personal productivities for both parties, which is something worth cooperating about.
The next blog post focuses on how founders should craft their shared objectives.