The Problem with Co-Founders




“My co-founder and I used to be on the same page.

Now we can’t seem to find common ground.”

Co-founders are the foundations of organizations, and yet their relationships can deteriorate or become fraught over time. These aren’t just business partnerships; they are complex personal relationships taking place in the fishbowl of a professional context, under the scrutiny of boards, employees, and customers. 

In this new episode of The Clarifier, Angie D’Sa interviews Jeff Hunter about the complexities of co-founder relationships and provides practical guidance for navigating the inevitable challenges. Key takeaways include: 

  • What Makes Co-Founder Relationships Complicated: These are complex personal relationships taking place in a professional context, under the scrutiny of boards, employees, and customers. While co-founders might agree to assume particular roles and titles, in reality their responsibilities, decision rights and influence can still be ambiguous, putting stress on the relationship. 

  • Where They Fail: When co-founders treat their relationships as purely “professional” failing to have the intimate conversations necessary to acknowledge the very real, personal fears and expectations between them, relationships erode. Decisions for the business, which should be made in the best interests’ of the company, become implicit competition for power and influence. Often decisions get made based on the least threatening path that two co-founders can agree to – the lowest common denominator, rather than the most inspired and valuable path for the business.

  • What You Can Do About It: Co-founders must foster open and honest conversations about their fears, concerns, and expectations to strengthen trust, safety, and communication within their relationship. Identifying reversible two-way-door decisions provides an opportunity to experiment first with one co-founder’s viewpoint and then the other’s, enabling data-rich learning on whose judgment should guide the company in which contexts.

Full Transcript:

Angie D’Sa 00:04

Welcome to this week’s episode of The Clarifier, where I speak to Talentism founder Jeff Hunter about co-founder relationships. Jeff himself has been a co-founder numerous times and has coached dozens of co-founders and co-founding teams.

Jeff Hunter 00:20

There are times where, and I’ve worked through a lot of these instances with co-founders, they actually have a pretty toxic relationship right from the very start. It’s very power dynamic-based. It’s very ego-based. By ego, I mean being more interested in being right than being rich.

Angie D’Sa 00:40

In this episode, we learn what tends to put pressure on co-founder relationships and why there’s often strife once the honeymoon period is over. We also learn what to do in particular when you find yourselves in situations where it’s difficult to know how to make the right call or who gets to make the decision. I invite you to listen if you’re co-founder dating, if you’re in a co-founder relationship that’s all roses right now, or if you’re in the middle of a period of difficulty with your own co-founder or co-founding team. Okay, Jeff. So today’s episode was inspired by a recent conversation you and I had with an acquaintance of yours who was reflecting on a co-founder relationship and thinking about the lessons she had learned and how to apply them as she looked for her next co-founder for her next venture. So before we jump into this topic and why these relationships are unique and often challenging, I’d love it if you could share with us your own co-founder experience. You have been a co-founder multiple times in the ventures you have started and built. And you have coached many teams of co-founders. So please give us a glimpse into your experience.

Jeff Hunter 01:58

Yeah, thank you. When you told me you wanted to speak about this topic, I spent the weekend reflecting upon my experiences as a co-founder and founder. The journey actually started when I was 18. My friend Brad and I went to high school together and then went to college together. He came to me and said, “Hey, I know we have to get jobs. This was the summer after our freshman year approaching the summer after our freshman year. But I’ve got a better idea. Let’s start a company.” And from that, he became the lead partner, and I was the co-founder. He was the lead founder, and I was the co-founder of a company called Bengal Marketing Group. That was my first co-founder experience at the tender age of 18. Then, the next one was probably when I founded a company called Hunter Group Services all by myself at the age of 25. Then I co-founded Datamain with Dr. Mitch Weil. After that, I co-founded Employment Engineering with Tom Balo. So, I’ve had many founding and co-founding relationships. In the case of Talentism, I was the single founder. Whenever I’m coaching my clients who are co-founders and going through the particular struggles of being co-founders, I often feel their pain because I remember being in those situations myself. It’s an incredibly difficult and fraught relationship. I have to say that the most challenging coaching I’ve ever had to do over the last decade, which has been my full-time focus, has been co-founder relationships. It’s like a high-wire act compared to all other forms of coaching. So, I was excited to talk about this because there’s such a rich history for me, with over 40 years of working on this.

