Do co-founders decide everything together or does the CEO call the shots?

Hi!

Partner disagreements happen all the time. The good news is, most of the time, they are disagreements that get resolved for the better.

I'm a business performance expert, a CPA, a CGMA and highly experienced at leadership and managing companies. Allow me to suggest some options for you.

This looks like you and your partner need to reach an agreement on how to operate the company. You can do this verbally or you can do it in writing with an operating agreement. I suggest you get this agreement in writing. The results you seek are to clearly define, and understand between both of you, the way both of you may smoothly run the company.

Operating agreements may have many different segments in it including (but not limited to) defining everything from who has an operating role vs who doesn't, your responsibilities, how the company ownership and profits are split, entry and exits of partners and even the method of accounting chosen.

Once you decide with your partner who has authority regarding your product direction, the person responsible should provide good leadership to see the products are well developed, and the other should follow their respective role as agreed and defer product development decisions to the other.

If one partner breaks out of the agreed role, you should have a private, positive conversation with your partner to set your boundaries and remain in your agreed roles. When this happens, you need to have this conversation within a reasonable amount of time after the disagreement. Don't be afraid of what they think, because your product and your company are at risk. Just be respectful and let them know they crossed the line and ask that they step back behind it.

I hope this helps!

Please feel free to call me if you need help with this operating agreement, including a sample for your reference. To prepare it, you can expect you'll need a legal expert and a business expert to contribute to your desired operating agreement.

Best of Luck!
Rodger Stephens, CPA, CGMA
Business Performance Expert

First off, congratulations on taking the leap to founderhood. In the early stages of a startup, roles are often complicated. You may bring the idea and vision but your other co-founder should also be able to contribute and shape the vision. The product often gets put in the middle of power struggles between founders. Work with your co-founder and share the vision you have. Allow him todo the same and bring both of your visions together. It is important that you do this with an open mind. Your vision needs to be flexible. If not these type of conversations will not be productive and tensions with your co-founder will become more announced.

Your job as CEO is not to veto ideas from co-founders but to bring clarity to the vision. Mark Suster uses the analogy of the CEO being the Chief Psychologist (Check out his post on this, "My Life as a CEO (and VC): Chief Psychologist").

Also remember that the decision maker will ultimately be your customers. When pre-traction we often look to ourselves as founders for the answers. As you gain customers their interest and lack of interest should be a big factor that ways into decisions.

To help with product decisions sit down with your co-founder and develop a product roadmap. This will help bring the high level vision down to execution and tactics.

A book I emphatically love and recommend for first time founders "The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup".

I hope this helps. I would love to have a call with you to discuss this in more detail. Best of luck to you and your startup.

How is the equity of the company currently distributed? Make sure important foundation based details like this are set and firmly understood by all parties before moving forward any further.

Part of becoming a CEO involves taking lead, and being firm in deciding your direction. Share with your co-founder that you value his opinion, but that you are the lead decision maker at the end of the day. Things will go more smoothly if everyone is on the same page about this.

Good luck! Feel free to message me for a call anytime.

I'm sure you've already heard this from other experts, but rest assured, you're not the only one that goes through this dilemma. Here is my advice: set expectations early, get an agreement and document it on paper (either formally through an Operating Agreement or informally like a Team Charter).

I always recommend getting input from the rest of your team to help shape your vision. Be genuine when asking for their opinion. Do consider that there will be times where your co-founders may have more subject-matter expertise then you. Solicit opinion, value their feedback and make the decision.

The worst split at the top is 50/50 because it is asking for gridlock. Someone has to have the final say and that is the CEO. One of the jobs of CEO is to evangelize about the vision. If that is not quite happening, check the evangeilzing methods, check the present vision (it may be a tad off).

I have been in many businesses, including the 50/50 and now as Business Executive Coach help point a big flashlight on future success, the alternatives, the evangelizing and self checking needed etc. Not for the faint of heart, but hey, that is why you are the CEO. :-)

I've been a co-founder/partner three times. The first two times didn't go so well, mainly because of disagreements among the partner. The first co-founder relationship started out well, then deteriorated quickly, once the business started having trouble, after losing our only customer due to 9/11 fallout. The second started on shaky ground and didn't end well. This third time around, things are looking good, in part because I'm applying the lessons I learned the first two times around.

