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POWERED BY TATLER
Week of 26 October 2020
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Some liken breaking up with a co-founder to a divorce. It's typically personal conflicts caused by irreconcilable differences that lead to co-founders parting ways for the sake of their business. But what’s the best way to break up with a co-founder? Let’s take a Deep Dive.

💣 Most of us don’t enter a relationship thinking we may one day part. But the reality is, break-ups happen very often. In business, when two people with different personalities, upbringings or backgrounds come together to run a company, there are bound to be some disagreements—from working styles to unequal distribution of work. It’s ultimately the unresolved issues that lead to the implosion of founding teams.  

🤬 When the partnership does go totally sour, poorly-managed co-founder break-ups have caused many startups to fail. A common problem leading to the worst splits is allowing emotions and ego to cloud judgement. And letting a co-founder leave on bad terms may not end well for the remaining founder, too, as investors are known to call up past co-founders to find out if they should put their money into a startup.

🤝 These break-ups are almost always not amicable, but they can be executed diplomatically. A good first step is to look at what’s stated in your partnership agreement and if the both of you need to bring in a mediator or lawyer. Other considerations include the amount of capital each founder has put in, your startup’s future post-split, the handover process, any agreement surrounding intellectual property created and the equity of the exiting co-founder.
 
🧘 The key is to practise kindness, generosity and patience. Even if this means giving them additional severance pay or one more month to transition out of their operating role, so they have time to find another job. And if you’re the one who’s getting fired, stay calm, behave maturely and push for a fair outcome. 

QUOTABLE




 
“When you think about the transition process, think of it as cooking a meal—you get to decide what you want to make and the ingredients that go into it, but ultimately the person eating it, i.e., the separating co-founder, decides how good it tasted. So make something that they will rave about.”

Bryant Galindo, leadership development coach and founder of business consulting firm CollabsHQ on how to ease an exiting co-founder out of a company

BY THE NUMBERS 


 

 

45% One in 10 co-founders are said to end their relationship within a year of starting a business. Within four years, this number increases to 45 percent.

2019 In 2019, WeWork co-founder Adam Neumann stepped down as CEO of the company, saying that intense public scrutiny was distracting him from properly running the company.

US$378.36 When Groupon’s founder Andrew Mason was ousted from his CEO position in 2013, he received a severance package of just US$378.36.

QUIZ


 
According to research, what percentage of startups fail due to co-founder conflict? 

A. 34 percent
B. 49 percent
C. 65 percent


Scroll to the bottom of the email for the answer.

DID YOU KNOW?



In February 2013, Groupon fired its charismatic co-founder and CEO Andrew Mason after its share price dropped by 77 percent during his tenure and reported a net loss of US$81 million for the previous quarter. 

In his now-famous farewell memo to his employees, Mason held himself accountable for the company’s poor performance, although not without first joking about his departure: “After four and a half intense and wonderful years as CEO of Groupon, I've decided that I'd like to spend more time with my family. Just kidding—I was fired today.”
  
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THE EDIT


 
5 Stories To Get You Up To Speed
 
  1. How To Break Up With Your Co-Founder
    CollabsHQ

  2. The Insider Guide To Avoiding A Co-Founder Breakup
    Medium
     
  3. Breaking Up With Your Co-Founder Is Never Easy
    WeWork
     
  4. 5 Tips For Finding The Right Co-Founder
    Generation T
     
  5. Co-Founder Breakups: Startup Lessons Learned (The Hard Way)
    Forbes

WATCH


 
Managing Co-Founder Conflicts

Having open and honest conversations with your co-founder about your differences and disagreements may be the best way to solving your problems, says serial entrepreneur and social media personality Gary Vaynerchuk, even if it means going your separate ways. 
 

THE EXIT LIST


 
If you don't know where to begin negotiating your co-founder’s exit terms, see this checklist of questions that will help guide you through the process.

FAMOUS EXITERS


 
Two Leaders To Know
 
The Man Behind Yahoo
Jerry Yang
The co-founder of Yahoo Jerry Yang was pressured to step down from his position as CEO in 2008 after failing to lead the company to develop a search technology that could compete with Google. He also frustrated shareholders when he rejected a US$45 billion buyout offer from Microsoft, which he felt was undervalued.

 
The Uber Entrepreneur
Travis Kalanick
Uber’s co-founder and former CEO made headlines when he was ousted from the top position at the technology transport company in 2017, after he was hit with claims of sexual harassment and developing a toxic work environment. As of 2019, he has sold over US$2 billion of his Uber stocks and stepped down from the company’s board of directors, cutting off his last tie with the tech giant he co-founded in 2009.

FROM THE ARCHIVES


 

Did you miss our Deep Dive on The Changing Role Of The Office? Read it here

ONE FINAL THING



Should BFFs Be Doing Business Together?
 
In his highly quoted book, The Founder’s Dilemma, former Harvard Business School professor Noam Wasserman’s research on 10,000 tech startups found that about 40 percent of founders were friends before they became business partners. Startups, he found, are also more likely to fail when their founders are friends, with each co-founder friend boosting the chances of turnover by nearly 30 percent.

NEXT WEEK



Why Are We So Into Cartoons?

That's it for this issue. Have a productive week!
 

The Deep Dive is a weekly close-up look at an idea, issue or trend that’s shaping Asia’s future. This issue was written by Chong Seow Wei, with editing and production by Samantha Topp and Lee Williamson.

We’d love to know what you think of this issue, and future topics you’d like us to cover. Please send your comments to editor@generationt.asia. And if you missed it, don’t forget to check out last week’s Deep Dive, on The Changing Role Of The Office.

The answer to the quiz is C (65 percent).

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