Co-Founder Mistakes That Kill Companies & How To Avoid Them

You definitely want a co-founder.

Hey, this is Michael Cyball and Dalton Caldwell, and welcome to Rookie Mistakes. We've asked YC founders for their rookie mistakes so we can share them with you and help you avoid these common errors.

Let's start with our first anonymous story from YC founders and mistakes to avoid at the beginning. When everything's going well, you don't know how you're going to handle disagreements or bad actions by the other person. It's extremely hard to deal with a bad situation after the fact if you don't have anything written down. It's awkward to talk about things like who gets what percentage of the company or do you have founder vesting. And you know how human beings are; we remember, but we don't always remember things quite the way they went down. Right? So, write it down.

I think the biggest error that I see is founders looking for someone with a skill match versus someone that they actually maybe have had a fight with before, like a friend. A lot of founders assume that whatever skills their co-founder has at the moment they join the company are the only skills they'll ever have. In my experience, almost everything you learn, you learn on the job. So, you'd rather work with someone you really like and learn together than work with someone you don't know at all and get into fights and then break up.

I mean, to put some facts on that: how many founder breakups have we seen where the founder says, "My co-founder is excellent, A-plus. They just don't have the skills that we need," versus, "My co-founder is a living nightmare and I can't take it anymore?" Right? Like how many people are like, "What a great person that I like a lot. They just didn't end up... I shouldn't have made them my co-founder because they just didn't have the right skills."

Michael, do you ever hear that?

Never hear it. And by the way, it's not that it's not true; it's that that doesn't cause a co-founder breakup. That doesn't kill a company. It's an error, but not a fatal one.

All right, let's move on to the next one. So, the YC founder wrote in, "Take arguments with your co-founders seriously. It's more likely to kill you than anything else."

What I see with a lot of co-founder disputes is that the relationship has never been pressure tested. They've just been friends. They've been like, "Oh yeah, we chat all the time," and then the first time there's a disagreement, it's just a blow-up, and the relationship is broken. You'll never be able to put the pieces back together again; versus if it's someone you know a while, maybe it doesn't seem as shiny, but you've already had some disagreements. You've already had the relationship ebb and flow over years.

Right? My best takeaway is that first, you don't always have to come into a resolution. Like, if you don't have two people engaging productively, you can pause. You know, you don't have to keep the fight going. Yeah. And then the second one is understanding how your co-founder deals with stress. Like, some people deal with stress by attacking, some people deal with stress by retreating. If you understand how your co-founder deals with stress, you can kind of better interpret what they're doing.

All right, here's the last comment that a YC founder wrote in: "I chose a co-founder with whom I could not share my honest disagreement. We didn't know how to fight well or come out of those fights better and wiser. Some part of that was conflict avoidance on my part, and some part of that was him fighting dirty."

It's crazy when you speak to founders where they'll spend eight hours a day with someone and twelve hours a day with someone, and they'll be like, "I haven't spoken to them in a week." Like, wait, you know? And I'm like, "What are you guys doing all day? You haven't talked to him in a week?"

Or, "I haven't talked to him in a month," or, "I haven't had a real conversation with them in a year." I think when things get that bad, I would argue there's a point where breaking up becomes inevitable, and the CEO's job is now not how to repair the relationship; it's basically how to separate in like the most effective...