How do I terminate my co-founder?

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Kruze Consulting Startup Q&A Author
Vanessa Kruze
Founder, CPA

How to Fire Your StartUp Co-Founder:

I’ve seen 3 of our startups fire a co-founder, and here’s what I’ve gathered from the process:

  • Step 1: Outline your Pain Points. Why are you looking to replace your co-founder? If his/her bandwidth or technical capability is tapped, consider hiring someone who can supplement this co-founder’s role.

  • Step 2: Have a “Come to Jesus” conversation with your co-founder. Don’t openly present the Pain Points list to your co-founder, but do use it as a roadmap to the conversation. For example, you might say, “Jane, I know you’ve been working 80 hours a week. If we’re going to reach our goals, we need to hire a full time Bus Dev/Marketing/CFO person now so that you can focus on what you do best: coding.” Keep in mind that this new hire can be above or below your co-founders current position. The key to this conversation is a) finding out what your co-founder loves to do, b) talking about what your shared goals are for the company, and c) (obviously the hardest) getting your co-founder back to what they love to do and hiring someone who can execute on your shared goal.

  • Step 3: Involve your investors and advisors. Have the conversation again with you co-founder and the investors/advisors. Know that their top goal is to see the company be successful, which may mean that they recommend that both of you should be replaced.

  • Step 4: (Gently) Involve the lawyers. It comes down to what’s in the legal documents and shareholder documents. Be clear on what is and is not possible. Often your co-founder will retain most of their holdings, but will be convinced to relinquish their position to someone else.

When I went through this process with 3 of our startups, 1 imploded and 2 successfully survived. Above all, keep your cool.

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