What Mistakes Are Killing Your Startup? #7: Fights Between Founders

Fights Between Founders – founder conflict is very common. Founders, being ambitious people, are almost bound to disagree

Paul Graham – Y Combinator

Building the founding team, survival and growth are undoubtedly the major challenges faced by entrepreneurs.

On one hand it seems quite clear that going solo is not the solution (see my blog post: Mistakes that kill start-ups – #1: single founder): as Carlota Pi (Holaluz.com co-founder) recently told me, “alone you go faster – together we go further”.

On the other hand, as my dear friend Jesus de Benito commented, “the best number to start a new firm should be odd…and 3 is a lot!” The truth is that issues and problems between founders are not hypothetical. No matter the output of the venture, IT WILL HAPPEN, IT ALWAYS HAPPENS! It is normal. The key to success is not to avoid the problem (the elephant in the room) but to be aware of the consequences of your decisions and anticipate them.

  • How can you ensure the team covers all the bases in terms of skills, experience and knowledge?
  • How can you make sure you have the right combination of interest and ambition?
  • How can you cultivate the right networks along the value chain of your business, while at the same time building a long-lasting founding team?

In my experience, more than 80% of the fights between founders are related to just 3 issues.

  1. First comes the dedication to the business (and its perception by other founders).
  2. Second, the initial cap table and how the shareholding is divided.
  3. And last but not least, how the strategic decision process is structured (or not).

The good news is these issues can be resolved with one single concept: anticipation. It’s much easier to fix problems before the company is started than after. Draw up the partnership agreement ASAP – you need to decide on DAY ONE on the decision criteria to be used when conflicts arrive (and they will) and STICK TO IT:

Easy things that you can do to prevent most of the conflicts:

  • Shareholding in the company is a very sensitive issue as it determines the present reward (for start-ups with dividend-generating revenue models) and/or potential future financial rewards (for most start-ups). In order to avoid conflict related to founder dedication levels and related shareholding, make sure there is a deadline for full dedication by all founders; if one of the founders does not make the final jump, the other founders should be able to buy back the shares at the original issuing price.
  • We know that the initial phases of a start-up are chaotic and founders work and collaborate on almost every single decision, but in order to avoid conflicts in the strategic decision making process, you should, as a team, clearly define what decisions you believe should be made by the CEO, the CTO, etc.… You may not need a CEO at the start, but you’ll definitely need one to grow!

Do not forget that in the end, most conflicts are not caused by circumstance but by people. Of course you need to find co-founders with the skills that you do not have, but first make sure you share values and goals. This will help resolve conflict peacefully and give you the time and energy to focus on what really matters – the growth of your venture.


Posts of the series:

#1 Single Founder

#2 Bad Location

#3 Marginal Niche

#4 Confusing an Accessible Market with a Potential One

#5 and #6: Launching too Early… or too Late

#7: Fights Between Founders

 

 

About Mathieu Carenzo

Mathieu worked in different positions in Europe and America mostly in corporate entrepreneur positions. After an experience in Danone to start his career, he worked in the helicopter branch of EADS: Eurocopter. He led the growth of the company in Mexico, Caribbean, and Central America building his expertise in the settlement of new structures and development of new markets. He is a Business Angel investing in early stage high growth potential new ventures (holding 2 board seats) and leads the growth of the Global Entrepreneurship Week in Spain.

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