How to Address Your Co-founder’s Under Performance

A step by step how to guide you can apply today. (Jonathan, note that these are bold here but not when published. This is what we need an automatic fix for. No manual formatting allowed. 🙂 

Co-founder conflicts are one of the top reasons investor-backed startups fail. Y Combinator (YC) has extensively discussed the impact of co-founder conflict on startup failures, emphasizing its significance as a common cause. In Noam Wasserman of Harvard Business School’s book The Founder’s Dilemma, 65% of high-potential startups fail due to issues within the startup team, particularly co-founder disputes.

WTF?

I think this is tragic because honestly, co-founder issues are easy to solve! Way easier than finding product market fit and scaling a business.

That’s a strong assertion, allow me to provide context in hopes that it enables you to give me the benefit of the doubt. I have worked in Bay Area tech culture since 1997. I am the co-founder of a successful SaaS company and held multiple executive roles between 2002 – 2010 as we scaled. I have been a full time executive coach specializing in co-founder relations at Thriving Founders since 2010. I have personally facilitated the resolution of dozens of co-founder conflicts. I have certifications in Nonviolent Communication, Neuro-linguistic Programming, and am fluent in Internal Family Systems parts work. All this and more is woven together with more than 15,000 hours of 1-1 coaching with founders. This is the well from which I draw what I am about to offer you.

In this how-to article, I will share my step by step approach to prevent one of the primary causes of co-founder breakups: when one co-founder feels that the other isn’t capable of doing what the business needs them to do.

I will use a fictionalized variation of a recent case that I helped resolve as an example. Paul, CEO and Mike, COO are long-time friends turned co-founders. The approach taught here is for the co-founder who is leading the resolution with the one he/she feels is underperforming.

If you are familiar with the Conscious Leadership framework, you will notice that my method moves Paul’s perspective from the “to me” stage of conscious leadership to the “by me” stage. Simply put, “to me” is a disempowered state of consciousness. “By me” is an empowered state of consciousness. The “by me” mindset is required in order for the dialogue between the two co-founders to conclude with a win-win solution. If you’re not familiar with Conscious Leadership, not a problem, you don’t need to know more than what I just explained.

Hey, good news! A few minutes from now you will have actionable insights that you can apply to your co-founder dynamic right away.

A unilateral step-by-step approach to resolving co-founder issues stemming from mismatched expectations, talent and roles.

Note: These instructions are unilateral and therefore ignore the aspects of the situation that your co-founder is responsible for. It takes two, right? Well, with this approach it only takes one to resolve the issue because, if you follow the steps, you will be creating a powerful vibe that evokes honesty, vulnerability and integrity from you and your co-founder. That said, it should go without saying that this approach will not work for all situations.

1. Assess the Situation Objectively and Take Full Accountability

Before confronting your co-founder, it’s crucial to engage in three transformative thought exercises that will greatly improve the odds that you achieve the best possible outcome. These thought exercises will shift your perspective from the disempowered “to me” consciousness to the empowered “by me” consciousness as described in the book Conscious Leadership.

Step 0: What’s at stake? Is this worth your time, attention and discomfort? You must decide that resolving your co-founder friction is worth, let’s say, more than the 4 hours this process is going to take. If you don’t commit then you will not have the courage to see this through. That’s right, what you are about to do will take courage!

First Thought Exercise: Strive for Objectivity

Begin by attempting to assess the situation as objectively as possible—a challenging but necessary step. Ask yourself:

• “What does the company need done that isn’t being done, and why?”

 

Journal:Write down your thoughts. To save time and avoid the rabbit holes, start with writing out the high level bullet point summary for your narrative. Then add one sub point per topic. If that’s not sufficient, add another sub bullet point, up to three per topic.

Recognize that complete objectivity is nearly impossible; our emotions often cloud our judgment. Notice how your answers differ based on the state of mind you are in while journaling. Ideally you will journal your angry version, neutral version, optimistic version. To help you find the most objective interpretation, review each point and ask yourself, “What would an objective impartial observer report if they observed what happened?

Now review and edit your narrative to the essential.

When this step is done you will have a clear outline of the narrative you are working with.

Second Thought Exercise: The Full Accountability Experiment

Next, delve deeper by examining your own role in the situation. Even if your partner has underperformed, consider how your actions, decisions, or lack of clarity may have contributed. Challenge yourself by asking:

• “What’s the version of this story where I am 100% accountable for my co-founder’s failure to perform to my expectations?”

 

This may stir uncomfortable emotions, but it’s a powerful way to uncover underlying issues and shift you into the empowered “by me” perspective. The full accountability perspective will reveal opportunities that your “to me” perspective blinds you to. As a CEO, this mindset also aligns you with the board’s perspective: you are ultimately responsible for all successes and failures within your company.

Answer these questions.

