This post was first published on Techstars on January 23, 2016.
This is the third post in a series of five on co-founder conflict.
Leadership is about making decisions. Oddly enough, many founders never take the time to discuss who will decide what. This lack of clarity upfront and strategy to decision-making quickly leads cofounders in one of two undesirable directions.
In the first scenario, all decisions are made by all founders. This results in a slow or gridlocked decision-making process. When decisions are finally made, they are often then changed because there is no one clear decision maker — any founder can reopen any decision. Employees and investors quickly get frustrated with the slow decision-making process or the constant changing of decisions. If there are more than two founders, the situation is only exacerbated by the orders of complexity between the number of founders who have to be aligned for a decision to be made.
The problem is the idea that we have to decide everything together despite the fact that everyone is going to have a different viewpoint. Consider the differences between a visionary founder and a technical founder. Visionary founders look to the future and imagine how great it’s going to be out there. Technical founders look at today and say, “This whole system is going to crash tomorrow. We have bad code, bugs, and technical debt. We need to fix this now.” One founder is looking at the ground in front of their feet while the the other is looking out at the horizon. When they have a conversation they are looking at two different landscapes. They can’t figure out why they can’t agree on what they’re looking at because both think they are looking at the same thing. That is the paralysis and conflict that happens when we each inherently have different viewpoints but insist that everyone has to agree on everything.
As challenging as different viewpoints can be, these differences in viewpoints are the reason why co-founders often work out better than solo founders. A diversity of viewpoints is an asset to the company but needs to be accompanied with a framework for who decides what.
In the second scenario, the CEO makes all decisions. This leaves the non-CEO founder feeling disempowered. They will often resort to having hallway conversations undermining the CEO, reversing decisions, or slipping into the background and not scaling. It won’t take long before the CEO says to the co-founder, “Hey, when I look at what the company has accomplished this last year, I don’t see what your contribution has been. I’m wondering if you should keep your title or if we should just have you on the board and hire somebody else in your role.”
Both scenarios are are not desirable.
The healthiest companies decide who is best at deciding what. Each cofounder has their own ball to run with. If a decision is made that is totally egregious, there is veto power. Cofounders agree that each co-founder will have 100% of the decisions all of the time in their respective area, but the other co-founder(s) reserve the right to veto if they feel it goes against a core value of the company or steers the company too far from the mission. The veto is to be used very rarely; you should trust your cofounder to make the decision in the domain in which they are an expert.
If co-founders are not able to operate with this level of trust to let the person hold all the decisions for the domain for which they are responsible for dysfunction usually follows.
The healthiest way to approach decision-making is to split the domains. The most popular split is internal-external. One person in charge of people operations, finance, legal and anything that is internal to the company. The other person is external — fundraising, engineering and product, anything customer-facing. There are other functional models that work as well.
The important thing is to decide who is responsible for which functional areas and to stick to that decision and respect each other’s domain of responsibility.
Like each of the conflicts we will discuss in this series healthy conflict fundamentally comes down to two things, trust and respect. Trust that your cofounder can make decisions and be honest with you when things are not going well. Respect your cofounder enough give them honest and open feedback as things start to not feel right. Trust and respect has to start at the very beginning with the very first conversations about starting the company including who will be CEO, who decides what, and other key conversations that we will cover in future posts.
The key to having and being fully present in these conversations is not being afraid of who you are today and who you are in the process of becoming through the struggle and joy of startup life.
“The key to warriorship and the ultimate definition of bravery is not being afraid of who you are. Examine your experience to see what it contains that is of value in helping yourself and others. Warriorship is the opposite of selfishness. We become selfish when we are afraid of ourselves and afraid of the seeming threats the world presents. We want to build a little nest, a cocoon, to protect ourselves. But we can be much more brave than that. Even in the face of great problems, we can be heroic and kind at the same time.” -Trungpa Rinpoche