Reduce Startup Failure Risk by 65%: Preventing Founder Conflict
More than half of startups that fail do so because of co-founder conflict. How do those conflicts erupt and what can you do to prevent them?
More than half of startups that fail do so because of co-founder conflict (Wassermann, 2012). It is the daily reality that I witness in my work as a founder coach. No one talks about it: Survivorship bias is alive and well. So what is the reason startup founders find themselves in conflict more often? And, most importantly, how can you prevent that from happening as a founder?
This is a long article. I wanted everything to be in one place. Here is what you can learn:
Relate: Why Founder Conflict Is Everywhere
Understand: Root Causes — Your Only Path To Resolution
Understand: How Conflicts Escalate
Use: What Can You Do To Prevent Founder Conflict?
I also added further reading if you want dive deeper into research.
Why Founder Conflict Is Everywhere
The main reason for this is founders failing to invest time in their relationships. The high-stress, fast-paced environment doesn't provide the space for honest feedback. There will always be stress and minor misalignments, but the strength of long-term founder relationships is defined by their ability to work through conflict in a productive way.
I wrote this article as a primer for founders to help them understand the root causes of founder conflict, and what they can do about it. It is a collection of theories I pulled from research and methods that have worked well for me and my clients.
From my research and experience here is my definition of conflict:
Difference in Opinions + Emotions + Mutual Commitment = Conflict
It sounds like this: "I disagree, and it hurts because.../ But I care about us, so let's make it work!"
First and foremost, there is a silver lining within this definition: People who fight care. You don't fight if there is nothing worth fighting about. You care a lot about your company — after all, it is your baby! Caring deeply is a blessing and a curse when founders start to fight and engage in potentially constructive or damaging conflict.
Secondly, appreciate the existential fear beneath. Conflict emphasizes differences between two co-founders. Conflict threatens the us and what you have built together: your company, your team, and your relationship. The most intense fear is often the fear of loss: Losing the company, losing the team, and being excluded from the us. Possibly, this is the fear of losing personal identity: Who am I when my identity is not defined by the company anymore?
Founder conflict is especially hard because everything—the company, the team, the founder relationship, and personal identity—is at stake. But unlike a conflict within the organization, the conflict parties have similar power: between founders, there is neither a clear hierarchy nor established decision-making procedure. No one can force moving on or let the other person go. You are forced to "figure it out."
Why does it have to be so hard?
Do you really know your team? You have run the company together for years now. You thought you knew each other so well. Co-founder relationships grow like those of old friends. The problem with knowing each other so well: when issues arise, you engage in ruinous empathy in an attempt to avoid hurting each other. Empathy leads to a widening in the gap between expectations and reality. Resentment is the consequence, and it can be extremely difficult to resolve.
Start-up stress acts as a magnifying glass to founders differing behavior, and their expectations of each other. Metaphorically, co-founders are sewing together their team's parachute while in free fall. Founder teams in high-growth companies need to develop trust as they are getting to know each other. You do this by investing time in your relationships and opening up about yourselves. Some teams are naturally great at this, or rely on one of their team members to take the lead. While some rely on the outside help of a coach.
The pressure and solitude of startup life forces founder conflict to erupt earlier than in any other relationship. In addition to the stress within the company, many founders' private relationships and hobbies suffer. Whatever they turned to for dealing with stress: it's falling apart. So they bring their anxiety back into the all-encompassing workplace.
Rapid role evolution during hypergrowth is responsible for many conflicts surrounding the definition of roles. A CEO's role at Series A is radically different from what it was at Seed. Two forces work against each other here:
Roles evolve rapidly. Before you know it, you end up as a misfit in later stages of growth. It results in a lack of performance and resentment because the co-founder is not pulling their weight.
Founders have too little time to actually build a relationship and focus on personal growth. They rarely invest in reflection and regular definition of their roles. The pace is too high.
The above applies to goals and the vision of the company you are building together, especially the deeper level of company mission and purpose can become a trigger of tension. During hypergrowth, founders get sucked into operational tasks and lose touch with themselves, their co-founders, and sometimes their original mission. This is when lack of alignment creates a delta between founders.
Understand Root Causes — Your Only Path To Resolution
Knowing where conflict comes from helps us to identify the underlying issue and individuals' insecurity. When the conflict is triggered by the lack of clarity around roles, behaviors, and intentions, as a result of quickly evolving expectations or ineffective communication between the parties — these types of conflicts are easier to resolve when you manage to identify the underlying issue.