• Were the tasks you assigned reasonable given your partner’s skills and experience?
• Did you provide the necessary support and resources for them to succeed?
• Did you communicate your expectations as a delegation in document form that they signed off on, or was the delegation verbal without documentation?
• Did you accept their yes even though you didn’t trust it?
• If your most critical advisor or board member knew everything and held you accountable, what would their interpretation of events be?

 

Example from Paul and Mike:

Paul, CEO and Mike, COO are long-time friends turned co-founders. Paul is frustrated with Mike’s performance and believes the business plan they are committed to can not succeed without Mike getting the job done.

During the accountability thought exercise Paul noticed many aspects that Mike was responsible for, but rather than stopping there he looked deeper to find his responsibility in the dynamic. By the end of the exercise, Paul faced a tough but valuable realization. He had been repeatedly assigning tasks to Mike that didn’t align with Mike’s strengths. What’s more, Paul’s expectations were never explicitly written out. Paul chose to ignore Mike’s personality type, which includes a tendency to overestimate what he is capable of and conflict aversion. In other words, he accepted his yes without trusting his yes. By repeatedly expecting Mike to excel in areas outside his expertise after demonstrating that he wasn’t capable, Paul was inadvertently setting him up for failure. This acknowledgment was difficult but pivotal. Paul thought, “I’ve been contributing to this problem by repeatedly placing expectations on Mike that time had shown he wasn’t capable of executing.”

Third Exercise: Examine Your Shadow Side

Okay, if you thought the last step was humbling, your ego really isn’t going to like this one! Evoke your courageous heart now. I wouldn’t ask you to do it, but the results are so beneficial that these insights alone can make the difference between success and failure in the conversation you’re preparing to have with your co-founder. There is enough at stake that it’s worth doing whatever you can to improve the odds that the two of you come out better than ever on the other side.

Now, let’s delve into the “shadow side”—the unconscious shame, self doubt, and fear that might be driving your behavior and perspective. By exploring this hidden territory, you can uncover deeper factors contributing to the issue and ultimately acquire more “by me” empowerment.

Ask yourself:

• Have I run this pattern before with people other than my co-founder, including friends and family?
• How might I be benefiting by shifting blame from myself to my co-founder?
• What self judgements am I avoiding by continuing to believe that my co-founder can do the job?
• What’s the cost of denying the full picture for as long as I have?
• What’s the cost of continuing to delay acting on it?

 

Example from Paul and Mike:

Paul unearthed a startling insight: he may have been unconsciously “not giving up on Mike” as a distraction from a crack in the foundation of the company. This realization forced Paul to confront his own fears and insecurities about the business plan he committed to and what a pivot would require. He also realized that this is a pattern that has played out in the past. This was profoundly humbling, Paul felt horrible and needed a day and empathy from his most trusted friend to accept and integrate the realizations. The result was worth it. Acknowledging his “shadow side” and taking accountability eliminated his blame and judgements toward Mike and enabled him to conduct the meeting with a humble heart and clear mind.

Reassurance: Identifying and embracing your shadow behaviors isn’t easy, but it’s a very efficient way to raise your consciousness as a leader. It enables you to approach the conversation with honesty, humility and empathy. This reduces the likelihood that your partner gets defensive during the conversation and thus it can stay on track towards the best possible outcome.

My Manifesto

I believe that conscious startup leaders operating at their full potential will have the greatest positive impact on the future of life on Earth. My life’s work is to facilitate the rapid awakening and development of startup founders so that they can give their greatests gifts without succumbing to power, fame and greed.

Fortunately for me, the role of a startup founder not only demands transformative professional, psychological, spiritual and emotional development but can be the most effective vehicle for such, ifyou choose to see it this way. In fact, seeing your company as a vehicle for you and your team’s self actualization will make the journey easier. I believe it also increases your chances of material success.

Think about it. As a founder you have nowhere to hide, everythings on the line and you are constantly forced outside your comfort zone. The pressure is relentless and it’s lonely! Other than your coach or therapist, there is nobody you can be fully honest with. What’s more, all your weaknesses, along with your strengths are on display for everyone to see every single day! That said, nobody but your co-founder will be honest with you. (And that’s rarely true.) I’ll pause the list here.

In this pressure cooker you will either be destroyed, merely survive, or rapidly transform into a better and better version of yourself. It all depends on your mindset.

So, what do you think? Does my perspective resonate with you? If so, here are some steps you can take to get on the self realization fast track.

• Embrace the Conscious Leadership model. It gamified consciousness development for business leaders and makes the practice practical
• Work with exceptional coaches and therapists, not the off the shelf variety.
• Understand your personality type inside and out using Enneagram or Meyers Briggs.
• Understand your neuro-diverity profile and find healthy compensations.
• Learn to see and work with your shadow side.
• Embrace radical accountability and seek critical feedback.
• Create a cohort of trusted founders who see it the same way and meet monthly.

