Discuss: Startups fail because of broken co-founder relationships

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Discuss features short but strong and insightful opinions on interesting startup, entrepreneurship, and tech topics. Share your thoughts in the comments section below.

Seventy-five percent of venture-backed startups fail, according to Harvard Business School professor Shikar Gosh. And Statistic Brain revealed seven key reasons why entrepreneurs experience business failure.

1. Lack of focus
2. Lack of motivation, commitment, and passion
3. Too much pride, resulting in an unwillingness to see or listen
4. Taking advice from the wrong people
5. Lacking good mentorship
6. Lack of general and domain-specific business knowledge: finance, operations, and marketing
7. Raising too much money too soon

But I think these reasons don’t get to the crux of the matter: broken partnerships between co-founders. I observe that this is the reason why a significant number of startups fail.

In order to be diplomatic in our disagreements, we often attribute the cause of business failure to a lack of strategy, execution, or some other vague metrics. But I am convinced that most of the time, the failure is strongly correlated with deteriorating relationships between co-founders.

Though co-founders initially have common dreams and visions for their business, they depart from these shared visions often due to small troubles and insignificant disagreements.

If I translate the size of this issue into money in order to help you understand, it would be around US$5,000. Does this seem too small to result in broken relationships?

In the startup journey, it is impossible to avoid troubles with co-founders since we are all different in nature and come from various backgrounds. There is no perfect way to manage your partnership, since human relationships is never an easy subject.

However, I would like to suggest three things that can help founders make the best of a good and fruitful partnership.

1. Once you make a decision to do business together, you and your co-founder/s must be generous to each other. Everyone needs personal space to make mistakes and even failures.
2. Do not turn small differences into big issues. Your potential for a US$1 billion business could sink early on due to a US$5,000 argument.
3. Don’t forget that the world is small. Though you depart, you will encounter each other again soon. Your partner/s might be the deal breaker in your future ventures.

It was Charlie Munger, the lesser-known partner of Warren Buffett at Berkshire Hathaway, who said: “In the course of all our successful years of working together, if Warren does something I don’t like or agree with from time to time, why the hell does it matter to me?”

Let’s discuss:

1. What usually causes startups to experience co-founder conflicts?
2. When is parting ways the only solution?
3. What can co-founders do to resolve conflicts and save their startup?