Seven Principles for Resolving Founder Conflicts: A Framework for Constructive Co-Founding Relationships

Where there are people, there is ____

In a startup that brings together the brightest minds in their respective fields, anything placed in this void will be amplified exponentially.

The vast majority of startups are founded on the founders’ pursuit of and passion for a particular field, leading them to involuntarily bind their intense emotions to the company and its business operations.

In organizations teeming with people, such entanglements inevitably intensify and spark conflicts. The emergence of conflict itself is nothing to fear or avoid; rather, what merits discussion is how to understand and address conflict, and even transform it into positive feedback.

For founders of many companies in the very early stages (1–2 years), the root causes of conflict often stem fromThe alignment of expectations within the team that was sacrificed to achieve the speed required for business execution in a startup.。

In the early stages of a company’s establishment, the team’s enthusiasm and the founders’ intrinsic drive are high and intense, often leading to all-nighters, immediate execution after discussions, late-night team-building meals, and ramen with garlic. However, this state, if sustained over time, can result in misalignment and deterioration of communication among the founders. This decline blurs clarity regarding each individual’s current tasks, the pace at which work should proceed, and the expected quality or outcomes that should be achieved.

Another point worth mentioning is that sometimes cunningly hidden within these questions isMisaligned Strategic Visions and Risk Tolerance (Financial and Reputational) Among Founders from the Outset. This type of founder conflict is undoubtedly the most difficult to resolve, as it stems not from a deterioration in operational dynamics, but fundamentally from a misalignment between the founders that existed from the very outset.

Based on attributes and manifestations, conflicts are generally categorized into three types:Functionality、AffectiveandRelationality。

Functional ConflictThis occurs when the two parties disagree on how to complete the task. For example, a technical founder may want to focus on product development, while a managerial founder may prefer to concentrate on marketing.

When a company has not yet secured significant funding, task allocation can remain at the stage of theoretical projections in the business plan or be strictly limited to precise cash distributions. However, once financial resources become abundant, determining who gets to “fire more shots” and who gets fewer becomes a practical issue. The technical team may seek to expand the scale of experiments, while management may aim to recruit several regional sales directors. It is difficult for either side to conclusively demonstrate that allocating more resources to their respective areas would better serve the company, as most companies lack substantial empirical precedents to guide such decisions.

Affective ConflictThis may stem from the founders' differing values regarding the company. One founder may prioritize creativity and innovation, while the other may emphasize reliability and accountability.

In the early days of Vertex, founder Joshua Boger and his early co-founder, Harvard University Professor Stuart Schreiber, gradually drifted apart due to diverging values regarding the balance between basic and clinical research, as well as between scientific inquiry and practical application, ultimately leading to their parting ways. Looking back at their achievements more than two decades later, however, neither has strayed from the core values they originally upheld. One has seen a rare bloom: relying on its blockbuster cystic fibrosis (CF) franchise, Vertex is projected to reach $10 billion in sales by 2023. The other has firmly maintained his stature as a leading authority in organic synthesis, biochemistry, and drug discovery research, overseeing a large cohort of postdoctoral fellows at the Broad Institute.

Relationship ConflictThis stems from the differing relational dynamics among the founders. One founder may resent being required to work more than 40 hours per week, while another may thrive on intense competition, constantly pushing both themselves and others.

Friends often share scenarios like this: The founder responsible for management frequently delays payments to raw material suppliers to preserve cash flow, yet these suppliers are long-standing partners whom the technical founder has been working with since their university days, built on a foundation of trust and years of collaboration. How should such situations be handled? The technical founder, being straightforward and outspoken, often makes “ill-timed” additions or even points out errors during the management founder’s external PowerPoint presentations. How should this be addressed?

The uniquely Chinese culture of restraint and moderation makes the problem of misaligned communication even more apparent.

Since conflict is inevitable, learning how to coexist with it has become a mandatory course for founders.

