It’s a little-known secret — many Cofounders typically quit in the first year.
We don’t hear these stories because, by the time a startup becomes successful, they are long since written out of the annals of the company’s history. If we’re a first-time Founder, we don’t realize that there’s a massive delta between the commitments we make when we start a company and those that we have to maintain as the grind continues.
The problem becomes real when we realize we just gave our “forever committed partner” 50% of the company for what amounted to 5% of the long-term effort required to make it successful. If we had known Cofounders don’t last, we’d have prepared accordingly.
So why don’t Cofounders stick around?
Shotgun Weddings Don’t Last
It starts when we rush into the relationship, as most startups do. We’re so pumped up that we found someone, anyone, to work on our idea together that we’re totally willing to overlook the fact that we often know so little about them.
Our overnight shotgun wedding conveniently overlooks that we have no idea who this person really is. All of our personality quirks haven’t had time to manifest yet, and so we learn them at the most expensive time possible — when we’re forming the company. It’s easy to get along when nothing has really gone wrong yet, but the moment we start to have some real-life challenges, we start to realize how hard it is to find a truly compatible Cofounder.
Even if we do have some history with our Cofounder, we may not have a history with them as an actual Cofounder. Sure, we may have been great friends before or had a great run as coworkers at a different company, but that form of the relationship didn’t have the same consequences as our startup does.
We Assumed Way Too Much
Going into our startup, we assumed our Cofounder would share the same commitment as we would, no matter what. They would work the same hours, put in the same personal capital, and generally hold up their end of things all around.
Those commitments were easy to make when we didn’t need to back them up over years of grueling nights and weekends, watching our bank accounts dry up while our spouses and loved ones grew angry with the outcome. Simply put — we assumed they would motor through this like we would.
But once the pixie dust of startup glory wears off, and the realities of running a startup weigh in, most Founders simply can’t stay in the game. Our problem is that we confused “commitments” with “contributions.” Commitments are what we say we’ll do, contributions are what we made. Anyone can make a commitment, very few people make contributions.
Plan for Divorce, Hope for Marriage
While losing a Cofounder sucks (for both parties) the only thing worse is having set up a structure that assumed we’d be married forever. Often we hard-code an equity split based on very little initial information or contribution.
It looks something like “Oh what? You say you’ll make 50% of the contribution forever? Cool! Here’s 50% of the company regardless of whether you ever actually do what you say you’ll do!”
A better way to manage this is to have a backup plan, which is often achieved by requiring each Cofounder to vest over a period of time, often 2-3 years, to make sure the marriage actually lasts, and if it doesn’t, that there is a clear and well-understood plan for who gets what in the divorce.
Cofounders drop off all the time — it’s not the end of the world. So long as we have a plan for the “What if?” we’ll be able to move on and create something amazing with or without them. We’ll hope we stay married forever, but just in case… let’s plan otherwise!