Why do founders split? 1. Differing visions

Over the last 4 months, I have heard of or at least 8 companies closing down because of “founder issues”. Overall this number of companies that I have been tracking personally where the company closed was 14. So relatively speaking the number of companies that closed because the founders split is larger than “lack of funding”. The only other reason I have heard have been lack of traction. These are companies in the valley and India BTW.

Why do we have so many companies which close because of founder issues?

I tried calling and talking to many of the founders separately to understand what the issues were and its not clear that there are the same that plague most “marriages”.

Most married couples split because of financial issues, compatibility issues or “cheating”.

With most founders, I cannot point to the 3 main causes yet, since I have limited data, but I can share what happened in some of these cases, based on my understanding of their situation. Sometimes, my understanding was colored by my impression of one of the founders, but I tried to remain objective about the situation.

Differing vision of where to take the company. This was cited by most of the founders.

“We  used to talk about where we wanted to take the product. We had a general direction and were fairly aligned. Then it started with a few features that we had different opinions on. In a matter of weeks we would constantly fight about every feature. The constant fighting drove our team mad and we decided to split”.

“We started with targeting large enterprise customers, since my co-founder had a few relationships there. We found that many had a long time frame to get us on board as a vendor. Then we decided to change our target to mid-sized companies. That changed the vision of our product and some key features, which the developers could not deliver on. I still thought we could focus on larger customers, but my co-founder did not and we decided to split”.

Many times, the vision of the company is considered very sacred by the founders. Which is a good thing. Alignment of vision is hugely important. I can also see how the vision changes at times, since the initial assumptions made, usually change as you go to market and meet customers.

Some founders are flexible about that change and are willing to be patient about finding that vision, whereas others want to stick to a vision they originally came up with.

If you are a solo founder and are looking for a co founder, it is hard to determine flexibility of your co-founder since most people seem reasonable and fairly flexible during the first few months. I tried to formulate a list of questions to ask – largely scenario based, such as what would happen if this were to occur, or how would you react if this happened?

Most times when I asked those questions of people I got fairly good answers which I consider are reasonable.

These questions did not help very much though, since as we talked about before, vision’s change and so do people’s impressions.

When you ask the objective question in a non threatening situation, it is easy to be collected, objective and composed.

That’s rarely the case when product shipments are behind, payroll is delayed and a customer contract is taking longer than anticipated.

What takeaway do I have from this main reason for founder’s splitting?

If you have not worked together for a “significant period” of time, its very difficult to find out if your co-founder is flexible to change.

So what do I now do as a result of this learning?

I prioritize teams where founders have not worked together for a significant period of time, much lower. If you have a co-founder you have met at a hackathon event, or a startup event, and have been working on your company for 4-6 months, then I would likely pass on your company.

Its not because I dont like your idea or product, its because of demand and supply. Right now, I get many more companies where co-founders have worked together for much longer and have recency of shared vision.

In the next post I will talk about another reason why founders split – performance and execution.

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7 thoughts on “Why do founders split? 1. Differing visions”

  1. Nice one, nailed it.

    While starting up with new partners we often fail at the starting point itself
    we fail to evaluate synergies in an objective fashion at the starting point i.e
    – Behavioral traits are overlooked or perceived when starting with someone new
    – Like financial/organizational risk assessment and planning. Personal risks are not planned
    well. What if one partner needs money 2 years down the line , his option will be to make an
    exit.
    Putting personal plans known at the starting point may help .
    – The Product/growth strategy is something which is prepared to pitch to a VC rather than a
    collated vision of the founders.
    – We are in a hurry to startup and postpone a discussion as to how to really take it forward.
    – Finally people are in sync as far as Plan A is concerned , but as far as Plan B or Plan Z is
    concerned , each one has a different version.

  2. I will suggest you to speak to founders and team who have build companies and ask them reasons for sticking together, probably entrepreneurs need to know the ingredients of the secret glue.

    In my mind, qualities the founders need to inculcate for better Team Dynamics…
    0. High level of Self-Awareness (emotional as well as intellectual)
    1. Emotional Maturity
    2. Trusting co-founders and teams capabilities in there area of expertise (a founder has to have an eye for spotting talent who has similar qualities and then letting them do there work without micro managing anyone – it is easily said than done, but it is important crack this)
    3. It is not about “i” it is about “WE”
    4. Learning to “let go”.
    5. Agreeing on common business Ethics to build a company’s foundation.
    6. Should at the least have worked in an professional setup in there area of expertise for minimum 3 years full time.
    7. Be driven by objective passion and not fairytale passion.

  3. 🙂 You should absolutely consider working with us then –

    Me and one of my co-founders go back 10 years – we studied in college together, we worked together for a while, started two previous startups together, one failed spectacularly within 6 months, the other ended up more as a small business than a startup (with actual revenues and customers though). We eventually decided to move on (I took up a consulting gig, he did his MBA in ISB). This third one, we are well poised to not repeat the same mistakes at least!

    My second co-founder; I’ve worked with him for over an year in a consulting gig recently. Easily one of the best developers I have ever worked with.

    My third co-founder was my first co-founders batch mate in ISB – and became a very close friend over the year. I myself spent 3 months in ISB (awesome campus!) and now know him pretty well as well.

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