Conflicts have root causes and triggers. Most of the time, what triggered an argument is not the underlying root cause. A good analogy that is often used in conflict analysis is the Iceberg Model, which portrays the conflict as an iceberg with the majority of its volume underwater. Above water are triggers — positions and concrete demands that either party of the conflict hold. Below the waterline are the underlying interests and needs that are not met. These are the roots.
Photo by Alexander Hafemann / Unsplash
You might fight with your partner about the same topic, but your root conflict could vary from that of your partners: imagine you fight about roles in the fundraising process. The trigger was who would speak about which topic to investors. Your root might be the need for recognition, while her root is the need for security in your relationship as co-founders. Resolving the conflict is about addressing the underlying roots, not speaking about the triggers. This process can take weeks.
Power & Control: Money, status, and who has the final word matters. Who gets to make the final hiring decisions? Who speaks to the investors during pitch meetings? Who doesn't involve the other?
Care & Closeness: Trust is the foundation of a working relationship. As Perel explains, "Conflicts rooted in care and closeness always come back to broken trust, the 'I thought I could count on you' kind of statements. When trust is broken, it shatters all of our assumptions about the relationship and our value in it."
Respect & Recognition: For years, you've both been putting in the long hours. Now, only one founder is mentioned in the press, invited onto the mainstage for panel discussions, or gets to sit on the board. This comes down to the founder asking, Do I, and the work I do, matter?
These three root causes are always interpersonal: their position is always relative to the interests of others. I want to give you two examples of how root causes show up from triggers in startup life:
The CRO Acting Out
The easiest way to predict conflict is when roles overlap, or a growing company creates a power vacuum. One of the fiercest founder conflicts I witnessed was that of a divided team. One of the founders had excelled in his role as a chief revenue officer yet would sacrifice company-wide agreements: he overruled spending rules, interrupted hiring processes, and influenced product decision-making outside the agreed channels.
Our work started with clarifying role definitions and behavioural expectations for all founders. Quickly, we unearthed the three root causes: he was under the impression that his influence in the company was waning. His behaviour was mainly about him trying to assert his control.
Anna, Battling Her Own Demons
Unresolved questions and conflicts are lingering within all of us. When these questions come under pressure in the company, individual intrapersonal conflicts take center stage.
I recently coached a team in which one of the executives longed to be an entrepreneur in her own right. Let's call her Anna. After years of successfully building companies as a CMO, Anna wanted to take on full responsibility. She wanted to be the CEO. She was torn about the decision and felt insecure. This underlying tension had affected the company's teamwork negatively.
Yet here, Anna was part of a team of friends who excelled in their roles. She knew her next steps: Anna would need to step up into a bigger role and expand her scope. However, within her company, this type of growth simply wasn't possible. Which meant she had to leave and join another company as CEO — or start her own. Ultimately, this was her need for recognition and respect driving her to question her own role. The nagging questions created irritations within the whole team.
When You Don't Even Know Why You're Triggered
Even without a specific issue or underlying root cause, some personality types can develop a dangerous relationship dynamic: our instinctive behavior in relationships, like social muscle memory, is formed in our early childhood. Attachment theory explores this behavior. Sometimes, it is codependency that causes conflict within a working relationship. Knowing your attachment style helps you understand your behavior in relationships, professional and personal.
Secure attachment: The secure attachment style is those who trust long-term relationships and feel safe and secure in their working relationships. Other important attributes of securely attached people include having high self-esteem, loving intimate relationships, actively seeking social support, and sharing feelings with others.
Anxious attachment: This is where one co-founder craves more attention and affirmation than the other. It is only when they obtain emotional and professional closeness that they feel secure and content in their relationship.
Avoidant attachment: The avoidant co-founder displays the opposite of this behavior. They feel overwhelmed and threatened by the anxious relationship style. They feel they have lost their sense of self and autonomy, as the anxious partner demands more and more emotionally.
Photo by Federico Beccari / Unsplash
Conflict becomes difficult to resolve between the anxious and the avoidant style founders. The Anxious type demands more intimacy and affirmation from the avoidant type, who is autonomous by nature, and will distance themselves from the anxious type. This cycle of codependent relationship style can spiral out of control. It is called the anxious-avoidant-trap.
How can we break the cycle? Changing your attachment style is the scope of deep, individual work with a therapist. Becoming aware of your own tendency and discussing this tendency with your co-founder interrupts the spiral.