Angie D’Sa 04:01

Thank you for sharing that. I definitely don’t have as much experience as you do. However, I had my first co-founder experience at a younger age. It was in fifth grade when a group of girlfriends and I formed a group that performed as the Spice Girls at little kids’ birthday parties. Let me tell you when you’re in fifth grade and performing at a kindergartener’s birthday party, and they think you’re the real Spice Girls, it’s a pretty great gig. But even then, I noticed some of the implicit power dynamics that we’re going to talk about in this show. They emerged and may have been even rougher at the age of 12 and 13. But I want to get into it. So, tell me, what is inherently different about the co-founder relationship compared to other professional relationships and relationships between executives at a company?

Jeff Hunter 05:01

Well, a couple of things. First of all, I’m not sure it’s useful to look at it as a professional relationship. I’ve never seen a co-founder relationship as “professional” in the sense of adhering to the standards and norms of being professional with each other. I see it more as a personal relationship that has a professional context. While I don’t claim to be an expert on personal relationships, I had an interesting experience early in my career that helped shape my thinking about this. I was the executive director of a nonprofit called Winners on Wheels, which was a founder-led nonprofit (I was the executive director). It was a scouting program for kids with mobility challenges. What I realized when I entered that world was that the parents of kids with these mobility challenges experienced stresses that most of us can only imagine. These stresses often led to higher divorce rates, separation rates, and a higher incidence of poverty. Navigating such a challenge, which involved something you deeply love (your child), puts incredible pressure on relationships. All marriages and personal relationships are difficult and fraught. Humans aren’t good at relationships, despite being a relationship-centric species. But when you put a personal relationship under the microscope of various people (for co-founders it’s venture capitalists, employees, stakeholders, mentors, advisors), and when you have something you deeply care about under stress and challenge, the relationships can quickly fray. One thing I’ve realized is that the health of the business is often correlated to the quality of the co-founder relationship. When the business is easy and healthy, the relationship is strong. But when the business is struggling or facing challenges, the relationship becomes fractured. Having a a productive relationship in the midst of a context of something you care deeply about, that is under stress, is incredibly difficult. That, to me, was the one thing you could really correlate across the various case studies I’ve encountered. For example, I remember a group of co-founders who were killing it. They constantly emphasized how easy co-founding was and how smoothly they worked together. However, as soon as they experienced their first bad month, the relationship began to fracture. This is just one of many cases I came across. Additionally, I’ve noticed an increase in stress within the world of co-founders recently due to factors such as higher talent costs, increased growth costs, and the lingering effects of the pandemic. Another stress factor I discovered recently while speaking with venture capitalists is that they are becoming less “founder-first” or “founder-friendly” and more willing to have difficult conversations with co-founders early stages if they feel the co-founder isn’t adding the expected value. This adds another layer of stress for co-founders to deal with.

Angie D’Sa 10:19

Let me see if I can put together the pieces I’m hearing from you. First, when I asked why co-founder relationships are different from other professional relationships, you emphasized that they are mostly personal. Although they may occur in a professional context, they are driven by personal relationships. The nature and intensity of what co-founders build together makes it more personal than strictly professional. So, we have personal relationships with all the characteristics of personal relationships, but they take place in a professional context, which brings additional scrutiny from investors, boards, employees, customers, and the market. This shift in dynamics, where personal relationships are put on display, can significantly impact the co-founder dynamic. Furthermore, there are several stressors affecting co-founders in the current climate, including the usual ups and downs of building a business and macroeconomic forces that put pressure on entrepreneurs. These pressures encompass factors like the cost of capital and the changing mindset of venture capitalists regarding how they view founders. Now putting those pieces together, I’m curious to hear your thoughts on what actually breaks down between co-founders. With the personal relationship and the high-stakes public context, what breaks down? How can co-founders see themselves in the picture that you are describing?

Jeff Hunter 12:24

Well, there are several things to consider. Let’s dive into them. Firstly, when I started Talentism, I made it clear that I would be the sole founder because I believed in my unique vision encompassing the philosophy, system, model, and product levels. Innovating across all these dimensions is rare, and I couldn’t imagine finding a good partner in the early stages who wouldn’t mess everything up. However, when I was discussing starting Dive In, our venture capital firm, with Christina Sass, I knew I needed a co-founder. I explicitly told her up front that she should be the lead founder, and I would be the co-founder. It needed to feel like the venture was hers, and I would support her on that journey as a co-founder. My role was to provide strategic value, insight, and an additional set of capable hands at the beginning. I wanted to be deeply involved, living and breathing it like only a founder or co-founder can. But I believed she was the key person, not me. This approach has been relatively successful in other cases where I have seen it deployed. However, it rarely is deployed. So, the question I always ask myself in founder-co-founder dynamics is: What would be the state of the organization if one of the individuals left? This question varies based on the stage of growth and the type of organization. Venture capitalists prefer technical founders or co-founders for technical businesses because they want that DNA from the start, rather than it being a later addition. However, technical founders are typically not great managers and may lack experience in that area. They often view everything through the lens of technology’s effectiveness or efficiency, rather than the overall business which can create tensions. In those cases, it is crucial to clarify who is the essential person needed for the venture’s success. This aligns with the psychological concept I’ll discuss later called “right or rich,” which often where a lot of co-founders get out of sync. Addressing the question of who will be the lead founder for overall, versus for a specific problem, is crucial. These questions are fraught, and rarely asked. It’s a complex issue, intertwined with human psychology, egos, and people’s fragility regarding their perceived importance. However, the question of who is the lead founder always comes up. If you can address it early and make it situational in the beginning, you can gain practice and potentially avoid numerous problems later on.

