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How do I terminate my co-founder?

Vanessa Kruze, CPA, is a leading expert in startup taxes and tax compliance. Her team at Kruze Consulting has filed thousands of tax returns for companies that have raised billions in VC funding, and her work has been diligenced by leading VCs, attorneys, and M&A teams at the largest technology companies.
Vanessa Kruze, a highly-experienced CPA, brings valuable tax expertise to startups, drawing from her rich background at Deloitte Tax and as a financial controller for a $20 million startup. As the leader of Kruze Consulting, recognized multiple times in the Inc 5000 list, she specializes in navigating the complex tax landscape for startups. Her firm is known for delivering precise and strategic tax solutions, delivering tax credits utilizing advanced tools to ensure compliance and optimize tax benefits for startups throughout the United States.

Table of contents

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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