7 steps to resolve co-founder disputes

One of the most difficult times for a startup is when its co-founders are entrenched in a dispute. When a large disagreement arises, it is easy to become very emotional and defensive. This is completely understandable: your business is your baby, you’ve spent years building it up to where it is now and don’t want to harm it with a bad decision. In these high-intensity situations, we often default to our worst behavior.

Friction and disagreements can sometimes lead to good outcomes. Unfortunately, we all have probably also experienced or heard about the opposite occurring — disagreements that linger unresolved, last months or years, and fester into resentment and bigger problems that end up threatening the business. In the case of Snapchat, a dispute resulted in an ugly lawsuit. Is there any way to stack the deck in favor of a result that everyone is happy with? Are there ways of bringing unproductive disagreements back on track?

“A 7 step framework for negotiation and resolving co-founder disputes” (CLICK TO TWEET)

There is nothing inherently wrong with disagreements. What good would a co-founder be if they just agreed with everything you said? Disagreements are often valuable and productive when everyone involved feels comfortable enough to speak freely and honestly. But this is not easy to do when faced with decisions that will dramatically impact the business. There’s a lot of risk and fear tied in with these kinds of decisions which makes it difficult to empathize with other perspectives.

This post is a guide to navigating these disagreements and finding an outcome that all parties can be satisfied with.

Before you try and resolve the disagreement

Taking some steps to develop a better self-understanding will prepare you to negotiate. This will help you focus on what’s important when you are negotiating and avoid common pitfalls.

You don’t want to be negotiating a disagreement while you are tired, stressed, hungry or distracted. Take some time to rest and refresh yourself before trying to resolve the disagreement.

Lawrence

Understand yourself

A good way to understand yourself and how you work with people is to take a personality test. There are many tests available online that are free or very affordable that can serve as a point of reference for you and your co-founder. Simply understanding each other’s personality traits and communication styles can help facilitate better communication.

Myers Briggs – This is a basic personality test that describes your personality and why you do things the way you do. I recommend the test by 16 personalities. It’s detailed, free and does not require registration.

DISC – The DISC test is a way to understand your communication and interaction style. You can take a free DISC test here.

Style under stressTake this test to find out how you act under stress and emotionally intense situations.

Create and maintain a safe environment for dialogue

sydney

Before you start negotiating, you need to create a safe environment. Progress will halt as soon as someone starts to feel uncomfortable, threatened, unheard or misunderstood. When people feel unsafe, they will either hold back sharing their ideas or try to force them. A safe environment is one where all parties feel they can freely express any idea.

Some signs that people feel unsafe are:

  • Silence
  • Abandoning the conversation to avoid uncomfortable confrontation
  • Sarcasm
  • Withholding ideas from the discussion
  • Forcing ideas into discussion
  • Avoiding certain topics
  • Often times physical feelings will show up before emotions. These are signs that you need to take a step back and cool down before proceeding. Things like:
    • A twisting in the stomach
    • Tightening of the chest
    • Tension in the jaw or shoulders
    • Shallow breathing

We often miss these signs in ourselves and in others. You get so caught up in agenda items that you miss the changes in body language and tone and don’t realize that there’s a problem.

The trick is understanding that the actual content of your discussion does not matter when it comes to safety. It’s not the fact that you are disagreeing on a budget that’s the problem, it is the style and the “how” something is being said that causes the breakdown.

Dave-Lerner

Dave Lerner the director of the entrepreneurship program at Columbia University recommends removing yourself from the stress of the work environment to get better results resolving disputes.

Being aware of this and keeping an eye out for signs that safety has been violated also keeps your brain functioning on a higher level. It keeps you focused and reduces the chance that you will fall back into your style under stress.

The best way to maintain a safe environment and keep dialogue open is by sharing how you want to be communicated with. Discuss what stimuli cause you to react emotionally and what the signs are that your emotions are starting to kick in. Listen as they present the same information to you.

Commit to finding a mutually acceptable solution and respecting the other’s needs. Be vigilant in catching yourself if you start to feel unsafe while you are negotiating. The sooner you can realize that the conversation is taking an unhealthy turn, the easier it is to get back on track.

The more comfortable everyone can feel during the negotiation, the better the chances are of finding an agreeable solution to the problem.

A 7 step framework for negotiation and resolving co-founder disputes

These steps are based off of the Harvard Negotiation Project. Follow these steps to separate relationship and business issues. Work through the steps to identify a mutually agreeable way to solve both.

Relationship – Am I prepared to deal with this relationship?

The relationship between you and your co-founder needs to be understood when negotiating and resolving differences. More often than not, a strong relationship with your co-founder in the long run is far more important than any single business decision. (CLICK TO TWEET)

Mike Knoop, co-founder at Zapier, shares several strategies in his post on Resolving Co-Founder Disputes. He recognizes that each co-founder is just trying to do what’s best. This helps keep dialogue open.

Consider these questions:

  • How important is the relationship compared to the issue you are disagreeing on?
  • How do you want this relationship to look after you negotiate?
  • Are you willing to risk damaging the relationship to get your way? Or are you willing to concede to preserve the relationship? Is there a middle ground?