In the second venture, there were four partners, including the CEO, who I actually introduced to the venture. I was the COO. In this venture I was in the position of your partner, in that I had a hard time accepting the CEO in his position. At the very beginning I thought he was the right person for the job. Soon after he started, I got the sinking feeling that he wasn't. I tried to steer from the side, which didn't work out too well for anyone and wasn't nearly enough to get the company back on track and pointed in the right direction.

What I'm learning this time around is that differences of opinions are one thing and they're important. Fundamental differences in value systems are something else. With differences of opinion, people can come into a constructive conversation with differing viewpoints, combine them, and leave with a solution that's exponentially better than any of the individual solutions.

The conversation my not be easy, however it doesn't have to be life-draining, either. The conversations among people who have fundamental differences in value systems are the life-draining ones. No matter how hard you try, these conversations to go nowhere and you're left exhausted and with no better solution at the end of the conversation than you had when you started. Progress becomes paralyzed as a result, especially if you're trying to make a decision by consensus.

Coming back to your specific question, if you've agreed that you are the CEO, have you also discussed what that means in terms of decision making? Has your team agreed that the final decision comes from you?

If you have, I feel like it's very important for you to -

-give the other decision makers a forum to express their ideas and

-make sure they feel heard

Feeling heard means different things for different people. Talk one-on-one with your partner to see what feeling heard looks like for him/her.

Once you've established this collaborative environment and have decided and clearly communicated that you're the decision maker, stick to that strategy. It sounds like this has been working so far, don't start to second guess yourself. If your co-founder continues to have problems with this approach and it begins to feel like the difficulty is being caused by a fundamental difference in underlying values, you may want to consider finding another partner.

Always happy to discuss further on a call and good luck!

I am quite not surprized when you said that the product is pulled in opposing directions, because he is interested in idea and not in you. So, it is time you understand what his roles as a co-founder is :
1. Embrace Co-Founder Job Descriptions: Co-founders are vital to the business but can get lost as the company evolves. We evaluate our co-founder job descriptions yearly to ensure that the written expectations are in line with the work the company needs done. Do not be afraid to reassign co-founder roles and responsibilities so that business goals can be met.
2. Track Tasks: You should be tracking everything and making sure that your co-founders are keeping up with the tasks that they are assigned. Tracking everything will keep everyone organized and on the same page. Talk about these openly in meetings, and do not be afraid to make sure that your co-founder is not dropping the ball as you might be in the same situation and need his or her help.
3. Communicate Openly: You can always tell when an organization has good communication. The leaders know about a problem before it happens. It is important that co-founders check in with each other frequently to share updates, achievements, losses, and obstacles. While using each other’s strengths is important, sharing varied perspectives is equally necessary.
4. Use the Same Technology: Whether you use Google Docs, Microsoft Project, or Basecamp, all your founders must be using the same management system. Your team should also try to streamline the number of tools you need to access daily. More is not better in this case.
5. Sign a Co-Founder’s Agreement: One way to minimize risk of conflict is to clearly define roles and responsibilities at the outset by signing a Co-Founder’s agreement. For example, one person handles strategy and business development while the other manages operations. Putting these in writing and agreeing on who makes the ultimate decision in each arena or what you will do in case of disagreements is critical and too often overlooked.
6. Focus on Expertise: In the beginning, it is important to establish co-founder roles and responsibilities based on expertise. Each founder should be there because of a specific skill, and their job description should align with that skill. For instance, a technical co-founder should run technology. Other founders can have input, but on technology, the buck stops with that technical co-founder.
7. Establish Complementary Roles: Each co-founder should ask what role they, and they alone, can fill, and then you should articulate those roles to your entire team. This should go beyond tactical execution and extend to personas that are widely understood throughout your organization.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath