Building a successful business is hard. Fostering a healthy, enduring relationship with your co-founder alongside scaling a high-growth tech business is even harder – or in many cases impossible. In fact, founder conflict, according to Noam Wasserman author of The Founder's Dilemmas, is the reason why 65% of start-ups fail.
We draw on the wisdom and experience of Dr Amandip Bahia (or Dip as we know her) to understand why founder relationships breakdown and how to get ahead of the conflict before the situation is irreparable. If you have ever met Dip, one thing you will be able to gauge immediately is her incredible way with people. Following a 16-year career working in Severe and Enduring mental health services at the NHS, Dip’s curiosity in leadership and strategy led her to the corporate world, where she now works as the People and Organisation Lead at Investec Bank. In addition to her role at Investec, Dip has spent time working with Outward’s portfolio founders at key junctures in their start-up journey. In this piece, we explore some of the learnings…
What has struck you most about working with founders?
The level of personal sacrifice that goes into founding a company is unique. The stakes are high and unlike CEOs, the risk comes with little security. As a result, founders are extremely protective of their business, consumed by a relentless pursuit to make it work. Anne Boden, founder of Starling Bank, sums it up really well in her book titled Banking on it, where she explains “…most of the world’s largest, most profitable digital firms were not built upon the back of unique, brilliant ideas that led the market. No, they were built on the dogged persistence of their founders.”
In your experience, what is the root cause of conflict between co-founders?
When starting out, time is precious and everyone is operating in survival mode. No job is off limits; you wear all hats and get stuck in, moving from one task to the other to keep things afloat. The downside of this ‘go, go, go’ approach, is that co-founders do not spend enough time working together to understand the real contribution and value each one brings. This knowledge gap impairs future decisions on who is better suited to take on certain tasks or responsibilities. It can also cause relationships to derail, as there is a misalignment – or even resentment – on who added value and where.
At this stage, co-founders need to go through a process of what I like to call ‘recontracting’. This is a time to agree what you can expect of one another and importantly how you will work together.
"My job is to make it safe to say the unsayable. I probe and question areas that feel a bit edgy or sticky – things I know the founders don’t want to unearth..."
What are you striving for as you help founders work through conflict?
I am always outcome agnostic. My role is to coach, mediate and facilitate the team through a process where they are able to get to the best outcome for themselves. My job is to make it safe to say the unsayable. I probe and question areas that feel a bit edgy or sticky – things I know the founders don’t want to unearth, but where I know it’s going to be helpful. As a third party, with no other agenda than to have founders’ best interest at heart, I can really push the boundaries.
Friends turned co-founders, how to navigate the change in the dynamic?
At the outset, my advice is to talk about everything – salaries, leave days, paternity leave, dealing with conflict, etc. Think of it as the prenup before you get married. This process of ‘contracting’ and ‘recontracting’ should occur throughout the duration of your relationship and as the business changes.
"If you are in the discipline of reflecting, the gaps will emerge"
Your advice to building healthy co-founder habits?
- Reflection: make time to regularly step away from ‘the doing’ in order to look back and reflect on what is going on in the business. This is especially important when navigating key milestones, be it a funding round, a client win or the loss of a senior employee. If you are in the discipline of reflecting, the gaps will emerge
- Keep evolving: regularly review and clarify roles and responsibilities, especially when change has occurred. What is required of each other can and should change
- Feedback: get into the habit of giving (and receiving) feedback by setting aside dedicated time to share alongside in the moment feedback. For example, after a meeting ask: ‘How did it go?’, ‘What should I have done differently?’ This shouldn’t feel superficial – really ask the questions
- Check yourself: Continually test the assumptions that you have made about your co-founder – how do these stray from what is real and what is based on fact? A simple example is, Founder X has children, and therefore Founder Y assumes they will be less available during school holidays
"My overall intention would be to understand to what extent the relationship has been tested...and if they have respect for one another"
What questions would you ask to assess the strength of a co-founding team?
My overall intention would be to understand to what extent the relationship has been tested, how have they dealt with conflict and if they have respect for one another. In all of the following questions, it would be important to hear about specific examples…
- Tell me about a time when you delivered difficult feedback to your co-founder?
- … a time when you were offended by your co-founder? How did you deal with it?
- What do you value in each other?
- How do you celebrate wins?
- What’s the unofficial induction into the team? – this one is more about getting to the root of their culture
A good leader often reminds me – we are human beings not human doings, it’s important to remember to take the time (and role model to others) that being is important. Pause, review, reflect and learn – this will feel like a luxury you don’t have time for but creating the discipline of these rituals early on will be worth the investment in the long run.