Founder Splits
I’m now going through my second founder split scenario.
It’s inevitable these things happen, but it’s still hard when they do. It’s a bit like some awful illness where you know other people who have fallen victim but for some reason you don’t think it’ll ever happen to you.
It’s inevitable, though, because people are people and startups are ridiculously hard. Surviving - let alone thriving - in that pressure chamber requires complete alignment between founders. The tiny fissures that can be papered over start to expand into dangerous cracks at scale, at speed, and over time.
Eventually, a moment will come where a change has to happen - and usually, the people involved know it’s coming. I won’t profess to have 20 years and 10 examples of having done this, but FWIW my observations on what it means to handle these things well:
- Ask for help. Chances are, your VCs will have seen this play out many times before and this is an area where they genuinely can be useful sounding boards.
- Establish the legal position. Your constitutional documents should lay out what happens in this scenario, including things like share vesting and notice periods. Understand this clearly as it may play in to how you negotiate the exit.
- Plan the transition. Don’t act before you know what the next step will be. Sometimes the departing founder will help in the transition, but be prepared that it gets more ugly. Use your other team members to support - bring them inside the tent early to step up into the new solution. Challenges galvanise teams.
- Be honest. Trust is so important that everyone needs to operate with integrity. Without it, things can unravel quickly and the split can become messy. That goes for everyone - the person involved, investors, team, etc. That doesn’t mean “the whole truth to everybody” but it does mean transparency when called for.
- Cut clean. I personally don’t think transition phases, reworked structures, tweaked roles, etc really work in the long run. If you’re at the point where a change needs to be made, bite the bullet.
- Move quickly. Once decided, there’s no point dragging things out - act quickly. A start-up has so little resource it needs to move past the drama - of which there will be some - and back to the mission ASAP.
- Overcommunicate. The rest of your team, your investors, and other interested parties will wonder what’s happening and what it means for them. When it comes times to tell people, be clear, calm and complete in your communications to make sure nobody feels the need to panic.
There’s no avoiding some pain as you go through this sticky situation, but plenty of people have done so and made it out the other side.