From the VC’s corner (14): When co-founders are not on the same page and issues are bigger

The four co-founders, Angel, Bully, Cozy and Dottore, are debating if they should punish their transaction/sales director, John Doe. John is experienced, having worked before for a few powerful startups and a global investment fund, is a great culture fit and super positive (a bit sneaky though), but his last year’s performance was average; he missed the targets, although all the venture’s departments had poor results. He attended several high profile conferences during the last years, each having at least a training session and several networking events, but sales results haven’t improved and the pipeline is still thin. In addition, John has hired some great analysts and he boosts the weekly happy hours with the team.

Co-founder Angel has worked with John on a couple of deals and is pretty much ok with John doing his role, and since his personal interests are towards real estate, he’s neutral or mildly critical. Co-founder Bully, the ops killer and the financial guru, believes that John had his shot and it’s a waste of money to pay a high salary to keep average people around; he suggests a pay cut. Co-founder Cozy, also BoD President and the “official” interface with the authorities and media, would like to grow yoy, but he knows the market is still sluggish, clients are cash-squeezed, economy is modestly recovering after a tough plunge and, having worked with John directly, tries to be a diplomat and have everybody happy and aligned. Co-founder Dottore, passionate about academic knowledge and somehow visionary, has nothing against working with John, the more the venture’s bank accounts are in great shape; maybe John can assume additional roles, he thinks.

As a remark, all four-cofounders have personal agendas, and they’re not 100% committed to the venture.

Besides, John is not always early/on time in the mornings, and likes being independent and to leave before the night falls. His personality fit with the co-founders is not perfect, although communication between the parties has room to improve.

Looks like there are many solutions to this problem; but why did it come to a head, I asked myself, while having a lunch with the four co-founders, and also trying to understand if there are other uncomfortable issues they needed to put on the table now and then get back to work. And the issues were bigger, and were partially solved at that time. John Doe resigned, to the surprise of the co-founders, and the poor sales continued for some time… Only a few years down the line, the co-founders broke up and the venture disappeared. A part of their activities was taken over by a major player, while a few team members and two of the co-founders continued into real estate.

In this case, as in most similar situations, the issue at hand was never the actual issue. The idea is to talk about the main problems, and disseminate the negative power they have over co-founders (and rest of employees.)

If the venture had been sort of a big bank, Top4 advisory or other major, taking any solution would have been just fine. In the case of the smaller venture, it would have mattered the co-founders take time to hear each other, as well as John’s angle, and have the emotional maturity and agility to say to each other that, even in times of a down market, important is staying focused and improving services.

Life is complex, doing business is tough, and founders are constantly dealing with multiple and serious problems and challenges. Moreover, some of them are having serious mental issues (anxiety, depression, etc.), or they lack any self-awareness, have material problems, marriage or health issues.

“Business is very personal, despite what they say in the movies, and co-founder conflicts often require taking that long walk or having that long family-style meal. It might also require calling your investor and admitting that you can’t resolve this conflict, or that the conflict is the smoke and that the fire is a highly personal issue.” (Jason Calacanis)

As a final note, any resemblance to real persons or situations is purely coincidental.

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