Here, we must learn from an outstanding and well-known founder----Li Yunlong, Commander of the Independent Regiment。

Having been forcibly assigned a co-founderZhao GangAnd during the first meeting, Comrade Li Yunlong decisively articulated the division of responsibilities and business operations:

“I call the shots in battle; you call the shots in life!”

"Of course, this aligns with the basic management model of our country's military, but it also reflects Li Yunlong's quick and decisive allocation of responsibilities based on each individual's skills and strengths."

Later, the two men became friends after a clash. During one drinking session that left them both in a haze, Zhao Gang, with his scholarly air, actually dared to ask Li Yunlong to pour him a drink. But with just one sentence“Drinking is life, and it’s my responsibility.”, compelling even the rebellious Li Yunlong to obediently comply.

Thereafter, when major decisions arise, both parties’ views are heard; once the person accountable makes a decision, the debate ends. Upon agreeing to move forward in accordance with that decision, the discussion is closed, and no further disputes are raised that could undermine trust.

Our innate genetic mechanism for seeking benefits and avoiding harm inevitably drives us to minimize all conflicts, but this is not necessarily correct.

Successful startups are run by founders who are not afraid of conflict and have learned to embrace it. In most cases, to maintain healthy and normal business relationships, we need to learn how to engage in (fair) debate and find solutions that are acceptable to both parties involved in the conflict.

Before identifying an optimal course of action to resolve each other’s dilemmas, we can prepare ourselves in advance and learn to coexist with conflict by focusing on the following three points:

Given that we have established conflict as inevitable and often necessary for the growth of startups, the primary preparatory step is to develop a contingency action plan for managing such conflicts in advance.

Draft a written agreement that clearly defines the founders’ roles, profit sharing, responsibilities, and workload allocation, and may also include a conflict resolution plan. This ensures that when conflicts inevitably arise, the founders have a mutually agreed-upon written reference to guide them.

Avoiding conflict is a natural human tendency. For Chinese founders, who are often concerned with saving face, staying within their comfort zone and sidestepping issues may seem like a way to salvage business relationships among co-founders. However, the harsh reality is that delaying conflict resolution only escalates the problems, passes them on to successors, and can even cause irreparable damage to the company.

Confronting and accepting conflict is not only beneficial for the founding partnership, but also sets a positive example for the team: “My co-founder and I can reach mutual understanding; we communicate openly and honestly within the company.”

As a founder, it is easy to fall into the trap of believing that one’s own perspective is the only correct one and, often unconsciously, imposing this view on co-founders. Why shouldn’t a founder who has poured their heart and soul into the company “expect” others to share their vision?

However, seeing only one side of an issue can severely damage working relationships. Make an effort to put yourself in your co-founders’ shoes and truly listen to their perspectives when conflicts arise. Founders will win some arguments and lose others, but the goal of running a successful company remains aligned.

When founders have gained sufficient awareness of conflicts and developed contingency plans within their capabilities and experience, yet still inevitably face conflict situations, the following seven insights can help them resolve conflicts at an early stage.

To resolve conflicts among founders, regardless of the circumstances or ultimate outcome, the founders must first acknowledge the existence of the problem.

This can be described as the most difficult yet critical step in conflict resolution. One of the founders must insist on raising this point to initiate a serious dialogue on the issue. The pursuit of clarity regarding the problem should be bold and fearless; otherwise, it merely adds more uncertainty to an already uncertain situation.

After sending the message, “We need to have a meeting,” each founder should reflect on whether they are willing to engage in the dialogue with a positive mindset and work toward constructive outcomes.

Ensure that the dialogue does not become polarized from the outset due to mutual blame. Admittedly, by this stage, everyone has accumulated significant negative emotions and is tempted to seek an outlet for venting. However, remind yourself that failing to find a solution will have adverse effects on both you and the other party, whereas your original purpose in collaborating was to resolve issues of mutual significance.