How Conflicts Escalate
There is a lot of research on the stages of conflict. Here is my version, inspired by Friedrich Glasl's Model of Conflict Escalation (1980), and the more simplified study Conflict Resolution, by Finkelman (2016). Conflict has four phases: starting with discussion, moving through transfer and escalation, to manifestation.
So what characterizes each phase?
Discussion: The discussion phase usually deals with factual issues where people have conflicting ideas. These include but are not limited to different expectations, demands, and interests. This leads to misunderstandings—or different opinions—on how to proceed and disagreements relating to the problem's initial cause.
Transfer: Rather than taking responsibility for their role in the conflict, the issue is transferred to the other person: He doesn't want to come to an agreement with me, He wants to take personal advantage of the matter, He is unwilling or incompetent, are common complaints when people have reached the transfer phase.
Escalation: The escalation phase is characterized by conflict amplification when third parties—previously uninvolved—become involved or are told about the conflict. This is when you tell your board members or key executives in the company. The hope is to be able to receive solidarity. As more people become involved, it's important to loop in an external party to facilitate a non-violent and productive discussion. This could be any third party with an objective perspective or a professional like a coach or mediator.
Manifestation: Those involved no longer talk to each other but talk about each other. A joint solution to the conflict is a distant prospect. The expectation is that others will resolve the conflict (e.g., an arbitration board, a court, etc.) In this situation, separation becomes a real option.
The high pace of startups results in conflicts erupting quickly. Rarely will you catch a conflict in its earliest days. Therefore, always pay attention to those underlying root causes: power and control, care and closeness, respect and recognition.
What Can You Do To Prevent Founder Conflict?
Tension and conflict offer an opportunity for personal and structural growth. They are a signal that change is needed. In a healthy co-founder relationship, both parties recognise the root cause of a conflict and work to resolve it. How can you practice this skill?
Openness: Employ a Curious & Caring Mindset.
First, understand what each founder cares about the most. There is a difference between your co-founder's position and their underlying interest — what they actually care about. There is a difference between interests and positions.
Ask yourself: What is important to know about your situation? What's the real challenge here? Exploring the motivations and the perception of your co-founder helps you to gain a new perspective. It will help you get to the root causes.
What are recurring conflicts?
Where is structural miscommunication?
What are patterns?
What are the topics you failed to discuss at the beginning?
I often ask midway through a conversation: What is the elephant in the room here? What should we actually be talking about?
Notice Your Triggers and Conflict Behavior
Founders are constantly stressed, and stress triggers insecurities. Insecurities trigger conflict behaviors that are controlled by our unconscious. We are all triggered by other people. When we are triggered, an action sets off an unconscious protocol. Being triggered is part of our reptilian brain. So what can you do about it?
Notice when you are triggered and regain control of your behavior. Reflect on conflict situations and ask:
What were the actions that triggered an emotional reaction / subconscious reaction in me?
Where did I feel this impulse in my body?
How can I name this emotion?
What can I do to deescalate myself when I am triggered?
Knowing how you and your partner behave in a conflict situation will help create understanding. These normally take the form of fight, flight or freeze. Understanding where your conflict behavior comes from can help you better understand your relationship to conflict. We learn our conflict behavior in early childhood. But the biggest step is awareness: learning to recognize when your brain turns into "conflict mode".
If work becomes the only stage on which the co-founder relationship happens, it is a risk. Have your relationship live in many areas of life. This relates to
Communication channels: Maybe not Slack?
Topics: What passion do you share?
Time: How about having dinner together with no work topics?
This is so fundamental that we forget to appreciate its importance.
Retro: Feedback Your Work & Relationship
Make conflict resolution a habit. Establish a retro that helps you evaluate if you are on track with your relationship. A format I like to use in sessions is: I like, I wish, I wonder:
I like is a starting point for what went well or what is positive about an idea.
I wish is a starting point for what could be done differently /improved.
I wonder or What If can be an impulse for ideas and yet unanswered questions.
Exercise: Take 5-10 minutes to silently write down their reflections about the last week — one point per sticky note. Then, take turns and read out your I-like items while hanging them on the flip chart. Repeat for the other sections. Make sure to budget time to discuss the next steps for implementing wishes and discussing open questions.
Your co-founder relationship's strength is defined by your ability to work through conflict in a productive way. By managing the risk of team conflict systematically, you can slash your failure risk by more than half.
Growth is a conversation. Spend more time with each other as humans.
Photo by Rod Long / Unsplash
If you want to read up on the science behind the frameworks I use, check out the sources below.