Boss Moves: How to resolve co-founder conflict

Expert advice on working with a business partner who actively undermines you.

In this series we tackle some of the thorniest questions facing business leaders today.

The question:

After university, I launched a tech startup with a classmate. In the first few years, we made tremendous progress. But now that we are starting to scale, our views of where the company should go have diverged. This is especially worrisome because my co-founder keeps undermining me in board meetings. How do I fix this without blowing up my company?
– Conflicted Co-founder in Cabbagetown

The answer:

Dear Conflicted Co-founder,

It’s natural for business partners to have differences of opinion. It can even be healthy to work through disagreements and come to a deeper understanding of one another. But there are boundaries that shouldn’t be crossed. While arguments can be a sign you both care deeply about the company’s direction, when communication becomes disrespectful, veers into personal attacks or breaks down altogether, it can jeopardize the success of a company.

Susan Sierota, a former Fortune 500 executive and an advisor at MaRS who often coaches CEOs, notes that disagreements at the top can cause low staff morale and retention issues. “When there’s conflict, it will impact the company,” she says. In fact, 65 percent of startups fail because of clashes between founders.

Sierota once worked with three co-founders who were just hitting their stride — they had secured Series A funding and growth was on target. But when they hit a snag on the product side, things got personal. Eventually, everyone on staff knew there were issues between the co-founders. “Things had gone so far that there wasn’t a way for them to build back trust,” says Sierota. A coach was hired to walk the founders through a separation, and two of the three left. It was a messy breakup, says Sierota. Even worse, it set back the company by a year.

In spite of the odds, it is possible to defuse conflict without harming your business.

Determine the root cause

It feels awful when your private disagreements are being aired in front of an audience — especially when that audience is your board. Though your instinct may be to get defensive, it’s important to step back and try to figure out what went wrong.

Have you had an honest conversation with your co-founder about their cheap shots? It might be time to talk frankly about what sparked this animosity, assess your business goals and figure out where things really stand between the two of you. Is the conflict related to a misunderstanding at work, or is there more serious discord at play? While a squabble over something like prototyping could be manageable, a fundamental misalignment of personal or professional values is harder to smooth over. See what you can do to bridge the gap and whether this is a problem that can be solved together. For co-founders who share the same fundamental goals, divvying up responsibilities and mapping out clearly defined roles can help keep the peace and minimize the risk of being blindsided during a big presentation.

And when conflict does bubble up, letting it escalate and being careless about communication can be red flags for staff. Verbal attacks and contradictory messaging are “never healthy,” Sierota says. “Everyone knows when mom and dad are fighting, and the unintended consequence of that is you end up fracturing the team and they pick sides.” Worst-case scenario: the board catches wind of the issues, eroding trust in the two of you as founders and damaging your relationship with the company’s decision-makers, advisors, funders and networks.

Bring in the pros

When things get personal, you might want to bring in a coach or another neutral third party, who can help develop a plan of action to get founders working together again. As professional mediators, “they can create agreements that heal that fractured relationship and build back trust,” says Sierota. This might involve establishing boundaries by laying out specific tasks each person is responsible for tackling, or formalizing agreed-upon goals in order to manage expectations. If communication has broken down entirely — and the rest of the team is painfully aware of the situation — coaches can assist with refining your message and brokering a peaceful separation.

Pull in the board

When you’re deadlocked in arguments about your company’s direction, Sierota recommends actively soliciting input from the board. A company’s board functions as the co-founders’ boss, so it’s important for even the most fractious duo to reach some alignment before they request feedback. “Boards don’t want to get engaged in drama — that is not their role,” Sierota says. Leave personal grievances at the door, then walk the board through all the different options. That is, unless you and your co-founder are unable to come to an agreement and are forced to dissolve the partnership. In that case, the board can help determine who is staying on, what an exit entails and how to support the company in the interim.

How to conflict-proof your relationship

If you and your co-founder are determined to make it work, there are strategies to improve your dynamic and minimize conflict (the company-ruining kind, at least). First, book some face-to-face time. “You can build bonds online but you can only strengthen them in person,” Sierota says. In-person check-ins allow you to read and respond to the other party’s body language and other subtle/non-verbal cues, which means there’s less room for misinterpretation than there would be on the phone or over Zoom. And try to do things that are just for fun. While corporate bonding activities might not be your dream scenario, Sierota says a foundation of positive memories can be “what gets you through the tough times.”

Finally, knowing one another well is crucial. Many problems can be solved before they even begin if you have a clear sense of how the other person works and processes emotions, when to reach out and when to leave them alone. This could involve recruiting a coach to help the two of you discuss work methods, triggers, fears and motivations. You might also try taking a personality test (answer honestly, of course!) and swapping answers to learn about how your co-founder ticks.

Sierota encourages founders to “pull weeds early. Sit down before it takes root and takes over the whole garden.” As with any other business challenge, she notes, being honest, direct and open about how to tackle friction as it comes up can ultimately put your company in a better position.

 
Are you a business leader with a conundrum? Write to us at media@marsdd.com.

 
Photo illustration: Stephen Gregory; Photographs: Unsplash