Ask HN: How to get rid of a co-founder
I, being the programmer, of course had to build it, with my partner being the domain expert (and non-technical) would handle all business and marketing stuff. The understanding was that since we were building this on the side of our day jobs we would just work on it in each of our free times.
At first it went really well, my partner was engaged and got a lot done. After a few months, though, his enthusiasm fizzled. I myself took about a month and a half off from the project to focus on a talk I was giving, so I wasn't judging him harshly, but since that time he hasn't done very much. Some of the tasks we talked about him doing back in March still haven't been done, to my knowledge, at all. And where we used to talk about our company all of the time (again, we have been friends prior to this), we now never talk about it unless I bring it up.
I've tried a couple of times to give him outs; asking him when he'll have time to work on the project and (hoping he would say that he doesn't have time in the immediate future) wanting to bring up that maybe it's not a good time for him... but every time I've alluded to this he says that he's going to work on it tomorrow, or the day after that, but he never does.
At this point I don't know what to do. I feel like he still likes the idea of our company but doesn't want to put any work into it. I absolutely do not want to launch this product if I've done all of the work but do not have 100% equity. We've missed several soft deadlines because of this, and I find myself even slowing down because there's little for me left to do. I really want to go into crunch mode and finish the mvp off before it gets to a year, but the situation with my co-founder is hanging over my head.
54 comments
[ 3.7 ms ] story [ 79.8 ms ] threadThen talk to a lawyer.
You haven't done all of the work.
Given that the technical work is not complete, I'm not sure it's really a big deal that the non-technical work is not complete. You haven't given us an idea of how much non-technical work remains.
Get the MVP ready, and then if your partner is not ready, ask him for a timeline or something. Let him know your concerns.
Quit thinking about "getting rid of him," it's very premature.
If you're so keen to get rid of him why do you not already know what he's not doing and needs to do?
How will getting rid of him help you if even you don't know what you need to do to make this work?
There's 2 of you, you don't have and can't afford to have silos yet.
Naive developer indeed
If you didn't incorporate yet, then you owe each other nothing. Maybe your friendship will end, but that's still separate from an actual business.
Then again, I don't know if you yourself are that committed either. A month and a half off from work to prepare a speech means you're not fully committed. If this was because he's not doing much work either and you got demotivated because of that, then this entire relationship is a cancer and you should break up as soon as possible because it sounds like you will be more motivated without him.
> Then again, I don't know if you yourself are that committed either. A month and a half off from work to prepare a speech means you're not fully committed.
No, that was simply a mistake. I'm not going to take on any such side commitments for the foreseeable future. I recognized the mistake and course-corrected.
Then when all things are clear from the legal side, first try to get this to work (if you still have any hope for this guy). Sit down with him and honestly talk about what you have in mind, and tell him you want to make this work. And make him commit to several things by certain time.
Or you could just tell him you want to split up. (Again, after talking to a lawyer).
You wrote 100% of your code and there was no legally binding document that transfers your ownership so I think it should be fine, but really really I suggest you talk to a lawyer if you are serious about this business. It's worth the money.
This will not be inexpensive to set up (a couple thousand in legal fees), but if you're ready to launch and want to clean up your legal situation, it could be worthwhile.
Right now you would likely be considered to have a partnership, and you each have rights under that (which vary from state to state). If you go off and build this on your own without a document that your friend has signed, you'll be on shaky ground if he/she comes back after you've become successful. For what it's worth, I am a former lawyer (but never specialized in this particular area of law).
> If you didn't incorporate yet, then you owe each other nothing.
Anything that does business is a company (incorporation is needed to form a corporation, which is a specific kind of company; the term is often also used for forming a LLC, another particular kind of company); if two people have joined together with the intent of making a for-profit enterprise but with no formal agreement, it is a partnership.
See, e.g., the first couple paragraphs of this piece, even though the whole piece is focussed on unincorporated nonprofit associations: http://www.nolo.com/legal-encyclopedia/what-an-unincorporate...
And, even when informally formed, partnerships do have consequences while they exist and steps that need to occur to finally end them. Particularly, getting rid of a partner in such a situation generally means dissolving the partnership. Here's one guide, but definitely not complete info for all scenarios: http://smallbusiness.chron.com/dissolve-informal-partnership...
