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Ask HN: How to fire your co-founder?

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Re: Ask HN: How to fire your co-founder?

#31

Post by georgespencer »

I'm in the uncommon position of having actually had to do this. It wasn't a "firing" per se as much as a parting of ways which I initiated, but here's what I learned:

• Discuss it very frankly with at least one board member you trust. Depending on their involvement with the business they may already suspect that something is wrong. Outline to this board member your concerns that Co-Founder is going to take this the wrong way and derail the business.

• Discuss with Co-Founder the specific areas you feel Co-Founder isn't pulling his weight (it isn't okay, even if it's the truth, to say "he isn't doing anything"). Make an irreducible list: start with what are obviously his strengths, and then list the ways in which he is not playing to them. Make it inarguable and prevent it from turning into a personal matter.

• Keep the focus on company not him. For the company to succeed, you need to accomplish XYZ.

• Explain very clearly what his options are. You are not trying to screw him, but you are displeased with his input. You would like to amicably resolve this so that the board doesn't have to be involved, but failing that you will take it to the board and ask them to do their job by sorting it out. He can accept reduced equity and no day-to-day involvement, or he can kick up a fuss and you will move him on. Either way he should accept the reality that his involvement is coming to an end and that his decision now is how it ends.

Your board, if they have any kind of experience in running a business whatsoever, will know that this is one of a billion things which will go "wrong" over the four or five years it will take to make or break your biz. You can influence a lot in the way you communicate this event to them. It sounds to me like it's not truly a crisis but a significant opportunity for you to offload someone who is not contributing and reallocate capital to someone who will put in the hours.

My overriding advice is that you should not worry about this. Next time you start a company be sure to finalise your divorce before you finalise your marriage (i.e. very clearly delineate duties for founders and establish what success for your roles looks like), but other than running out of capital or not growing, very few things are disastrous for a startup.

Re: Ask HN: How to fire your co-founder?

#32

Post by birken »

At the early stage of a company, equity is very important to keep people's incentives aligned to work really hard in the best interest of the growing the company. This generally initially expresses itself in the founders, who have a lot of equity and little or no salary, and then continues on with early employees. So just from this perspective, spending a ton of equity on somebody who isn't contributing is a massive opportunity cost.

Additionally, there is a reason successful solo founders are rare. It is hard to found a company, especially without somebody who is 100% aligned with you (at least economically) the whole journey. I'd imagine that a situation where you start with 2 founders and go down to 1* makes it even harder, because you are like a single founder but with all of this stress you are accumulating right now on things that aren't related to making a great product.

Now this isn't to say that founder strife is something that doesn't happen in successful companies. It does. It is just the magnitude and early-ness of your strife seems pretty large. Making a successful company is really really hard, and you really want to put yourself in the best position to succeed. If you aren't in a good situation, and getting to a good situation doesn't seem likely, then just leaving and starting something else might be your best available option.

Note: I have no idea how large your company is, so this post is assuming your company is 2 or 3 people and is very early stage. If your company is doing really well or is much larger, this advice basically doesn't apply at all, because then "sticking with it" starts to look like a good option.

*: I'm extrapolating that you had 2 founders based on your post. If for instance you had 4 founders and were going down to 3 I don't think it would be as big a deal.

Re: Ask HN: How to fire your co-founder?

#33

Post by gtremper »

primitivesuave wrote: post #29
michaelochurch wrote: post #21

Earlier quoted context omitted.

It's actually BDSM, Business Development, Sales & Marketing.

You might want to put those in a different order to not get confused with the other BDSM.

They actually refer to the same thing.

Re: Ask HN: How to fire your co-founder?

#34

Post by ra3 »

alan_cx wrote: post #25

To look at it the opposite way... Could you quit and re-start? If you have employees, maybe they quit and follow you? Perhaps your investors would go with you too.

He likely has a clause in the employment agreement preventing him from competing in any way. Pretty standard

Re: Ask HN: How to fire your co-founder?

#35

Post by taude »

mesogamer wrote: post #23
badclient wrote: post #4

If I talk with my boards on his misbehaviour it will get them stressed and stop believing on the company Sorry dude, looks like that is precisely what you are going to have to do. Don't worry about the board stressing; they can handle it. That's their job. Focus on YOUR job: the success of the company. The board will stop believing you when you prolong this longer than you should have, actually making the situation m…

Thanks for the advice. I might go with this one after holiday ends. The only problem I see here is that he has more rapport with them (since I'm more product oriented and he's money oriented). It's going to get real messy, especially since he holds all money, bank, passwords info (now I understand why he wanted to take control of those stuff in the beginning). Firing him will be so messy, and the 3 employees we have…

In reading that he's the money guy, is he really not holding up his side of things? What's he specifically not doing, that he should be?

