Why We're Unprepared for Co-Founder Relationships

A Tale of Two Partners: Life Partnership vs. Business Partnership

Being better at being married—compared to our parents—is one of the most universal ambitions I run across in millennials. We believe we have the tools—therapy, endless books, a culture beginning to value emotional intelligence—to be better partners to our partners and parents for our kids. I certainly have a privileged reference frame where my circle went to college (even if it was at a state school in the midwest) and are business owners or well-paid knowledge workers. Still, I take pride in what feels like a generational commitment to level up. Marriage is a relationship, and for most, it is the relationship, but for founders and business owners, there’s another relationship that ranks right up there: the co-founder or business partner. And so, it’s striking how much I see people who are committed to being great at one kind of relationship—their marriage or partnership—struggle to keep their head above water in another—their business partnership.

Why We Struggle with Our Co-Founders

So what gives? What makes business partnerships so much more likely to overwhelm us when compared to life partnerships? Let me give you a metaphor. Imagine you gained 200 pounds in six months. Your life has now changed dramatically. You went from fit and healthy to having your doctor, friends, and family remind you of how high the stakes are to be overweight in what feels like a single night. Starting a business is a bit like that for at least four reasons: start conditions differ, it’s easier to blame someone else for their part than take responsibility for our part, we want to protect ourselves and our partners, and finally, it’s easier to say we’re serious about being a good partner than to actually do the work to be one.

A quick sidebar, though, first. I love a good statistical misattribution or mistranslation like in the elementary game telephone. People love to cite Noam Wasserman with a statistic on how most companies fail due to co-founder conflict. I even almost cited it here before I decided to check the facts. Take this one from Entrepreneur.com, for example, “In his book, The Founder Dilemma, best-selling author and Harvard Business School professor Noam Wasserman claims that 65% of high-potential startups fail due to conflict among co-founders.” First of all, the book is called The Founder’s Dilemmas (plural). And in it, Noam cites a 1989 study of 96 portfolio companies across 49 venture capital firms in which he surveyed V.C.s “cited problems within the management team as a top-three contributing factor, making it the most important contributing factor for 61 of those companies.” [1] Nowhere does he mention the word, Co-Founder. That said, most of what you’ll read here applies to “executives on the executive team” as much as it does “co-founders” or “business partners.”

Start Conditions

Marriage and a business partnership are both binding legal commitments that tie two people’s futures together, and the paths that two people take that lead to these two different commitments differ in at least four distinct ways:

1. The “dating” period is much shorter for business partners vs. life partners.
2. The stakes increase much faster for business partners vs. life partners.
3. A business partnership necessitates close collaboration on complicated and complex challenges much sooner than a life partnership.
4. There is far less cultural preparation for a business partnership’s difficulties than for a marriage.

Dating Period

• People take their time getting married. In 2021, The Knot surveyed 5,000 people who got engaged that year and found that most couples dated for more than two years before getting engaged, and a separate study found the average length of an engagement is fifteen months [2] [3].
• People do not take their time getting into business together. I couldn’t find data on the average length of time co-founders spent preparing to start a company together. Still, based on my experience with my own business and the 40+ companies I’ve worked with as a coach, I would be shocked if it averaged over three to six months. The closest comparable I could find was from Noam Wasserman—his book, The Founder’s Dilemmas, summarized his findings from data on 10,000 founders—who found that “40% of founding teams included at least one set of co-founders who had a prior social relationship without having shared a prior professional relationship” [1], indicating that some teams at least knew each other before getting into business together. Interestingly, he found these preexisting relationships did not increase the odds of success but rather increased the likelihood of a co-founder’s departure by 28.6%.

Financial Stakes

• When we’re dating somebody, we gradually step into shared financial risks. Only when we marry someone, which happens after years, do we enter into a binding legal contract that ties our financial futures together. Signing a lease—moving in together—is another way we do this, and most people don’t move in together for a while.
• In a business, the financial stakes get high quickly. Your financial futures are bound when you incorporate and split equity. This often involves individual goals like paying off debt, saving for an engagement ring and wedding, a house, college, and retirement. And when those goals depend on how someone else behaves in a business relationship, any slip-up or mistake from one party can feel like a threat to others.

Collaborative Requirements

• In year one of dating, the collaborative requirements are simple. The most complex thing most people are likely to need to collaborate on is either travel plans, cooking a meal, or throwing a party together. And if any of those things goes poorly, most people will end the relationship and look for a better-suited partner.
• People need to collaborate on many complicated and complex business problems in year one. In the first year of business, two people need to research a market together, build a product, determine a business model, incorporate a company and split equity (tying their financial futures together in a binding legal agreement), hire and fire people, raise money from investors, and more. If any of these things go poorly, you need to involve a lawyer to split up.

Cultural Preparation

• We treat marriage like the default path. 53% of American adults are married [4]. Even if our parents aren’t together on day one, we’re immediately exposed to marriage. Our friends’ parents’ are married. Our parents thought about it and decided not to get married, marry, or they got divorced. We’re steeped in the idea that one day, we’ll look for a life partner from very early on. Our parents, friends, and extended family are like Pez dispensers but for marriage advice. And not to mention the deluge of dating shows, rom-coms, marriage plots, and subplots you can only avoid by never turning a screen on. Then, when or if we do get engaged, many cultures and religions have pre-marital counseling traditions to further prepare us for the inevitable challenges two people will face when building a life—and for many, a family—together.
• We don’t treat starting a business like the default path. There are 31M small businesses in the U.S. (accounting for 99% of companies), only six million of which have employees [5]. Fascinatingly, 55% of American adults will start a business in their life, but most will not make it past their sixth year [6] [7]. For most of us, the default path is “get a job,” not “start your own business.” We’re not steeped in “how to start a business” and “how to choose a great business partner (and be a great partner to them)” in the same way we are our life partners. And while resources like First Round Review’s “Founder Dating Playbook” are a significant step in the preparation department, they’re new and—in my opinion—insufficient, ineffective, and give people a false sense of security.