"if two people have joined together with the intent of making a for-profit enterprise but with no formal agreement, it is a partnership."
No, it's not. What is "joined together....but with no formal agreement"? You can't take that to the bank, or to the court house.
I'm not, but I did pass Corporations (which, despite the name, covers all manner of business entities) before I left law school, so there's that.
> No, it's not.
Yes, partnerships absolutely can be formed why mere combination with a common purpose and no formal partnership document. In fact, much of the law of partnerships arose out of courts deciding how to resolve problems where people had done that.
> What is "joined together....but with no formal agreement"?
A relatively common situation that potentially creates a legal mess when it falls apart, or some third-party makes a claim involving the business.
> You can't take that to the bank, or to the court house.
You probably can't take it to the bank, because banks hate dealing with legal uncertainty and will demand that you resolve it first. You absolutely can take it to the courthouse, and many people have; of course, you'd usually do better to have a written agreement in place first, but that's often clearer in hindsight.
Moreover, other people can take you to court for it (including based on the conduct of your partner), so if you have formed a partnership by cooperation that you no longer want to have, you absolutely do want to make sure you have effectively dissolved it.
Tell your cofounder that you'd prefer to work on the idea on your own, and if he agrees, ask him to sign an agreement.
If he's your friend, and if he doesn't care much about the project anyway, that shouldn't be an issue.
If your friend doesn't want to agree to that, one thing you could offer is a mutual agreement to license all existing ideas and code to eachother, allowing each one of you to pursue the project on their own with new partners.
All of your other advise is excellent. I think this is exactly what I should do, if it comes to that.
If he truly is not interested anymore, guide your conversations in that direction without stating your intention to exclude him overtly. You want him to talk until he comes to his own realization that he shouldn't be involved anymore. That's the only way this will occur without his feeling that he was violently pushed out. You have to make this easy, and you have to make it feel like he made the choice, or at least made his own bed, not that you're cutting him off unfairly.
Anyway he asked me about my business. Then he said: "Do you have a business partner?".
I said "Yes I do".
He said "Get rid of them".
> just relaying the advice of a somewhat successful man
This is a fallacy. Unless it's backed up by really good reasoning, I wouldn't take someone's advice seriously _simply because_ s/he has been successful at _something_. There are too many factors at play and way too much context to make it meaningful unless it obviously translates to the situation at hand. I can't think of a plausible reason why having a business partner is, 100% of the time, a bad thing (which is what is suggested in this anecdote).
* caveats: "having a cofounder" is obviously not a panacea, and may not be a good thing if you don't have the right relationship (which seems fairly clear from the OP)
Which, again, is why it's insane to try to get legal advice from internet strangers.
So, I'd say that 1) you need to sit down with your co-founder and talk about things and 2) if this is going to be a long-term thing, you both need to spend a bunch of time upfront talking about your communication styles and commit to open lines of communication.
I have been in legal drama over these issues before. It is not fun.
If your partnership isn't well documented, you should consider walking away from the work, including all the code.
People on HN have talked about how vesting is unfair. But this situation is the problem it protects you from. If a partner refuses sane standard vesting, run, don't walk.
I've been involved with lawsuits over the exact type of situation. Maybe the OP could win, but it will be a costly process...
This is not being an asshole. This is being real and drawing a boundary beyond which you can no longer be taken advantage of.
The optimum result is they agree to leave the partnership. But either you need to eject this person from a project you want to continue to devote time to, or you need to move on to the next project. Your current situation is untenable.
It might be a good idea to seek a lawyer for a sit-down, that will cost you a little bit of money but they can give you a better overview of your situation. Send all paperwork you have ahead of the consultation.
It could boil down to be as simple as discussing the issue openly with him. That you want to keep working on it and that if he doesn't, would he mind signing it (whatever it is) over to you. If so, it's easy.
No matter what happens, if you feel that he is isn't the best partner to have on the project it's going to be easier to deal with now than it will be the longer you leave it.
