
Co-founder breakups - rdl
http://harj.posthaven.com/co-founder-breakups
======
robotjosh
I cofounded a startup that had all of these issues! I was the technical
founder along with 2 non-technical founders, they offered me 10% equity to
develop a hardware product. Seemed like a good deal, nearly finished my work
over 6 months. Then we get into techstars and I have to shut down my
independent contractor practice and come on full time with a shitty salary to
keep my equity. Also, I had to redesign the product in a way that added
several magnitudes more work. Another problem was that one of the non-
technical cofounders started calling himself the CTO and started ordering me
around on technical issues that I have an education in and over a decade of
experience on. After demanding to be an equal partner and CTO, I was kicked
out with no equity and no nothing.

~~~
embwbam
I'm sorry man. I was forced out of my first startup last year. It was very
traumatic. It's so obvious what you should have done in hindsight but that
doesn't help. I wish you the best if luck in the future.

~~~
robotjosh
Whats obvious that I should have done? These guys were my friends and only
acted like this because they have an advisor they trust telling them to.

~~~
avenger123
They were not your friends. Friends don't do that.

~~~
robotjosh
This was a long scam then. Over a year of being gym partners, playing
racquetball, drinking, all the stuff you would do with people you consider
friends.

~~~
avenger123
Please don't take my comment the wrong way. I understand it can be considered
somewhat snarky.

An advisor did not force any of your "friends" to do what they did. They made
a conscious decision to act.

People screw each other all the time. It's part of life. The main thing is
that you learn from this.

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vnorby
_This can turn out not to be a problem if the startup hits some reasonable
growth (growth is usually a solution to such ails as long as it continues)._

This is the important line in the article. Co-founder breakups probably happen
more because the startup is not doing well, and not vice versa. I'm not sure
if it makes sense to try and optimize for not running into co-founder problems
as much as just optimizing for your company's success as normal.

If your company is killing it, and you're a co-founder and you've got 10% and
you want to be the CEO and your grad school dropout grace period is ending and
you'd rather be working on technical problems, you're most likely going to
stick it out regardless.

~~~
_delirium
Another way of thinking of it is that doing things to maximize success is
_far_ more important than what percentage of a hypothetical future success you
get: 10% of billions is much better than 50% of millions, which is better than
90% of nothing. So really the percentage only matters insofar as its
psychological impact might influence chances of success.

~~~
derefr
> 10% of billions is much better than 50% of millions

In a VC startup? Sure. In a lifestyle business, I'd rather get a 99% chance of
millions (and a fun place to work.)

~~~
tyw
I believe _delirium was talking in terms of % ownership, not % chance of
success.

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jordn
I'm actually a little surprised that an equal equity split is apparently the
default and preferred option in the valley. It's quite an unspeakable topic in
my experience so I'd appreciate if someone could confirm this.

I remember being told explicitly in one startup focused class at MIT that it
was highly advisable to decide one way or another who would have the majority
of shares. We even played a role playing game where an equal split was the
only _wrong_ answer. The idea was that not everyone will be sacrificing and
committing equally and that it was better to figure that out upfront than have
it play out down the line.

~~~
maaku
> The idea was that not everyone will be sacrificing and committing equally
> and that it was better to figure that out upfront than have it play out down
> the line.

If you think you can figure out ahead of time who will be "less committed" or
otherwise less deserving of equity, then either (a) you're fooling yourself,
or (b) that person shouldn't be a founder.

~~~
derefr
I have friends with great skills who I want to work with at my startup, but
none who I would really expect "founder" levels of commitment out of.

It seems that they agree: what we both really seem to want is that, _after_ I
get the business off the ground _on my own_ , I just hire them for cushy jobs
as employees. :)

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thomaspun
Great post, Harj!

I went thru two breakups. This struck me the most.

 _You're doing yourself a disservice if you don't bring up what's on your
mind. If you feel like you can't, then you should probably question whether
you have the right co-founder._

Startups are stressful and not talking about founder issue early up would
_only_ make it worse and slow you down even more.

If anyone needs someone to chat about founder issues, feel free to reach me
from my HN profile.

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smoyer
A must read article ... I've seen instances of each, but didn't really
recognize them at the time (I'm also sure I haven't seen as many as Harj). I
think I'll be more aware now.

