Resolving Start-up Founder wars

Here's a neat article from the Guardian Small Business Network written by John Thompson,CEO of session replay technology developer User Replay, who has been CEO, MD or board member of six early stage technology companies.

The sad truth is that 11 or of 12 tech startups are destined for inglorious failure. While not all of these can be saved, in my experience many startups fail or under-perform for preventable reasons and one of the most common pitfalls is feuding between the co-founders.

Every time I'm with a group of company co-founders this subject comes up and most of us have war stories. Startups are very stressful and will test the best of relationships. Often there will be arguments over who controls what, who gets paid what, and which risks should be taken. In a straw poll of 10 early stage companies I have known, I can think of only one co-founder relationship that was truly great, and outlasted the company.

Avoiding tactics

Firstly, be careful about who you start a company with. Have you known them for long? Do you know how they behave when stressed? Can they do the tough conversations or do they prefer to brush things under the carpet? Can they give and take feedback without it getting personal? Do they work as hard as you? Do they have complementary skills? Have a strong 'pre-nup' in the shareholders' agreement, so if one of you has to go, you know the deal. Find a respected chairman who you both trust to bring an independent perspective in board meetings. When your investors insist on governance structures, welcome it. When issues do arise, tackle them early before positions become entrenched; invest time in keeping top team relationships strong.

What about when things do go bad?

Generally feuds are better resolved than tolerated. However, it has to be accepted that when a board seeks to resolve a dispute it may end in one of the parties leaving the company.

I've found that managers overestimate the risk of losing a key but feuding team member, and underestimate the damage from the in-fighting. If it really isn't working, it is usually better if one party goes.

Appoint a mediator – It is best to bring in a person with authority to arbitrate, for example the chairman or CEO (assuming they are not the parties in dispute). Or you can find and empower a mutually trusted external third party or professional counsellor. However, a mediator without authority can also be used to counsel both parties.

Set the goalposts – The appointee has to make it clear that either the feud is going to be resolved to everyone's satisfaction, or one of the founders is likely to be leaving the company. This serious backstop position will cause the parties to think, and may create a willingness to compromise.

Get to the meat of the issue – Is it a passionately held point of view on strategy, a clash of personalities or a power struggle?

Whatever the issue, the arbitrator needs to meet face-to-face with both parties and take the time to fully understand their views and determine possible resolutions. The mediator can then explain the views of each person to the other, and see if there is willingness to compromise.

If this is promising then the parties can meet together, with the conciliator, to try and agree a solution. This is a high risk meeting. I have known them to vary from being highly effective, right through to explosive and terminal. Clearly, the resolutions that stick best are ones where the parties genuinely buy-in to the decision, so it's well worth taking extra time here.

Stick to your guns – If the dispute isn't resolved, it's important that the promised consequences are delivered, meaning (usually) that one of the parties has to leave. This obviously needs to be done in an appropriate and legal way.

Obviously, the outcome of these events will be noticed by others in the company, and will have an impact on the culture. If someone leaves, staff will see feuding as a very dangerous pastime, and therefore it is less likely to happen again. Equally, feuding behaviour that is tolerated, or worse rewarded, will encourage others to participate in this toxic, but sadly common corporate behaviour.


We know that feuding between co-founders is one of the most common causes of failure in small businesses. Bring us in to help sort out the relationship between, and to provide mediation if needed.  The earlier the better, otherwise yet another great business will bite the dust, not because the idea doesn't fly, but because the people can't.

An honest society is an ordered society. An ordered society is an efficient society. An efficient society is a richer society. A richer society may support a poorer society.
Robert Fripp