It's hard to read between the lines to know if he's really not keeping up his end. Employees like him, he sounds like he's the field expert, he's got the money, he assembled the board, etc...

Re: Ask HN: How to fire your co-founder?

#36

Post by JoshTriplett »

mesogamer wrote: post #23
badclient wrote: post #4

If I talk with my boards on his misbehaviour it will get them stressed and stop believing on the company Sorry dude, looks like that is precisely what you are going to have to do. Don't worry about the board stressing; they can handle it. That's their job. Focus on YOUR job: the success of the company. The board will stop believing you when you prolong this longer than you should have, actually making the situation m…

Thanks for the advice. I might go with this one after holiday ends. The only problem I see here is that he has more rapport with them (since I'm more product oriented and he's money oriented). It's going to get real messy, especially since he holds all money, bank, passwords info (now I understand why he wanted to take control of those stuff in the beginning). Firing him will be so messy, and the 3 employees we have…

> It's going to get real messy, especially since he holds all money, bank, passwords info (now I understand why he wanted to take control of those stuff in the beginning).

You're not kidding. I hope you just mean logistical access (as in, currently holds the details to), as opposed to actually having them in his name. If the latter, you're pretty much screwed. In any case, when you discuss this with the board, once you get them on board with this decision in the first place, you're going to need to make a clear plan for getting access to all of those resources transferred. Hopefully you can do so quickly and without legal action required. Fortunately, if they're in the company name, there are steps you can take to get that access.

Re: Ask HN: How to fire your co-founder?

#37

Post by badclient »

taude wrote: post #35
mesogamer wrote: post #23

Earlier quoted context omitted.

Thanks for the advice. I might go with this one after holiday ends. The only problem I see here is that he has more rapport with them (since I'm more product oriented and he's money oriented). It's going to get real messy, especially since he holds all money, bank, passwords info (now I understand why he wanted to take control of those stuff in the beginning). Firing him will be so messy, and the 3 employees we have…

In reading that he's the money guy, is he really not holding up his side of things? What's he specifically not doing, that he should be? It's hard to read between the lines to know if he's really not keeping up his end. Employees like him, he sounds like he's the field expert, he's got the money, he assembled the board, etc...

One thing that helped me in my situation is that I made a document just describing my situation, written from the perspective that it is a business school case study. Then have some friends close to you read it and tell you who they think is at fault. The biggest key is that when writing the story, replace your company name and other names with made up names so people who you ask for feedback aren't biased.

This will give you first line of objective feedback even about your own positions.

Re: Ask HN: How to fire your co-founder?

#38

Post by adventured »

mesogamer wrote: post #23
badclient wrote: post #4

If I talk with my boards on his misbehaviour it will get them stressed and stop believing on the company Sorry dude, looks like that is precisely what you are going to have to do. Don't worry about the board stressing; they can handle it. That's their job. Focus on YOUR job: the success of the company. The board will stop believing you when you prolong this longer than you should have, actually making the situation m…

Thanks for the advice. I might go with this one after holiday ends. The only problem I see here is that he has more rapport with them (since I'm more product oriented and he's money oriented). It's going to get real messy, especially since he holds all money, bank, passwords info (now I understand why he wanted to take control of those stuff in the beginning). Firing him will be so messy, and the 3 employees we have…

It's not going to get real messy unless he wants to go to jail for fraud / theft / embezzlement.

You need to present your case to the board, there is no other good way to go. If they side with you, your co-founder will have no choice but to turn over control of the money, and in fact you should encourage the board to force the point on the money / passwords / etc controls anyway.

Re: Ask HN: How to fire your co-founder?

#39

Post by alan_cx »

ra3 wrote: post #34
alan_cx wrote: post #25

To look at it the opposite way... Could you quit and re-start? If you have employees, maybe they quit and follow you? Perhaps your investors would go with you too.

He likely has a clause in the employment agreement preventing him from competing in any way. Pretty standard

Well, yes. Except, with his leaving, and assuming all the important people, etc went with him, what would the remaining co-founder have left to be competing with?

Then what resources would the remaining co-founder have to go through the US court system?

Lastly, leaving and re-starting doesn't have to mean the exact same product.

I know what you are saying, but Im pretty sure it could be side stepped with some creative thinking.

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