Angie D’Sa 16:33

This may seem obvious, but I still want to ask: Why does there need to be a lead founder? What makes it so challenging to have equal partners running something?

Jeff Hunter 16:51

Most of the time, people are not equal at any given moment. In any particular moment, assuming that what you are trying to do is advance the business, which I am being explicit about here but is not always the case. At any particular moment, there is going to be someone who may have the right answer while someone else has the wrong answer. There will be someone with better skills, judgment, and perspective, while someone may have less. In group decision-making, where you do not have the luxury of time to build trust gradually or engage in dialogue over discussion, consensus needs to be reached quickly. Most startups need to act quickly. When you have consensus-driven decision-making in these contexts, it leads to worse decisions. People focus on reaching agreement based on the lowest common denominator, rather than seeking the right decision. It becomes challenging to prioritize the interests of the business when there’s an ego battle over equal credit or stage time. In those situations, putting the business first becomes difficult. Hence, even if co-founders may claim to be equal in various ways (such as capital pool or equity distributions), it’s crucial to recognize that there will be moments when someone has clarity while someone else is confused, or when someone has experience and self-awareness that the other lacks. This dynamic varies depending on the context. By allowing someone to take the lead in a given situation, you can avoid getting stuck in least common denominator thinking and better serve the interests of the business.

Angie D’Sa 19:08

I imagine that some listeners might have a conscious or unconscious allergic reaction to what you’re saying. As someone who speaks with many leaders and members of co-founder teams, I know there is a desire to avoid having an authoritarian culture or a single decision-maker ruling by fiat. However, what I am hearing from you is, in moments where open, fluid, curious, and sometimes vulnerable conversations can occur, it is possible to have great discussions where equals can contribute ideas, disagree, and find the best path forward. The challenge lies in the reality that most business contexts do not allow for that. In situations where decisions must be made rapidly, most people tend to bring their perspectives to the table, pushing for their own ideas rather than engaging in curiosity to understand and build something new. When trying to reach a consensus with two people holding different ideas, the result often becomes the smallest thing they can agree on, which is unlikely to be the best path forward for the business. Therefore, in this model, the only way to make decisions that aren’t about the lowest common denominator, but instead are about someone’s rich thinking, is to choose which person’s thinking is going to win.

Jeff Hunter 20:54

Yes. There are additional levels to this. I’m particularly fond of the concept of “two-way doors” versus “one-way doors” decisions, which is a phrase Amazon uses.Co-founders in the beginning (typically the first three to four years), of a relationship and a company are dating. You actually are dating for a very long time. You think you’re married, and you’re actually dating. That’s why in the beginning, you actually are trying to be the best you can at learning about the other person, yourself, the business, and the market. You’re learning in all those areas. You and I often discuss the importance of speed of learning. One effective way to learn quickly is by having one person make a two-way door decision and see who has a better track record. So, if you’re unsure about who should be the lead founder, you can each take on different two-way door decisions and evaluate the outcomes over time. However, it’s important to note that this approach should not involve using one-way door thinking for two-way door problems. To clarify, a one-way door decision is difficult to reverse, and the cost of failure is high. On the other hand, a two-way door decision means you’re good enough with 80% of the available information to make a choice and learn quickly, and if things don’t go right, the focus is on the recovery and learning from that. Now, I’ve encountered many co-founder relationships that are toxic right from the start. These relationships tend to be power dynamic-based and ego-driven. When I mention ego, I’m referring to someone being more interested in being right than rich. This is a misalignment between co-founders regarding their priorities. Some individuals seek power for status and authority, while others seek power to achieve a particular outcome. There are people who are very strong to vision and very loose to rules, and others who don’t think vision is important but are very tied to rules. The co-founders may initially discuss grand visions and dreams of success, but their actions often reveal a different story. Their behavior shows a focus on being proven right rather than pursuing success. This ego misalignment poses several problems. Decision-making becomes slow, learning is hindered, and relationships become difficult due to a “my way or the highway” mentality. While this dynamic can work in co-founder relationships where one person possesses significant power (think Bill Gates or Elon Musk), most successful stories involve co-founders working together. Venture capitalists strongly favor the co-founder model because of the numerous successes they’ve witnessed. However, in co-founder relationships where there isn’t one ultra-dominant player, both individuals try to navigate the dance together. The problem arises when one co-founder insists on being right and is unwilling to compromise on decisions that undermine their ultimate authority. This creates detrimental dynamics between the co-founders.

