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Over fifty percent of all co-founder relationships end up failing. And, If there’s one thing I am an expert in, it’s failed co-founder relationships.
After all, the first two teams of co-founders I tried to start my company with didn’t work out. It wasn’t until my third team of co-founders that I got it right. Even then, two of my four co-founders from that third team didn’t make it past one year.
There are ten warning signs, based on my experience, that you need to pay attention to. These warning signs can help you see when your co-founder relationship is failing. Here they are starting with:
Warning sign number one: Your co-founder doesn’t agree with your vision for the company.
When I started my company with my first team, “Jim”, “John”, and I seemed to be working well together. I knew Jim from our time at Maxim Integrated Products, and he recommended John, another Maxim alumni, as our VP Engineering.
I checked my network for references on John. Everyone I spoke with felt it was a coup for me to have John as part of the team.
It was clear, within a few short months, that John had different ideas for what we should do than I did. Right or wrong, when this happens, either one of you adjusts or one of you is going to leave the company.
John chose to leave the company, steal our IP down to the slide deck, and start another company.
Warning sign number two: Your co-founder doesn’t understand the tradeoffs of working with investors.
The problems weren’t just that we disagreed on the company’s direction. John also felt we should raise less money.
I wanted us to have at least two years runway, and John felt we should keep more equity and raise less money. Maybe it’s unfair to say John didn’t understand how investing works, but he didn’t understand that you lose control of your company the second you take venture funding.
A co-founder that doesn’t understand the realities of working with investors is a dangerous co-founder. That was John. John felt he knew better than I did what do, and he quit.