Communication – Am I ready to listen and talk effectively?

scott

As entrepreneurs, we often are quite stubborn. Sticking to what you believe in when others disagree is probably 1 of the things that has lead to your success. Unfortunately, the same trait can be harmful in this situation. You need to resist this instinct to maintain a dialogue between you and your co-founder.

Often when conversation heats up into disagreement, emotions run wild and blind you from being objective. Even the most level-headed founder can revert to their inner 5-year-old and turn a simple discussion into a pointless argument about who is “right.”

“Being ‘right’ is not the same as doing the right thing in co-founder disputes.” (CLICK TO TWEET)

At this point, it’s easy to lose focus and believe that the other party in the disagreement is the source of all your problems. “If you could just fix them… Everything would be ok.”

If you catch yourself in this line of thought, the solution is to reverse it. You can do this by acknowledging that you are contributing in part to the problem you are facing. It’s helpful to understand that you will benefit from this realization, and that you are the only person you can truly work on.

Here’s 3 tips to keep dialogue open:

  • Active listening for understanding – Take some time to simply sit and listen to your co-founder. You need to understand their position and perspective. We are often too busy coming up with counter arguments to actually take the time to listen.
    • Use clarifying questions to bring out the interests of your co-founder. Even if you think you understand them, asking them to explain their position may help you find common ground.
  • Speak to be understood – Think about words or information that you can use to help your co-founder understand your position in their own way. Speak about yourself using “I” statements. How do you feel about the problem at hand? How will what you have to say impact your co-founder? Also, consider a time and environment that will make it easier for you to understand each other.
  • Acknowledge – The next step is to acknowledge what your co-founder is saying and feeling. Repeating this information back to them and having them confirm it will reduce the chance that you are misinterpreting each other. Try and paraphrase or summarize what your co-founder is saying in your own words.

Interests – What do people really want?

What’s at stake in this disagreement that is important to you? What results do you want from this? Write out your interests and have your co-founder do the same, but understand that everyone involved may not know all their interests or agree on them.

Take time to understand yourself, step out of the situation and align your perspective with what’s truly important. (CLICK TO TWEET)

  • What are your motivations?
    • What’s best for the business?
    • What’s best for your customers?
    • Whats best for the long-term relationship between you and your co-founder?

Follow these steps to uncover interests with each other:

  1. Share and clarify the your respective interests. Can you articulate your co-founders interests and objectives in a way that is satisfactory to them?
  2. Check yourself and each other for any unexpressed or underlying interests that have not yet been listed.
  3. Get on the same page by identifying mutual interests and prioritize their importance.
  4. Once you have the mutual interests in place and prioritized, you’ll have a solid base to come up with some options for an agreement.

Options – What are the possible agreements or pieces of agreements?

Now is the time to find some options. What agreements can be reached? This is the time to step away from your individual position and find a solution that is best for the business.

The best options will transparently address the most important issues and maximize the joint gains of both parties.

Alternatives – What will we do if we don’t agree?

Do you need to negotiate? Or is there another way to satisfy your interests?

Outline and articulate your best alternatives to a negotiated agreement. List out the risks and consequences of your best alternative to negotiating (BATNA).

Identify the best and worst BATNAs for both sides and the consequences of each. A BATNA is rarely the best option for the business or your customers. They are best used as a tool to keep each other at the negotiating table and find an agreement.

Legitimacy – Is the agreement fair? Nobody is getting ripped off

A good agreement will have both parties feeling like they got a fair deal. The worst outcome would be someone leaving feeling unheard with negative feelings to fester. This will only sow the seeds for a worse situation down the road.

Try and find external and objective standards as a basis to legitimize your preferred options and refute unfair options.

Commitment – How will we commit to the resolution of this problem?

Once you arrive at an acceptable option for all parties, you need to commit making it happen.

  • Make commitments at the end of the negotiation, not the beginning.
  • Identify all issues and tasks necessary to implement the agreement. Don’t leave any room for surprises down the road that could undermine the agreement.
  • Plan out a time frame and steps to implement the agreement.

What does a good outcome look like?

  • Meets interests of both parties
  • Demonstrably fair
  • Better than any BATNA
  • Doable

Conclusion

Don’t let a poorly handled disagreement harm your business. When you are entrenched in a disagreement, it can be difficult to remember that you and your co-founder are on the same team and that there is almost always a way to resolve the your differences.

Additional reading:

Startup Podcast: Til Debt Do Us Part (Season 2, #8)

Crucial Conversations: Tools for Talking When Stakes are High

About

Kyle is the founder of Conversion Cake . He is the author of "The College Entrepreneur" A book for students who want to break into entrepreneurship. Follow him @kylethegray

  • Did the founders have a disagreement?! 🙂

    • Hey Ruben,

      It seems like most entrepreneurs that have been in business face these challenges at one time or another. Dan and Alex have disagreements, but they are good at finding middle ground.

  • Alp

    What do you think of these personality tests: Big Five (OCEAN), Enneagram, VIA Survey of Character Strengths and Belbin Team Roles?

    • I have tried the Enneagram, I think the insights were useful but I thought it’s interface and instructions were a bit confusing, so I was not sure I did it right the first time.

      Have you tried the others? What do you think of them?

      Overall I think personality tests are really great in the early stages when co-founders are just starting to get to know eachother. It provides a really good framework for communication. They are probably less useful as time goes on and behaviors and impressions start to solidify.

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