Co-Founder Quitting – Rant
1. In college - I started a company and tried convincing a couple of really smart friends to join as co-founders.
2. They were risk-averse. They wanted a salary. Even though I had 0 money, I promised them a salary and asked them to join as employees. They agreed.
3. I had no money for salaries, but I went into crazy action mode and got a couple of B2B clients for a random project I saw that people need (even though our main product is B2C as a startup and we later on shut this B2B section after we raised). I did B2B projects, got a cashflow, and started paying them salaries, while I took 0 salary as I reinvested as much as I could.
4. This went on for like 6 months. And I we were finally able to raise $400,000. The I convinced one of the employees to become a co-founder. He agreed. Gave him almost equal equity even though he joined late after we raised, and he was already taking a salary, while I never took a salary until that day. During this we also graduated college and started doing this full time.
5. We built for 6 months, realized we need more time and resources than we realised, and decided to downsize and take pay cuts. I took the largest pay cut to maintain the morale of my co-founder and team.
6. 1 year later, we are still kind of a sinking ship, and we have not been able to raise our next round. I also have no savings due to my minuscule salary.
7. We all pushed hard, and I managed to secure a $220,000 bridge round from existing investors
8. We are now in the middle of the paperwork to get that money in, and finally, there is hope, and I am getting out of my depression and headaches after a long time.
9. I announced reversal of pay cuts, a new game plan on how we will start generating revenue and also raise more soon.
10. Co-founder, out of the blue, suddenly says that he wants to quit. Says he does not care even if we succeed post the new fund round as he wants to switch domains immediately and work on another tech domain. He is willing to give most shares back.
11. I argued that he still has an employee mindset. Founders don't get to quit randomly; we have a responsibility towards investors and employees who stuck with us through all this.
12. As a co-founder, he has the authority to steer the company the way he wants as well, and I am happy to discuss and pivot together. My proposal is we see this current thing through, spend a few more months with the fresh funding on working on the thing the investors put in money for, and if it does not work out then pivot. If it works, still pivot with further funding.
13. He still wants to quit now as he does not want to work on this domain even if we succeed and even if we pivot later.
14. I was blindsided as everything seemed great until today. Until yesterday we discussed how we are going to build the largest company in our current / new domain
15. Even today, we are not fighting, there is nothing that happened between us, he just had a quarter-life crisis and believes his calling is to work in the said new domain, right now.
16. Even though I can code and have a decent tech background and I can manage simple tech stuff, he is genuinely a very smart tech guy, and like a prodigy. Losing someone of that level as a co-founder is a large blow.
Pretty sure that our investors will not continue the financing now, and without the current financing, I do not have enough money to run payroll nor to close the company if required.
Before anyone asks - he does have a notice period. But I will now have to focus on replacing him instead of focusing on things that matter. Also, employees will also be shocked and might leave as we are currently a very small team, and as company that is already struggling, losing one of its founders will spook the employees, and rightly so. They have families to feed.
I am really sad. I imagined us conquering the world together.
Rant over. Thank you for attending my RantX talk.
46 comments
[ 2.1 ms ] story [ 58.3 ms ] threadEven so, it clearly is upsetting you. I'd recommend you go ahead and feel how you need to feel, but then work through it, learn some lessons, and move forward. After all, we all started young and inexperienced. You will get better outcomes as you get more experience.
It is a bit like a marriage... and a divorce. The expectation is to move together as a single unit, not two individuals. Sometimes the partner feels trapped and wants out. You managed to convince the investor it was worth committing to, but you couldn't convince the co-founder.
As someone who has been in the co-founder seat multiple times, very often I think we get stuck in bad situations too. Sometimes selling or closing the company is a better idea than raising.
We sold a company once, only for the acquirers to realize they didn't want to do it either. It wasn't loss making or difficult, we just felt like we were wasting our lives doing it. As you say, founders don't get to quit.