 

Next step: Prepare the Meeting Agenda

Now you are ready to prepare to meet with your partner. Don’t wing it, use a proven meeting agenda template for difficult conversations. I recommend that you use the free C.U.B.E. for Difficult Conversations Meeting Agenda Templateto organize your thoughts and structure the meeting. It will take you 30 minutes to learn how to use it while making your meeting agenda. It ensures that the dialogue stays at the “by me” level, remains productive and doesn’t derail into conflict. It will keep you focused on discovering new solutions together. I’m tempted to walk you through this process but it would take another 5 pages to do so. You got this, CUBE is easy to use.

Next step: Ask your co-founder for the meeting

Email example

Lead with humility in the spirit of collaboration. “Hey Mike, I had some important realizations about how I have failed to set you up for success with the X, Y, and Z projects. I’d like to meet with you to share my insights, understand your experience better, brainstorm solutions and decide together what will work better. Are you up for that?”

Start the conversation by telling him you are trying out a new meeting template called CUBE for this conversation. Then open by taking responsibility for your role in the situation, which will diffuse tension and show that you’re not there to assign blame.

Fictional quotes from the meeting between Paul and Mike

Opening statement. “Mike, I want to start by apologizing. I’ve realized that I’ve been asking you to take on responsibilities that don’t fully align with your strengths. What’s more, I have not taken the time to clearly articulate my expectations in writing, which is always a mistake. I feel like I didn’t set you up to win. I’m curious what comes up for you hearing me say this.”

Tip: Use “I” statements to express your feelings without assigning blame, and use the active listening model so that your co-founder has the experience that you are truly listening. (If they don’t have the experience that you are listening, and they feel unheard, then the conversation will go off the rails.)

Prepare authentic acknowledgments. “Mike, you’ve done an excellent job building relationships and securing clients. Your ability to connect with people is a significant asset to our company. What’s more, your willingness to whole heartily take on initiatives that you haven’t done before is impressive. Exactly the trait a successful founder must have. “

In the spirit of collaborative dilemma. “We are in a tough place. I created a plan that we don’t have the experience, talent or human power to achieve. Rather than accept that I continued to hope that you would be able to learn an unreasonable amount quickly. Again’ I am sorry that I have expressed frustration with you, I know that you have done your best. I should have realized our collective situation sooner and pivoted to a plan that aligned with our talents. I believe pivoting to a plan that aligns more closely with our respective strengths is critical. The good news is that we now know what we can do and if we can find a plan the board will accept that is in alignment with our skills, we will do great.”

So how did it end?

Mike was so moved by Paul’s humility and accountability that he took full accountability himself! After mutual accountability was established they were in harmony and free to brainstorm solutions without fear of upsetting each other. They left no stone unturned and settled on an approach that included changes to the business plan and adjustments to Mike’s role. Unburdened from months of feeling bad about his performance, Paul was on fire! “I had no idea how much my internalized shame was holding me back.” Paul told me.

After the CUBE meeting

After the CUBE meeting, schedule weekly check-ins to ensure progress and maintain open communication.

What if?: Evaluate Compensation and Equity

If the redefined role requires adjusting compensation or equity accordingly. Delay this conversation until the new plan is underway and traction has begun.

I wrote an article on how to have this conversation, you can find it here.

Conclusion

Leading with an apology, acknowledging your own role, and working collaboratively to redefine expectations sets the foundation for a healthier partnership and a clearer path forward. I must repeat how crucial it is to follow a template like the CUBE model. Do not wing it!

I’ve witnessed many times how embracing radical accountability, empathy and reframing conflicts as a dilemma transform not just the co-founder relationship but the entire culture.

What’s more, relating to your company and your role as a dojo for accelerated self discovery and consciousness development for all involved is a total game changer.

Give it a try, what do you have to lose?

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Resources for Further Support

Recommend additional resources that can offer guidance and support.

Additional Resources:

• C.U.B.E. meeting agendas for emotionally charged situations

 

CUBE for Conflict was created to boil down complex models of communication into one practical, easy-to-use method that helps leaders avoid the most common mistakes in challenging conversations.

• “What Is Active Listening?” by Amy Gallo HBR January 2, 2024
• My article:  “DIY Method for Resolving Co-founder Equity Conflicts”
• “Crucial Conversations: Tools for Talking When Stakes Are High“* by Kerry Patterson et al.
• Read the Conscious Leadership book

 

Hire a Mediator

With so much at stake investing in an executive coach who has experienced what you are going through many times just makes sense. It virtually guarantees that you will get the best possible outcome and maximum personal growth as fast as possible.

In service,

Michael

Evolving startup teams since 2010…

See what my clients are saying…

www.thrivingfounders.com

Keywords: Decision-Making Process, Startup Leadership, Founder Decision-Making, Collaborative Decision-Making, Emotional Clarity in Leadership, Stakeholder Engagement Leadership Mindset, Self-Awareness for Founders, Strategic Decision-Making