One little nag - It might not be a great time to use the analogy of an
exploding pressure cooker.

~~~
Harj
Didn't think of that, edited.

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killermonkeys
ALL these tensions exist in a startup. In the 3 I have been in, all these
issues arose to varying degrees. In my second we went to the coffee shop on
Monday morning and talked really openly about what we thought of last week. It
was great. We were positive and honest people but nearly all issues including
a serious equity issue were dealt with. It is you v. the world so treating you
cofounder with suspicion is dangerous.

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USNetizen
This is a spot-on post. I just recently broke up with a co-founder, mostly
because of the uneven equity split like you stated (i.e. I was doing far more
work and contributing far more expertise than what my equity showed). It was
also due to a number of other factors, but that was primary. You hit the nail
on the head with this. Great post.

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gvr
I think doing proper personal due diligence up front can often help you avoid
a breakup; it can also help avoid starting a company together in the first
place if the fit isn't there, and make breakups easier should they happen.

I wrote a blog post about my own experience doing this with the co-founders of
Otelic. We have since lost one co-founder in a completely undramatic way -
which I largely attribute to talking everything through in great detail prior
to starting. Many times you're so excited about working together on a cool
product that you neglect to do this; it's happened to me before and it's a
costly mistake to make.

[http://gigaom.com/2012/01/26/the-questions-every-founder-
mus...](http://gigaom.com/2012/01/26/the-questions-every-founder-must-ask-
themselves/)

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benatkin
> The relationship between co-founders is usually the single biggest risk to a
> startup in the earliest stages

This doesn't seem true to me. If it were the case, I think going single
founder would be a way to improve the odds dramatically.

~~~
abstractbill
A good co-founding relationship has much in common with a good marriage. Think
of the output as being a happy family life. You _can_ create that all by
yourself, by adopting one or more children as a single parent. But it'll most
likely be a lot harder than if you find a good partner.

~~~
benatkin
I don't buy this. I'm not sure I'll do a good job at explaining why not, but
it's more of a hunch than anything.

The reason I don't buy it is because two average people can get married and
have a happy family life simply by cooperating. Cooperating is not enough to
succeed with a startup, they must also have a good enough idea, good execution
of the idea, and some luck. Often nothing short of _brilliant_ execution of
the idea will make a startup work. And they probably need exceptional people,
not average people.

Another thing is that a happy startup life, most of the time, is
unsustainable. People at the startup can be happy and get along with each
other right until they run out of funding. I've watched it happen. They often
still get along after they've stopped working on it, but the startup has
failed.

~~~
TheLegace
You know what my opinion was always that finding competent, smart, interesting
and passionate people are impossible to find, at least around me. I have just
gotten use to completely relying on myself.

In a lot of ways other people can negatively impact your creative process by
being a distraction. But at the same time, if you find someone where you can
happily communicate with then maybe the ideas can pour out.

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spartango
These are excellent observations. I think one of the big challenges, though,
is that seeing these issues coming can be very challenging. Subtle commitment
or personal priorities issues can lurk under the radar and only come up when
the going gets rough. I think the last point, regarding candor, is super
critical for this reason; if your team is transparent about everything, then
there's a good chance you'll realize things aren't right before things
explode.

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bridgeyman
This is helpful. We were fine with even equity splits or a slight difference
because one cofounder is funding the venture. Sounds like even is preferred?

~~~
Harj
If one founder is putting money in that's different, I'll include that in the
post.

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sreitshamer
Does the co-founder term always imply some sort of equality? If so, I think
the implication is dangerous. For example, finding someone who works exactly
as hard as you do is impossible, so someone's always going to be disappointed.

Also, the buck has to stop somewhere, at an individual, not a committee. It's
lonely at the top.

~~~
_delirium
I've generally found that the _best_ case is the buck stopping at a smallish
committee (2-4 people) who work well together, take joint responsibility, and
appropriately communicate and split expertise. Individuals have a lot of blind
spots and tend to get either overwhelmed or overconfident. But it's also true
that the "work well together" part has a high failure rate.

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OnyeaboAduba
I think this article gives some sage advice on what to do before you get to
the break-up stage...[http://www.businessinsider.com/7-tips-for-picking-the-
right-...](http://www.businessinsider.com/7-tips-for-picking-the-right-co-
founder-2013-4)

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edouard1234567
Nice post. You give an example of un-even equity split when one founder had
the idea, built the first site and got some traction. When do you stop being a
co-founder and become a founding employee instead?

