Chapter 1 - Entrepreneur Fundamentals
IN THIS LESSON
Navigate Cofounder Relationships
One of the biggest factors that break-up a company is the cofounder relationship going south. We help cofounders develop a strong communication framework to get through difficult times and build a healthy relationship as the company grows. From talking about the elephant in the room to setting clear goals, these seven steps to founder communication success can help save your relationship and company.
Avoid Cofounder Relationship Fails:
About 65% of start-ups will break-up due to people issues. In this section, you’ll learn about the three main cofounder fail categories that cause a majority of people issues and why you need to start paying attention to this relationship.
Get Your House in Order:
Getting your cofounder and investor agreements in order can help you navigate through growth and tough times. In this section, you’ll learn about key business items to get in order in case a cofounder decides to leave.
Understand Your Cofounder:
Understanding the strengths and weaknesses, goals, and needs of your cofounder can help avoid the wear and tear on the relationship. In this section, you’ll learn how to develop a healthy rhythm of communication to keep your company moving forward.
Set Clear Roles:
Cofounder roles will change over time. And identifying who does what and how you make decisions for the company is crucial to maintaining a healthy relationship. In this section, you’ll learn how to set clear roles with your cofounder as the stakes get higher.
Discuss the Elephant in the Room:
If there’s something your cofounder is doing that bothers you, it’s best to communicate these concerns early-on, and in a respectful way. In this section, you’ll learn key tactics to having difficult conversations and managing disagreements before the relationship blows up.
Build Trust With Your Cofounder:
Without cofounder trust, your company could be headed for break-up. In this section, you’ll learn how to build a foundation of trust with your cofounder in good and difficult times through honest and clear communication.
Cofounder Conversation Exercise:
Making sure you’re aligned with your cofounder can help mitigate problems while building a business. This exercise is designed to help you craft conversation starters with your cofounder and strengthen your relationship.
Don't Be the 65%
Research shows that 65% of companies fail due to problems within the management team. Knowing there is a real chance your company could fall into this percentage, what are you doing today to build a good relationship with your cofounder?
Start With Good Intent
When you assume good intent, it’s easier to have difficult conversations and start the dialogue from a place of learning instead of being defensive.
Think of a time where you approached a difficult conversation from a place of assuming good intent of the other person. Describe the situation and how it ended below.
STEPS TO BUILDING A POSITIVE COFOUNDER RELATIONSHIP
Step 1: Reality Check
Cofounder and people issues are going to happen, period. And developing a regular cadence of communication to address problems early before a blow-up or break up is critical to success.
The most common tension points between cofounders:
• Finances
• Salary
• Hiring
• Firing
• Product direction
• Product decisions
• Sales
• Responsibilities
• Hours worked
• Vacation
Step 2: Get Your Documents in Order
Starting to think about the "what ifs" of growing a company can help cofounders prepare for the future, get their house in order and protect the business.
Examples of “What Ifs”
What if a cofounder…
• leaves
• wants to leave
• is playing more than producing
• spending money irresponsibly
• isn’t delivering a product
• isn’t being truthful with investors
What are the “What Ifs” that need to be discussed with your cofounder?
Based on those “What Ifs,” what documents do we need to get in order to protect the business? Who do we need to engage to get this done?
Step 3: Understand Your Cofounder
Understanding your cofounder is more than just knowing how they take their coffee, it’s about gaining a deeper knowledge of their strengths and weaknesses, goals, life needs, culture, fears, etc.
Strengths and Weaknesses
Identify each other’s strengths and weaknesses below.
· My strengths/Cofounder Strengths
· My weaknesses/Cofounder weaknesses
· Overlapping skills with my cofounder/Overlapping skills from my cofounders perspective
· Where I think we have talent gaps/Where my cofounder believes there are talent gaps
Personal Goals
Goals for the company may differ for each cofounder, and figuring that out early-on can help in decision making and direction for the future.
1. What are your personal goals for this company in years 1, 3, 5, and beyond?
2. What does a successful outcome for your business look like?
3. Are your goals aligned with your cofounder? Why/Why not?
Pacing
Building a company often requires working 12+ hours a day, six days a week, even holidays, and it will impact your personal life - in fact, it will become your life. And talking with your cofounder about the workflow can help each other manage other responsibilities in life and mitigate feelings of unfairness.
Think about the current workflow with your cofounder. Does this pace feel balanced and fair? If not, what steps can you take to manage the workflow?
Burnout
Founder burnout is a real thing and could likely happen to any co-founder more than once. Developing a plan to address burnout can help preserve the relationship and keep the company moving forward.
Here are some of the symptoms of Burnout according to Psychology Today:
• Chronic Fatigue
• Insomnia
• Forgetfulness/impaired concentration
• Physical symptoms
• Increased illness
• Loss of appetite
• Anxiety
• Depression
• Anger
• Loss of enjoyment
• Pessimism
• Lack of effectiveness
• Feelings of hopelessness
If you are starting to see the signs of burnout with your co-founder or yourself, it’s important to acknowledge these signs and talk to each other and find a way to recharge.
What steps are you taking to maintain the physical and emotional stamina needed to handle the pace of building a business?
Finances and Salary
Money is a constant stressor for any relationship. And keeping an open line of communication with your cofounder about money, salary, and fundraising is a critical component to developing a positive relationship.
