Startup Founders are connected like toes on a foot. Photo by me.
A “deadlock” is a state in a computer program where parts of the program is waiting for other parts to finish who in turn are waiting for the other parts. The result is a freeze where nothing happens. This has probably happened to your computer some time.
A similar situation can occur in early stage startups. Before a startup gets funding or revenue the only thing that drives it is the passion of the founders. But, the passion in every individual founder is deeply connected to the passion of the other founders. You need to have a passion balance equilibrium otherwise the startup will freeze just like the computer program!
As an example, you’re three founders, you get started, energy is high and you’re all excited to do this thing. Then after a while one of the founders starts drifting. Maybe her daytime job takes too much time. Maybe her spouse doesn’t like that she spends all her free time working on your startup. Maybe she just lost interest, the reason doesn’t matter but the fact is that you are now extremely close to a passive founder deadlock situation.
Her drain in energy will drain the other two founders as well. It’s Sunday evening and you have the choice between playing with your kids or working on your startup. Why should you sacrifice your spare time when the other founder don’t? You go play with your kids (a wise choice anyway). The startup dies.
The same situation can occur in later stages, when funds are limited. As long as your startup doesn’t have its wings in the air passive founder deadlock is probably your number one risk.
So, how do you prevent it? At the end of the day, you can’t. This is simply one of the facts of life for a startup. But you can limit the risk somewhat.
- Of course you should make sure you have written agreements between the founders. This sets the baseline of what you expect from each other. It should also describe how a breakup should be done.
- Too much administration can kill the passion too but some simple way of tracking who does what will help you see early on if someone is dragging behind. A Kanban board is an excellent tool.
- One rather extreme way is to define an equity value for each task that needs to be performed and then split the equity after the task has been done based on who contributed the most to finishing the task. With this approach all the founders together make a list of what needs to be done and decide on an equity value for each task. When the task has been done the founders meet to “split the boot” with the founder who contributed the most getting the most equity. The downside with this approach is that you will spend a lot of time arguing over who did what and how much they contributed but if it works out it’s probably the fairest way to do it.
- Do the startup alone is one way but the chance of success is even smaller with this option so this is not recommended.
- If you’re OK with not an equal split of equity you can appoint one of the founders as “CEO”, give her more equity and the authority to be the driver of the startup. It’s then her task to “hire” co-founders and pay them with equity for the work they do. This approach also has downsides.
- Of course the best way to solve this is to just simply get your wings in the air as soon as possible. You really should hate being in the startup phase.
What do you think is the best approach to prevent passive founder deadlock?