The simple, but not easy, option is to take back the shares and let him go. Trying to harangue him to stay is only going to make things even messier down the track.
So the right thing by your investors and employees - keep running the business. Perhaps one of the remaining employees could step up to be the team leader - but only as an employee.
By definition a co-founder should be on equal terms with the other co-founder. As co-founders you share the product/service vision and have compatible attitudes to risk, finances, etc. You just cannot promote an employee to co-founder.
"I imagined us conquering the world together."
You imagined. He didn't. Big difference. I know this is really hard for you and depressing at the moment but you need to accept the truth and reality. This guy was never a real co-founder.
It is probably good for you if he wants to quit now and give back most shares. Get a lawyer and draft the agreement properly and get him out. Since he got a salary as well, I would push for him getting 0 shares if you can swing it. Then you have things to think about. I don't know the details of your company enough to say whether you can save it or not but if you truly believe it can work and you have seen signs, then don't quit and find a way to get through this.
I run a bootstrapped SAAS without a co-founder and happy to chat offline if you want to vent/discuss.
Well many times a founder will do this knowingly to get/keep someone who has other options like much better salary elsewhere, etc.
Not saying it's wrong approach, but have also seen the resentment the original "hustler" has later when this "co-founder" doesn't have the same drive. E.g. thinking "It's not fair", etc. even though they were desperate for the help when they had little money.
> suddenly says that he wants to quit
I thought slavery is over and we get to pick where we work, if they will have us. Something in Constitutions and laws in various countries write something about freedom. Since you didn't have some iron-clad clause with massive penalties (which I don't know/believe would be legal), then it sucks to be you at this time. To quote the meme with Candance "life is tough, wear a helmet".
Also, dude, the guy didn't want to be there in the first place and must have had zero excitement.
For all youngsters out there: don't marry a company. Do your thing, don't lie, work hard. When you find a better thing for you (and your family) take it. A job is a job. Planning for the projects of 2024 and quitting in January is a-OK, it happens. Life happens.
Dave Ramsey says "move with the speed of cash". I get that the Start-ups and VC game is a whole different beast, but the water was up to your nostrils. It only needs a nudge to get you underwater.
I hope things work out!
You’re trying to take it in a stride and simply vent about it, but this should be something completely benign.
“Awie, Mr. Entrepreneur can’t focus on things that matter because literally everyone in your company told you your thing doesn’t matter?”
They told you they weren’t interested. You keep trying to do your personality cult employee mindset talk to the wrong people. You don’t know other people, this is a you problem. None of those sacrifices should have been forced on those particular people. In your standard, any entrepreneurial endeavor is worth pursuing by merely being entrepreneurial, which is not true.
The harder pill for you to swallow is that this game is actually not available to people that aren’t rich, it’s all an illusion. Congratulations on raising some capital, that structure is real! But the idea that everyone can build something scrappy and take sacrifices if they just get out of an employee mindset is fiction. The people you fawn over were able to do their own seed rounds and just pretend they were taking sacrifices even if they didn’t.
I was with you until this comment. Yes it is easier if you are rich but plenty of examples where people find a way to start a company without being rich.
and it wasn't about starting a company, it was about doing what OP did which was playing the venture capital game. anyone can start a company, it takes $100 in the right state.
I think the point was clear but let me know if it wasn't, to you.
If you or anyone else wants advice on founder dynamics, my email is vinay@loom.com. Happy to give advice and be a sounding board over email. I’m sorry you’re going through this.
Why would you do this?
Sounds like it was a flawed plan from the get go.
It’s a start-up. All plans will be flawed. Also, most businesses don’t have liquidity for years of payroll on hand.
Presumably, based on what you've said, at zero investment from his own pockets.
Then this sentiment like you don't understand why he doesn't have a cofounder mindset... A co-founder feels like something that should happen naturally not something you should have to convince someone of..
It’s a tough pill to swallow but hopefully you learn something about human nature from this experience and don’t become resentful/bitter about it.