To help yourself complete this task, try asking yourself the following questions:

“Have we reached a consensus on the causes of the conflict, or are we still unclear?”

“Do I fully understand the reasons behind their decision to take these actions?”

“What have I done to bring our partnership to its current state?”

“Is this a breach of trust, or a gap between my expectations and their actions?”

“Regarding the issue we are debating, is it clear to both parties who has the final say?”

If the root causes of founder conflicts can be corrected, then the answers to the aforementioned questions can typically reveal what is amenable to correction.

Once you and your co-founder have reached a resolution, ensure it is documented and followed up on. This helps prevent future misunderstandings, conflicts, or resentment. In addition to the written agreements and contracts mentioned earlier, memoranda of understanding (MOUs) or simple emails can also be used to record the outcomes of discussions and agreed-upon action steps. It is advisable to avoid using non-professional communication tools such as WeChat, as they lack formality and blur the boundaries between work and personal life.

You can also establish a timeline and feedback mechanism to monitor the progress of problem resolution and evaluate the outcomes.

If you have reached this stage, please keep in mind that disputes among co-founders should be resolved internally as much as possible.

The consideration here is not about “keeping dirty laundry within the family.” Although external consultants, investors, or other shareholders may have good intentions, the reality is that it is difficult to find someone who can truly remain impartial and balance the interests of all parties. If external intervention is necessary to resolve the issue, identify a trusted individual; this approach is far more reliable than aimlessly recruiting without a clear objective.

As previously discussed, the root cause of many conflicts lies in the ambiguity within companies regarding who is responsible for specific tasks, what quality standards or outcomes are expected, and who holds the final decision-making authority and accountability.

It is advisable to set aside one or two hours for a focused discussion, systematically reviewing each function within the organization (e.g., product, financing, engineering, sales, etc.). The more comprehensively each participant can outline their respective areas, the better, as the root causes of ambiguity often lie hidden within these defined (or undefined) segments.

Once roles and responsibilities are clearly defined, founders must establish a constructive communication rhythm to ensure alignment in accordance with previously agreed-upon terms. Skipping this step will only result in finding yourselves back in the same situation, but now facing an entirely new set of problems to address.

Communication can take any form, whether it be daily stand-up meetings, weekly progress reports, or spontaneous exchanges of ideas. Such communication may include external collaborators and stakeholders. As long as communication is conducted in a regular and well-founded manner, it is effective.

Finally, you can establish a “check-in” schedule for the revised division-of-labor agreement or work model.

When you develop a mutually beneficial solution based on the “Eliminating Ambiguity” section above, it is certainly ideal to check daily whether each party is fulfilling their commitments. However, in real-life scenarios, the changes expected from the other party are not always easily quantifiable on a daily basis. Therefore, it is advisable for all parties to agree on a regular review schedule that corresponds to the severity of the issue.

Managing conflicts between co-founders can be a difficult and time-consuming process. However, if conflicts are resolved in a constructive manner, the team can still reap several key benefits:

1. Reducing Tension and Stress: When conflicts are effectively managed, both parties experience relief and reduced tension. This can lead to a more productive work environment and a better understanding of each other’s perspectives.

2. Improving Communication: When conflicts are resolved constructively, communication becomes more effortless. Although it takes time to adapt to the mechanism, it will undoubtedly enable both parties to express their concerns and ideas in a clear and concise manner, thereby facilitating better decision-making.

3. Improving Relationships: When conflicts are resolved, they build new trust and relationships among the parties involved, giving rise to a more collaborative work environment and stronger team cohesion.

4. A Clearer Vision: When conflicts are resolved, a company’s mission and objectives can typically be articulated with greater clarity. This enables all parties to gain a clearer understanding of the goals being pursued, ultimately driving stronger business performance.

   
   

Remember that conflict is not always a bad thing; it can be an opportunity for learning, growth, and innovation.