The mistake we made was that we didn't make a shareholder agreement in the beginning when we started out that would clearly outline the responsibilities of each person and what they would have to do in order to keep their equity stake. As the company has evolved it has become clear that one of the founders is holding too much equity compared to the value he is creating for the company. Thanks to our investors we came to an agreement where he was bought out and retained only a small stake in the equity and is staying on part time and there's no bad blood. However if we had created a SHA in the beginning then it would have been very easy now to just legally take away his equity and go forward. So definitely make sure founders' responsibilities are outlined in a legally binding way before you get in business. However from what you're saying I would suggest that you don't get into business in the first place because everything about your company is still ahead basically and if you're getting into with someone who is showing lack of commitment already then it's most likely only gonna get worse in the future. If you own everything about the product already then just take it and walk away.
I wouldn't even waste time trying to re-engage him. If it's this early in the game and he is already checked out and it will only get worse. Sure, he may re-engage for a little but he'll go back to his ways in a matter of time.
You have the upper hand as the technical co-founder. If you leave he has nothing. Tell him you're out and go start another company. Ideas are a dime a dozen, the value is in the execution.
I disagree. The company doesn't need to be worth money now for engaging with a mediator or getting legal advice to have value.
For example, a proper Full and Final Release, mutually agreed upon, can not just save you a fortune in future litigation, it can free you to seek investment in a future venture without the fear or need to disclose past stakeholders, and give peace of mind to work knowing that it won't be derailed by skeletons in the closet.
The spectre of litigation can at-best cloud your optimism, at worst undermine your prospects; it can be a weight upon your every move.
As time passes, the natural human bias is to over-value their past contributions, and undervalue the past contributions of others. The longer the time passes, the greater the bias. If you succeed, the more likely they are to demand what they feel they deserve, from their perspective.
They might be the type of personality to let it go; but if they are litigious, it's better to know it before there's real money on the table. If they're not litigious, they won't mind signing a release or making a deal.
Every situation is different, but getting legal advice isn't just about the money at current value, it's about the price of potential litigation, your peace of mind and ability to produce in the future, and the cost of the spectre.
1. Give him a little time to turn things around. Be perfectly clear about the expectations and keep asking him about his progress.
2. If he still doesn't seem motivated, try to convince him that it's better if we separate. Draw up a letter of separation and get him to sign it.
3. If he refuses to do that, try a buyout as dsr_ suggested.
4. Worst case, offer some small stake.
I'm really hopeful (1) happens but this gives me a plan to try and resolve this quickly if it doesn't. Grateful for everyone's advise here!
There's no easy way to handle this. It sounds like you are going to move on without him so just tell him that, offer him a small piece of the business and take the rest. If he doesn't want to cooperate, you can always just start a new entity and continue on your own.
Co-founder choice is the hardest and most impactful choice a startup can have. At a minimum, I try to craft an MOU that states what each person's responsibilities are, and that they contribute meaningfully over a 3 year vesting period. That ensures if either partner drops out, they transfer the equity to the partner continuing forward. That said, because of aforementioned reasons, even that is a mine-field.
Like with any relationship, you need to talk about it with your friend. Not what you've done by "alluding to it", but by being straightforward. "You don't seem interested in our company. I don't want to continue like this. Is it time for you to leave the company?" Yes it may be a difficult discussion but can it really be worse than what you're putting yourself through right now?
In your situation did you write up a partner termination agreement?
We have to refresh our paperwork with the state this September and I'll either remove him then or dissolve that business and incorporate solo in the state I have moved to.
And if he says no, dissolve the whole thing and go find something else to work on. Odds are good you would have pivoted to something else anyway.
This conversation can lead a number of good places - 1) he gets motivated and things go back to the way they were at the beginning, 2) he agrees to add a third person and split his share, 3) he decides to walk away, perhaps with a small share of equity for work already done.
1. Recording the contributions of each founder. 2. Assigning weights to the contribution. 3. Distributing equity based on the totals.
Check out this video for more detail:
https://www.youtube.com/watch?v=G7kgEbXmBFc
Is there ANYTHING of value he contributed? If so, would you be willing to give him a small equity stake in the new entity for him to walk away? That's the cleanest thing to do.
It's always hard to make a break.