This is like purchasing a mail order bride, relocating them to your country, and then being shocked when they decide they want to be in a different relationship because it wasn’t what they thought it would be. Can you blame them? We owe nothing to anyone except our children and our pets.
You’re piling a lot of guilt and shame and pressure onto this individual for leaving but at the end of the day the buck stops with you. Gotta be better about choosing who you work with, and how you do that.
While I agree with the general sentiment of your post, this seems like a pretty sad world view. We as humans do form connections and I'm happy I owe people and they owe me, even if at the end of the day, family will always come first.
When a more powerful person persuades a risk averse person to take the risks associated with being a co-founder, the relationship is on rocky ground right from the start.
The truth about starting a business is that the vast majority fail, and those who succeed typically come from privileged backgrounds. It's very rare for legitimately poor people to succeed because you cannot take the same risks if you have nothing to fall back on.
My suggestion to you would be to get a big tech job and collect as much money as you can. Once you're self-sufficient, you can go full YOLO.
OP made him a "founder", but he wasn't a founder. Not in his heart. He played along for a while, but it wasn't in it. Founders need an attachment to their companies like it's their child... this was a step-parent, and not a good one.
Now, the question is, why did you make someone who wasn't a co-founder, a co-founder? Was OP overwhelmed? Lonely? Lacked confidence? Wanted someone else to have the same level of attachment and passion for the company? Trying to trap/guilt them from leaving with the title? None of those justify the action. OP F-ed up here at #4.
1- not to diminish real step-parents, that step-up and put in the work, and earn it. Lucky to have met someone who did IRL.
In business, that can be a useful trait.
In relationships, it's a death sentence. People like him are exhausting.
If someone said "You still have an employee mindset" to me I don't think I could stop myself saying something like "that's all I wanted. I wanted work to do and a paycheck to get from it. You elevated me to a position I didn't want and are mad I don't want it."
I assume you had a vesting period? If so he can probably only get 25% of his shares anyway-- so him giving 75% back isn't really his choice. It was silly for you to give a large percent of the company away after doing a lot of the work yourself. Big mistake on your part.
> I argued that he still has an employee mindset. Founders don't get to quit randomly; we have a responsibility towards investors and employees who stuck with us through all this.
I don't think you're convincing him to stay. You only sound like a patronizing ass.
People can quit whenever they want. Life is too short to grind on something because, investors.
From now on, never again, I am now working towards becoming a realtor. The huge difference is that people will accept to work on commission if the goal is clear and self-evident such as selling houses but won't do the equivalent (equity based compensation) if the road is paved with unknown unknowns such as building a company from scratch (or just like mine and your case they'd do it for a while before having a change of heart)
With real estate at least you get to put together a team and be the leader and everybody works on commission so there is no tension and not even the chance of tensions developing.
Teams seem to be longlasting as well, at least from what I could see.
Seems also the most straightforward path to become a millionaire, whereas the startup thing is for people aiming for becoming a multi-millionaire or a deca-millionaire, with some low odds of becoming a centi-millionaire
He's known for a long time that he wants to quit, it's just now that he's worked up the nerve to tell you. If you're honest with yourself, I bet you've known it for a long time too.
> I argued that he still has an employee mindset. Founders don't get to quit randomly; we have a responsibility towards investors and employees who stuck with us through all this
...and this is the exact point that you blew it. Why do you think you get to tell him what to do with his life? And why should he put the interests of your empoyees and investors ahead of his own?
He's just not that into (working for) you. He's gone. Let him go and try to salvage what you can.
I don't think you're being honest with yourself here on many counts.
Have you considered a "couples counseling" scenario with your cofounder? It doesn't even need to be an actual counselor. But it would be useful if you had an uninvolved 3rd party that you and the cofounder and anyone else could talk with . . . a 3rd party that you could trust to give you an objective analysis.
Didn't you use a vesting table for the shares?