Resolving Major Co-Founder Disputes: A Process for Success

Co-founder disputes can threaten the success and stability of a startup.

Disagreements can range from:

• Who does what and how
• Differing visions regarding the direction of the business
• Founders’ misallocation of time and priorities
• Different working styles
• Personality conflicts

There are so many types of co-founder disputes that it can be easy for one small disagreement to snowball into a larger issue, creating a toxic work environment, reducing productivity and trust, and ultimately leading to the failure of the business.

I am a certified Mediator who works with startup founders and business teams to help them negotiate disagreements and major disputes.

I see too often how well-meaning individuals avoid disagreements to preserve the peace when in reality all they do is maintain the tension between the founders. I am called in after things have gotten so bad that the founders want to go their separate ways, renegotiate their equity split, or dissolve the company altogether.

Don’t let things get that bad. With the right approach and tools, these disputes can be resolved to strengthen the partnership and the business.

Here’s a step-by-step guide to help you effectively navigate and resolve your co-founder disputes.

Step 1: Set Some Ground Rules for the Discussion

The first step in resolving any major dispute is to agree on some ground rules.

The aim is to create a space where all parties can communicate openly and honestly. This involves answering the following questions:

1. What types of guidelines will help you respectfully communicate? This could include no interrupting, using “I” statements, and avoiding blame or criticism when possible.
2. Where should you meet that makes everyone feel comfortable? Choose a neutral setting that makes everyone feel comfortable and free from distractions. This will be extremely helpful later on when things get potentially uncomfortable.
3. What’s your intention for the meeting? Before you begin the discussion, talk about what you’re ultimately trying to get out of the chat. Do you want to hash things out to preserve the relationship? To air out frustrations or other issues? Or is it a bigger conversation like no longer feeling aligned with a person as a co-founder?

Effective conflict resolution occurs when you intentionally set the tone via some ground rules that everyone can agree to.

Step 2: Acknowledge the Issue through a Feedback Model

The first step in resolving a co-founder dispute is to acknowledge that there is even a problem.

It’s easy to want to ignore the issue or hope it’ll resolve on its own, but denial will only make it worse. Acknowledging the issue allows all the founders to hopefully move forward with a solution-oriented mindset. However, do not personalize the problem.

Use the OIC Model to help you give feedback in a business-focused way:

To use the O.I.C. Model effectively, find observable behaviors that the other person has done, discuss its impact on the business, and then ask for a change. An example of how to do this is below:

Example: “Over the last few weeks, I have noticed that you don’t seem as excited about our work as you used to be. You’re not answering emails promptly. The team is wondering where you are and why they can’t get a response from you [Observation]. And it’s all starting to affect our ability to properly execute tasks [Impact]. Could we talk about this? I’m wondering what’s going on and what has changed, if anything [Change].

Step 3: Identify the Core Issue(s)

Once you’ve started talking, it’s important to delve into the deeper, underlying issues rather than just the surface-level conflict. To identify the core issues, use the Conflict Iceberg as a model for unearthing more information:

The conflict iceberg invites you to ask questions to go deeper into some of the unknown knowns that may be causing problems.

To use this framework effectively, do the following:

1. Share Perspectives: Allow each co-founder to share their perspective without interruption. This helps to ensure that all parties feel heard and understood.
2. Ask Open-Ended Questions: Use questions like:
   1. What do you feel is the main issue here?
   2. How has this situation affected you?
   3. What is an assumption one of us is making that we should discuss?
3. Summarize and Clarify: As you hear things, reflect back what you’ve heard to ensure understanding. For example, “So, what I’m hearing is that you feel undervalued because your contributions are not being acknowledged.”

Step 4: Dialogue and Brainstorm Solutions Together

Once the core issues are identified, you’ll be in the flow of a dialogue, which should naturally lead to brainstorming solutions together.

During the dialogue, use active listening skills and empathy to help build understanding and reduce defensiveness. Here’s how:

1. Listen Actively: Pay full attention to the speaker, maintain eye contact, and avoid interrupting. Show that you are engaged and interested in their perspective.
2. Acknowledge Emotions: Validate the other person’s feelings by acknowledging them. For example, “I understand that you’re feeling frustrated and overwhelmed.”
3. Communicate with Compassion and Clarity: Express your thoughts and feelings clearly and respectfully. Use “I” statements to avoid sounding accusatory, such as “I feel concerned about our communication because it affects our teamwork.”

As you do this, look for common ground. Focus on shared goals and values, which helps to create a collaborative atmosphere and align the founders towards a common objective. Then brainstorm solutions together by doing the following:

1. Generate Ideas: Encourage the founders to suggest potential solutions. Write down all ideas without evaluating them immediately.
2. Evaluate Options: Discuss the pros and cons of each idea and consider how they align with your shared goals and values.
3. Agree on a Plan: Choose a solution that the founders can agree on and commit to. Make sure the plan is specific, actionable, and includes clear steps and timelines.

Step 5: Implement and Follow Up

Once you have agreed on any potential solutions, it’s important to write out the road map so implementation and follow-up are ensured. Think about:

1. Assigning Responsibilities: Clearly define who is responsible for each action step. This ensures accountability and follow-through.
2. Set Check-In Points: Schedule regular check-ins to discuss progress, address any new issues, and make adjustments as needed.
3. Reflect and Adjust: After implementing the solution, take time to reflect on what worked well and what could be improved. Be open to making adjustments to ensure long-term success.

Bonus Step: Establish a Quarterly Realignment Process

Some founders find it helpful to create an intentional space once a quarter where they can air out frustrations or disagreements in a designated space.

This is especially useful when a startup is in an era of high growth and the founders may need more time or space to dig deep into their issues.

You follow the same process outlined in this article with the overall goal of putting time on the calendar to meet once a quarter to remain aligned as founders.

This type of process, if used effectively over time, will keep the founder time high-performing. Just make sure to take what you learned here and customize it for your context.

Bottom Line

Resolving major co-founder disputes is not easy, but with the right approach, it can lead to a stronger partnership and a more successful business.

By creating a safe space for dialogue, identifying the core issues, practicing active listening and empathy, brainstorming solutions together, and following up on the agreed-upon plan, you reset the co-founder dynamic to be high-performing.

Regularly having these types of conversations not only resolves current disputes but also sets the foundation for better communication and cooperation in the future. By following this process, you can turn conflicts into opportunities for growth and strengthen your co-founder relationship in the long run.