Taking Responsibility

Both people are responsible in every conflict, struggle, challenge, or whatever you want to call it. There’s a part of the struggle and resolution you need to take responsibility for, and there is a part the other party needs to take responsibility for. The thing is, it’s way easier to see someone else shirking their responsibility and get righteous than it is to look at our half of the equation.

The wonderful team at Conscious Leadership Group makes “taking radical responsibility” the foundation of their methodology, encouraging every individual to commit to “taking full responsibility for the circumstances of their life and for their physical, emotional, mental, and spiritual well-being” instead of “blaming others and myself for what is wrong in the world.” [8]

Peter Drucker shared an excellent example of what taking responsibility for something instead of blaming looks like in this 1967 book, The Effective Executive, by citing an even older example from 1938:

“We all know, thanks to Chester Bernard’s 1938 classic, The Functions of the Executive, that organizations are held together by information rather than ownership or command. Still, far too many executives behave as if information and its flow were the job of the information specialist—for example, the accountant. As a result, they get an enormous amount of information they do not need. The best way around this problem is for each executive to identify the information he needs, ask for it, and keep pushing until he gets it.” —The Effective Executive p. xxiv

For good measure, let me illustrate with a modern example of a pattern I see over and over again. The COO doesn’t want to give the CEO feedback because they’re afraid the CEO will react with an unpleasant emotion like anger—put another way, “The CEO doesn’t take feedback well.” This is an expert way to shirk responsibility, so let’s break this down. In this example:

• It is the CEO’s responsibility to take feedback well. Otherwise, they will cut themselves off from the flow of information.
• It’s the COO’s responsibility to deliver feedback to their CEO, so the CEO has the information they need to make good decisions.
• It’s the COO’s responsibility to consider whether the feedback they want to deliver is 1) in service of resolving a conflict or improving a situation or 2) because it would feel good to release their anger or frustration. 1 is a good reason, and 2 is not.
• It is the COO’s responsibility to support the CEO or quit.
• It’s the COO’s responsibility to determine whether the CEO’s inability to handle feedback well is something they can tolerate or not and, if it is not something they can tolerate, to quit.

For what it’s worth, the COO in question was me. I was the COO who didn’t give feedback because I didn’t think my co-founder took feedback well. It was easy to blame someone else instead of taking responsibility for figuring out how to either a) deliver the feedback in a way it was easier to digest, b) accept that my C.E.O. wasn’t going to change, or c) quit. And by not doing any of those three, I undermined her.

It’s a great example because so many of us see so clearly what the other person could be doing better in the partnership. Still, we miss the things we take responsibility for—the things we can control—and miss what could otherwise be beautiful opportunities to 1) grow ourselves, 2) help our partners grow, and 3) build more effective and successful organizations.

Fear, Defensiveness, and Protection

Defensiveness gets a bad rap. People defend or protect things they care about. So if someone’s being defensive, it’s because they give a shit, which can often feel in remarkably short supply. That said, hold your ground too firmly—that is to say, inflexibly—your business will never move forward. There are many things people can get defensive about, all of which are because they’re afraid something bad will happen and always because they’re scared of something bad happening to either 1) themselves, 2) others or 3) both. Let’s break that down.

We protect ourselves because we want to avoid discomfort and pain. Makes sense. And a lot of what we’re protecting ourselves from is other people. We don’t want to get yelled at, we don’t want to take any emotional abuse, and we don’t want to learn hard truths that threaten our identities or egos. But we have to take the long view. When I think about figuring out how to have a conversation with a co-founder about how they don’t take feedback well, that conversation feels painful. I’d love to not have it. But if I take the long view, I know that if our C.E.O. doesn’t get better at taking feedback, the company probably won’t succeed because people will stop giving them the information we need. Which pain is greater? An uncomfortable conversation, or taking an L on four years of hard work?

We protect others because we don’t want others to experience discomfort or pain. Also makes sense. Our co-founder said they’d do something and then they didn’t. Fuck. Now I’m avoiding the pain of an uncomfortable conversation, but also, since I care about my co-founder, I don’t want to hurt them. But I know I’m No Good™ at giving critical feedback (I always end up yelling at people!) So I protect them, freeze up, and zero feedback doth I give. But again, we have to take the long view. You may be protecting yourself and your partner from some short-term discomfort, but the long-term damage of a hundred unresolved conflicts ne’er spoken of might poison you slower than Cersei Lannister, but poison you, all the same, it will.

Serious People

Chris Power is the founder and C.E.O. of Hadrian, a very rad American manufacturing company working on rescuing our aerospace industry from a looming manufacturing crisis. In episode 281 of Invest Like the Best, Chris talks about serious people vs. unserious people, and I want you to consider whether you’re serious. Huh?

Imagine we are all running a town together. Each of us has a role, and a serious person has to perform their function or else society degrades. An unserious person passes responsibility.

Many co-founders are not serious about being great partners to their business partners/co-founders, similar to how many people are not serious about their health. We know that getting enough sleep, eating a healthy diet, and getting 7+ hours of exercise each week are baseline requirements of physical health, and while most of us want to be healthy, we aren’t serious about putting in the work.

So when it comes to our co-founders, if we want to be great partners (and great partners build great companies together), we need to be serious about putting in the work, and while putting in the work won’t be easy, we do understand quite a bit about what that involves. So stay tuned for issue 17, where I’ll dive into that.

Hoo boy, indeed.

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