Angie D’Sa 26:15

If I were to distill the practical takeaway for someone listening to this who is in a co-founder relationship or searching for a co-founder, it would be to start with the Talentism maxim that speed of learning is the most crucial predictor of long-term success. The speed of learning is directly linked to building competitive advantage and adaptability in the market. In the beginning, you’re learning about the market, customers, organizational building, and investor expectations. Equally important, you’re learning about your co-founder. While you may have thought that the co-founder dating phase was over when you signed the incorporation papers, in reality, it’s an ongoing process. In moments of disagreement where there isn’t an obvious hierarchical structure dictating whose opinion wins, there is an opportunity to make decisions based on data. By choosing one person’s viewpoint on a two-way-door problem, you can gather information about their judgment. The goal is to make data-informed decisions about who should be responsible for certain calls within the company, considering their capabilities, synthesis abilities, and approach to data. This approach should prioritize the best interests of the company rather than ego-driven design. However, saying, “We’re going to bet on you this time and me the next time,” can be challenging. There is usually ego involved in that relationship. It is a personal relationship that has the context of all the conversations that tend to happen along the way, such as  “Whose idea was this? Who deserves to be CEO?” Your brain might tell you that this is not a smart way to run a business, and you may genuinely believe that your decisions are rooted in the company’s best interests. But it’s important to recognize that there may be some ego and self-protection involved in these conversations.

Jeff Hunter 28:31

That’s right. When viewed through the lens of Talentism IP, it becomes clear that this is all about psychology, not rationality. It’s about how people, in their contexts, filter their environment and react based on confusion or blindness. People are often surprised by how others react to them. Co-founder relationships are particularly challenging because the power dynamics at play are implied and not explicitly defined. If there is nothing explicit, no external validator or reporting structure, such as an org chart, the rules become unclear. If you are next to each other on an org chart, the rules don’t apply anymore. The most successful co-founders possess a high level of personal mastery, ability to see the big picture, and understand themselves well. They exhibit self-awareness, self-skepticism, and other traits we try to help leaders grow in their personal mastery as their ultimate competitive advantage. However, many co-founder relationships lack these qualities. Most co-founder relationships start relatively early, and individuals may even not have fully developed their prefrontal cortex. They may overestimate their abilities due to attending prestigious schools, failing to recognize that luck played a significant role in their success. In the early stages, humility and investment in the co-founder relationship are crucial. Instead of treating it like a dating phase, the focus should shift to building a strong, long-term partnership. For example, having monthly dinners where co-founders can openly discuss their feelings, fears, and concerns is highly beneficial. Unfortunately, many early-stage startup co-founders neglect this practice as they are constantly in “run mode” and fail to build with each other. However, the co-founder relationship is the power source of the enterprise. We have actually measured the considerable loss of productivity when co-founders experience discord. It’s essential to recognize the importance of investing in the relationship and developing appropriate tools for effective collaboration. Additionally, co-founders often struggle with low self-awareness and secretly fear that the other person doesn’t like them. These concerns are reminiscent of dating insecurities. Overcoming these challenges requires investment, practical rule-setting, and dealing with conflicts in a constructive manner. Otherwise, the energy that should be driving the success of the enterprise gets wasted within the internal dynamics of the co-founder relationship.

Angie D’Sa 33:34

One of our aims in these conversations is to provide practical takeaways for our listeners. From our discussion, I’ve identified at least two key points, and I’d love to hear your thoughts on any additional insights. The first point is that when there is tension between co-founders, and there isn’t an external organizational structure defining decision-making authority, disagreements may appear as logical debates. However, if we could see through emotional X-ray glasses, we’d realize that it’s actually a battle of egos, with each person trying to prove their worth, value, or status. In such contexts, it’s unlikely that the best decision for the business will emerge. At best, it may lead to a lowest common denominator agreement, and at worst, someone may prioritize being right over creating a positive outcome for the organization. It’s crucial to recognize this common trap and be aware that co-founder disagreements in these circumstances rarely yield favorable results.

