
Cofounders - dan_sim
http://blog.spreedly.com/2009/12/22/cofounders
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grellas
Whenever co-founders bust up, there is inevitable trauma to the business of
the startup no matter what mechanism is in place to assure that one particular
founder (or a faction) has the final say. In this sense (as recognized in this
post), it is the people who matter more than any particular mechanism.

Having represented countless founders over many years, I have seen all sorts
of startups succeed even though they lacked a mechanism for ultimately
determining control and relied instead on shared governance. This is by far
the norm and not the exception and simply signifies that most people manage to
get along and tend to resolve their issues most of the time when it matters
even though they theoretically could get ensnared in deadlocks.

I have also seen the classic bust-ups and fights over control, and these truly
_are_ a mess - hence the advice in this post to put a control mechanism in
place if possible can prove helpful, at least if co-founders are willing to
cede final authority to one among their group. The bottom line in this
respect, though, is that most founding groups are _not_ willing to cede such
authority in this manner - I think this has less to do with founders failing
to think the issues through than it has to do with basic human psychology. It
simply is not easy for those starting a venture on comparatively equal footing
to elevate the status of one above the others. In turn, in cases where it _is_
obvious that there is one dominant founder, this normally is reflected in that
founder's getting a disproportionate share of the equity and unilaterally
controlling the company in that manner.

That said, this is a thoughtful post that will help founders to think through
and deal with this issue.

By the way, a common method used by a still small minority of founders to give
control to some over others is the Class A/Class B common stock approach
(popularized by Google) by which all common shareholders have identical rights
except that the B holders get a 10x voting advantage for their shares (or any
similar variation on this theme).

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steve___
There are many ways to skin a cat. Assuming the equity amongst the co-founders
is equal, I think the methods used to resolve conflicts are mainly dependent
on the co-founders dispositions.

For me personally, I believe there has to be a willingness from the founders
to put the customers' needs first. If I truly believe I'm working with my
equals, then their opposing views are just as important as my own.

Assuming there are four founders and there is a conflict then I'd suggest the
founders get in the same room and talk about the problem first. Make sure
everyone agrees on what the exact problem is. Assuming there is still a
conflict then brainstorm on possible solutions. At this point if there is
still a conflict and the vote is 2-2 then I'd suggest flipping a coin. Trying
one of the solutions is more valuable than both ideas combined. The insights
the founders will receive from attempting the solution should make it obvious
which solution is best.

Lastly if conflicts are cropping up on a consistent basis, if the general mood
of the group is negative, if people are going off on their own and/or if there
is a strong belief in the group that not everyone has the customer needs as
the primary focus, then quit. Use a shot-gun[1] clause to resolve the issue of
how to buy out a partner and move on. It is easier said than done.

[1] <http://en.wikipedia.org/wiki/Shotgun_clause>

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angelbob
This makes me think that the advice about 50/50 cofounders -- that you want
somebody who complements you, not somebody like you -- is especially good.

If you're the tech guy and the other guy is the business guy, you _have_ a
conflict-resolution method in place for most things. You have final say on
tech, he has final say on business. So you'd expect the difficult/troublesome
decisions to be the ones where you've got equal say, like "do we sell for this
amount of money?"

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steve___
For me an ideal fit would be someone who is like-minded with a constrasting
skill set.

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nopassrecover
I'm still trying to work out how two people can bring the same passion and
direction to a project. I can find people with similar worldviews and
complimentary skillsets but with cofounders having the same goal and the same
energy seems the most critical point.

OT but I like how this blog gives a clear link and description to their
product (something which annoys me on other product blogs where all links
point back to the blog itself). I actually clicked through and am interested
in using their product thanks to this good post and the easy link +
description. I still need to investigate further but the reasonable price to
take the hassle of subscriptions off my mind sounds good.

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jasonfried
50/50 is the worst ratio in business.

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steve___
What makes you say this? Do you feel co-founders are analogous to a marriage?

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johnl
Sounds like the article reinforces the same checks and balances that the U.S.
government is based upon, why the supreme court has all those judges and terms
of elected officials are staggered. The founders force themselves to seek the
middle ground. Pretty Good.

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samstokes
This part resonates: "having a known resolution mechanism in place encourages
everyone to resolve disputes informally"

