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Ask PG: What core issues can founding teams disagree on but still succeed?
For instance, say one of the founding partners (an accomplished person in their own right) believes that while they work on the startup they can also work on other 'non-trivial' activities (like work in/help run a family business) because their entire life they have done (successfully) multiple major activities at once (e.g. graduate top of the class at a top-5 Ivy University, while getting the equivalent of a Rhodes scholarship in another field, while competing in a significant competition and placing top 8 out of 100+, and being married, etc.).
So they have committed and do what it takes, but they are still involved in other things.
If their partner disagrees (largely based on 'mainstream knowledge' about what it takes to build a large startup) - but it could very well be the case that this person can make it work - have you ever seen cases like this that work?
Or another example is:
- Say one partner puts much less weight (and value) on an initial idea, than the other. This matters when discussing equity breakdown. How do you bridge that divide?
- Say one partner has some assets that they developed, by themselves, that can help the startup - but is hesitant to include it (out of concern that the other partner will be gaining financially from this asset without much contribution). Is that a deal breaker?
Are these issues really very important in the long-term? Assuming you have a product that has traction...does it make sense to ignore these issues and just continue working, or will they come up to bite you in the long-run?
- pg 14y agoIt's much like the question of what married couples can disagree on. I.e. it's not so much a question of what types of things they disagree about as whether they can figure out a modus vivendi despite their differences. Incidentally, the specific examples you mention are very worrying, because they suggest lack of commitment, which is a big predictor of failure in startups.
- marcamillion 14y agoThat is my initial reaction - but given the partner's propensity to defy the odds in their other endeavors, would that be sufficient evidence to take a gamble? Also, given that this particular endeavor is one in which they have tied up their entire identity in - and they are not intentionally 'not-committing' (in fact, they have explicitly stated and done things to indicate that they are committed - just not to the extent that the other partner feels fully comfortable). Also, they are a relatively "public" figure/mini-celebrity in a particular niche, so for them to back down from such a public commitment would be more difficult than a "non-public" person. I guess, going back to the marriage analogy, it's more a question of "not because your partner doesn't love you in the way you want to be loved means that they don't love you with all they have". Is it possible that they could genuinely be fully committed, but just can't commit in the way YOU (i.e. the other partner or investor) wants them to be committed...and it still be a success.
- genwin 14y agoYou have to accept that a partner might end up with an unfair share of equity, just like marriage. In the beginning, a partner who contributes less time than you but has a better track record of success may well deserve an equal stake.
- brudgers 14y ago"Is it possible that they could genuinely be fully committed, but just can't commit in the way YOU (i.e. the other partner or investor) wants them to be committed...and it still be a success[?]" The key is trust, not agreement. If there is a belief among the partners that everyone is acting in good faith, then the relationship can evolve in a healthy and productive way. Short of total commitment rather than hedging bets, my two cents on the type of disagreements mentioned earlier would be something along the lines that these various inputs be assigned a cash value, and that the company issue a promissory note payable upon liquidation or similar events to the person making the "investment" rather than converting the "investment" into equity. This connects reward with risk more directly should the company become successful and avoids the sort of wide disparity between founding partners that incentivizes legal action or engenders bitter feeling. Good luck.
- marcamillion 14y agoThat's a great idea - about assigning a promissory note payable at some event in the future.
- orangethirty 14y agoExperience (and marriage) has taught me that people need their own space. Dont cross those lines. Dont push. Focus on giving them what they want. Making them happy. A happy team is more productive than an angry team. Plus when people feel appreciated and respected, they put in more effort. In terms of financials, always err on their side. I'd rather lose a couple of bucks (even if its a couple thousand) than lose a valuable partner. It really all boils down to how mature everyone involved is. Most of the stupid fights in the stratup world are due to a lot of young immature people who never learned how to share toys.
- debacle 14y ago> - Say one partner has some assets that they developed, by themselves, that can help the startup - but is hesitant to include it (out of concern that the other partner will be gaining financially from this asset without much contribution). Is that a deal breaker? I dealt with this (my partner was the one who had developed the assets). For the most part, it's something that can be worked around. We both costed out the library, had our friends look at it and tell us what they thought it was worth, and then we rolled that into my partner's equity share based on a 200k valuation. It wound up being a ~6% difference between our equity shares.