So, what can be done when faced with such situations? Ideally, if you have previously agreed upon a set of rules regarding who takes the lead in specific situations, it can be a great help. However, in many cases, these rules may not exist. In such instances, it’s important to take a step back and somewhat objectively determine that someone needs to take the lead, even if it means flipping a coin. The value of gathering data outweighs the importance of making the perfect choice for leadership in that particular situation, especially when the decision is not irreversible. This leads us to practical point number one.

Practical point number two is the necessity of investing in the foundational relationship between co-founders. To effectively recognize when these situations arise and approach them with some detachment, it’s essential to have regular intervals of investment. This investment involves building trust, creating a safe space for open communication, and establishing a shared understanding. It requires having honest conversations where co-founders can be genuine and discuss their fears. Sharing vulnerabilities strengthens the bond and fosters a sense of safety over time.

In summary, the two practical takeaways are: in moments of disagreement without clear decision-making authority, rely on predefined rules if they exist; otherwise, make a bet to gather data and agree to analyze it. Additionally, invest in the co-founder relationship by cultivating trust, safety, and open communication. By the way, these insights can be valuable not only in the context of co-founder dynamics but also in building a healthy marriage.

Jeff Hunter 37:19

It is, after all, a relationship. I was just reflecting on my 31-year marriage with my wife. When we got married, we sat down and established a couple of rules that have proven to be the most effective part of our marriage. First, we agreed that we would rather be bankrupt than divorced. This rule was crucial because many couples break up over money, and it applies to co-founders as well. I recall a couple I worked with who had opposing views on financial matters, causing deep entrenchment. By getting them in the same room and discussing what they were willing to break up over, they realized they had a higher-order goal they both aligned with. This central point allowed them to recognize when they were falling into old patterns and brought them back to their shared agreement.

Second, we shared a vision for our relationship and recognized the value each of us brought to it. While this may sound transactional, it goes beyond that. I acknowledged that my wife’s extroverted nature made me a better person every day. Recognizing the value the other person brings and appreciating the virtues they possess rather than focusing on their vices is crucial in a relationship. It helps both individuals grow and support each other.

The third rule we established was clarifying our endgame. What were we trying to achieve in our relationship or our business? It’s essential to have a clear direction and shared goals. To summarize, investing in your relationship by spending quality time together and keeping your pace of evolution aligned is vital. As per the Talentism principle, when two people start at the same point but learn and evolve at different rates, they become perpetually out of sync. This issue frequently arises among co-founders, and it could be the topic for another entire episode.

The striking thing to me is that the co-founder relationship forms the foundation of the entire enterprise—the culture, vision, strategy, and products. Yet, co-founders often treat it transactionally rather than recognizing its personal and intricate nature. By doing so, they fail to build trust and often end up destroying it, eventually leading to their downfall. So, if you’re embarking on your journey and selecting a co-founder, ask yourself if you’re willing to have difficult and honest conversations with that person. Will you openly share your fears, areas where you feel out of sync, and what you think you may be missing? Likewise, assess if they are willing to engage in these conversations. Amidst all the immense challenges you’ll face—such as misaligned cap tables or product failures—will you continue to invest in that relationship? If not, then you should assume you have a transactional relationship, and one of you will likely be out the door around Series C or D funding. You just have to figure out which of you it will be. That’s fine, but great companies rarely get started that way.

Angie D´Sa 41:44

If I could extract one unexpected topic related to co-founder dating from that I would offer it to anyone listening. Beyond assessing whether your skills complement each other, beyond aligning on the vision, beyond evaluating compatibility with investors, beyond discussing how you approach talent and compensation, there’s one crucial aspect: Can you have open conversations about your fears with this person? It’s not just a theoretical consideration; 

you need to practice it. Engaging in this act of vulnerability allows you to gain self-awareness about the hidden aspects you bring to the table, which often deteriorate co-founder relationships. It also builds a foundation of safety and trust, knowing that the person across from you is self-aware enough not to be driven by ego but instead by what’s best for the business. Moreover, it helps uncover any unconscious self-sabotage driven by fear. Therefore, the question of whether you can openly discuss your fears becomes an essential and somewhat unusual aspect of co-founder dating, but perhaps one of the most crucial.

Jeff Hunter 43:06

Yes, it’s difficult for human beings to do. I would suggest practicing it if you want to have a great life.

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