Are there any tension points about finances you need to discuss with your cofounder? Write them down.
Developing Culture
How you and your cofounder define company culture and the type of company you want to be can direct the type of decisions you make about growth, talent, investors, and more. Having conversations about company culture can help align cofounders in good and challenging times.
· What culture values are important to you? Does this align with your cofounder?
· How do you see the culture of the company changing over the next five years? What steps do you need to take to develop this company culture?
Step 4: Set Clear Goals
Do you want to eventually sell the business or keep growing? How are you going to structure the business as you add more talent? These types of questions can open new conversations to the various goals cofounders have for a business.
What vision do you have for the company? Are they similar to your cofounder? Write your answer below.
Step 5: Discuss the Elephant in the Room
Preparing for Tough Conversations
It’s inevitable, friction and tension will happen between cofounders. And when cofounders don’t have a communication diffusion plan in place when emotions and stress run high, it can lead to additional blow-ups and eventually a breakup.
Try these communication tips and frameworks around difficult discussions to work through tension.
For you:
• Try to have your conversation in a private, safe place to express oneself
• Listen, then speak
• Take a deep breath before you speak
• Take a walk and organize your thoughts before the discussions
• Keep the conversation respectful
• Be conscious of your verbal and non-verbal behaviour
• Remember you can choose to be angry and react to emotions or not
• Restrain yourself from giving a defensive action or response at that moment
• Take a learning perspective
• Look inward and see if you’ve done something to create this friction
• Identify the facts in this problem
• Stay away from emotional responses.
3 Key Phrases in a Conversation
Use these three phrases throughout your conversation so your co-founder feels they’ve been heard, you’ve acknowledged the friction, and then talk about the actions that will be taken afterward. Try this framework during your conversations.
• I hear you – This phase lets them know you are listening to their perspective.
• I see how you could feel that way – This phrase acknowledges their perspective and trying to understand their point of view. It doesn’t mean you agree or disagree with them.
• Here’s what I’m going to do – This phrase is letting the person know if you are going to take action, that could be changed or not, and it helps you walk through the why of the decision.
Step 6: Build Trust With Your Cofounder
What are you currently doing to build trust with your cofounder?
Step 7: Get Help
Whether there is tension in the relationship or in need of setting up a communication framework to discuss issues, it’ll be worth the investment to engage a coach, mediator or mentor to help strengthen the relationship so the company can continue to thrive.
Who can help us get the guidance we need to improve our relationship? Write your answer below.
Cofounder Conversation Exercise
This exercise is designed to get you thinking about your and your cofounder's performance levels and open a discussion around any variance.
Supplies:
• Piece of paper
• Pen
Instructions:
1. On the X axis label it "Performance"
2. On the Y Axis label it "Month," and divide it into 3 months
3. Chart of your personal performance over the last three months – be honest
4. Chart your cofounder’s performance
Reflection Questions
• Are the performances the same? If they are different, have you talked to your cofounder about why?
• Does this chart bring up and issue that may be festering with you right now?
• What do I need to learn from my cofounder to understand their perspective about this problem?
• How can I approach this conversation with my cofounder to create a productive outcome?
Assignment
Set up periodic check-ins with your cofounder where there is no work, no phones, and you have a non-emotional exchange where there is an opportunity to voice concerns and space and freedom to talk about what’s happening in the business and personally.
COFOUNDER DISCUSSION TOPICS
Passion, Strengths and Weaknesses
1. Why are you building a start-up?
2. What about your company gets you excited each day?
3. What do you enjoy most and least about your role?
4. What are your strengths and skills that benefit the company?
5. What is your cofounder(s) strengths? How do these benefit the company?
6. What is it about your co-founder(s) that you most appreciate?
Personal Wellness
1. What measures are you taking to help you maintain the physical stamina needed to handle the stress of building a business?
2. What measures are you taking to help you cope with the emotional ups and downs of handling a new business?
Business Dynamics
1. Name the next 3-5 types of people you plan to seek out to join/help your start-up and why you think they will be important.
2. What is your current role in the company, and how important is it to you to maintain that role?
3. If an investor or a cofounder believes that you should step down and take a lesser role in the company would you leave? Stay? Why?
4. What does a successful outcome for your business look like? Why is that outcome important to you?
Examples: I want to create a mega Corp like Microsoft or Google; I want to create a small company to sell to Microsoft or Google; I want to bootstrap a business that will support myself and my family earning X a year.
Culture
1. What cultural values are important to you?
2. How are you starting to implement these values into the company?
3. Do you feel aligned with your cofounder to implement these values?
Finances
One of the largest strains on a cofounder is family finances and one of the more common reasons a founder leaves a company.
1. How much do you expect to pay yourself/get paid in the first year? Second? Third?
2. Are you and/or your family (if applicable) willing to lower your standard of living? For how long?
3. At what (personal) financial point will you want to pull the plug on your start-up? How about your significant other (if applicable)?
4. How much of your own cash (not time) do you plan on investing in your start-up?
5. What are your current personal expenses per month? How long is your runway?
6. The recommendation for companies seeking outside funding is to have at least one year of runway, both business and personal. What steps are you taking to ensure this runway?
7. What other financial concerns do you need to talk about with your cofounder and significant other (if applicable)?