Cofounder Relationships

1. 0:00 – 0:37

   Why “no cofounder” isn’t a real solution to cofounder risk

   1. DCDalton Caldwell0:00

      I think a lot of founders have heard horror stories about cofounder breakups, and their takeaway is like, "Oh, I'm a genius. I'm just not gonna have a cofounder. Oh, I fixed the problem." [laughs]

   2. SPSpeaker0:11

      I pre-fixed the problem. [laughs]

   3. DCDalton Caldwell0:13

      Dalton. [laughs] That's the best sort of fix.

   4. SPSpeaker0:17

      This is Dalton + Michael, and today we're gonna talk about cofounder fights and cofounder breakups. We have a lot of experience in both of these. [laughs]

   5. DCDalton Caldwell0:26

      [laughs] Should we start with breakups first or fights first? Where, where, where do you wanna... What's logical? Let's start at the beginning. Um, cofounders.

   6. SPSpeaker0:37

      Okay.

2. 0:37 – 3:10

   What cofounders are for: mission, feedback loops, and “pooled faith”

   1. DCDalton Caldwell0:37

      What do we even mean by cofounders?

   2. SPSpeaker0:39

      Yes.

   3. DCDalton Caldwell0:39

      So traditionally, when you start a tech startup-

   4. SPSpeaker0:42

      Yes

   5. DCDalton Caldwell0:42

      ... you don't do it by yourself. And if you look to history of how a lot of the biggest companies started, um, they tended to have cofounders. I guess there's examples of families, so I'm thinking of non-tech companies-

   6. SPSpeaker0:53

      Sure

   7. DCDalton Caldwell0:53

      ... where you started with your family.

   8. SPSpeaker0:54

      Sure.

   9. DCDalton Caldwell0:55

      But usually there was, you know, another person, like the canonical Steve Jobs. [laughs]

   10. SPSpeaker0:59

       Yes.

   11. DCDalton Caldwell0:59

       Steve Wozniak.

   12. SPSpeaker1:00

       Yep.

   13. DCDalton Caldwell1:00

       It was, it was two people.

   14. SPSpeaker1:01

       Yes.

   15. DCDalton Caldwell1:02

       Maybe to start by addressing that, I think a lot of founders have heard horror stories about cofounder breakups, which we're about to talk about in a second.

   16. SPSpeaker1:10

       Yes.

   17. DCDalton Caldwell1:11

       And their takeaway is like, "Oh, I'm a genius. I'm just not gonna have a cofounder. Oh, I fixed the problem." [laughs]

   18. SPSpeaker1:18

       I pre-fixed the problem. [laughs]

   19. DCDalton Caldwell1:20

       Dalton. [laughs] That's the best sort of fix. And it's like, man, you guys sure spend a lot of time talking about cofounder problems.

   20. SPSpeaker1:26

       Have you even thought of my genius solution? [laughs]

   21. DCDalton Caldwell1:27

       You know, I'm a genius. Um, l- again, let's address that. Let's, let's steel man that argument. It is true that if you remove a cofounder-

   22. SPSpeaker1:37

       [laughs]

   23. DCDalton Caldwell1:37

       ... the odds that you will get in a cofounder dispute dip to zero.

   24. SPSpeaker1:40

       Yes. Clever. [laughs]

   25. DCDalton Caldwell1:42

       [laughs] However, there are many things in life where I think they're a good idea, but they involve taking a risk, and they don't have 100% success rate. Getting married.

   26. SPSpeaker1:52

       Sure. Having kids.

   27. DCDalton Caldwell1:53

       Having kids.

   28. SPSpeaker1:54

       Kids who like you. [laughs]

   29. DCDalton Caldwell1:56

       [laughs] Yeah. Taking any kind of risk. I don't know.

   30. SPSpeaker1:58

       Sure.
3. 3:10 – 3:40

   Single-founder success still recreates “cofounder-like” relationships

   1. DCDalton Caldwell3:10

      Let's put it this way. We know a lot of the single founders that have been successful as well.

   2. SPSpeaker3:14

      Yes.

   3. DCDalton Caldwell3:15

      And sometimes we funded them at YC.

   4. SPSpeaker3:16

      Yes.

   5. DCDalton Caldwell3:17

      All of those people created cofounder-like-

   6. SPSpeaker3:21

      Relationships

   7. DCDalton Caldwell3:21

      ... environments and relationships-

   8. SPSpeaker3:23

      Yes

   9. DCDalton Caldwell3:23

      ... that did fill the void.

   10. SPSpeaker3:24

       Yes.

   11. DCDalton Caldwell3:24

       So whether it was employees, whether it was advisors-

   12. SPSpeaker3:27

       Yes

   13. DCDalton Caldwell3:27

       ... whether it was friends, there was no way you can get around not having someone to talk to all the time to bounce ideas off of.

   14. SPSpeaker3:33

       No.

   15. DCDalton Caldwell3:33

       Right?

   16. SPSpeaker3:34

       No.

   17. DCDalton Caldwell3:34

       Everything together.

   18. SPSpeaker3:34

       And I feel like those stories are just, like, because they don't make the headline story, they're not told.

   19. DCDalton Caldwell3:40

       Yeah.

4. 3:40 – 4:55

   How cofounder fights start: friendship vs. transactional dynamics

   1. SPSpeaker3:40

      But I completely agree with you. So what happens when you are fighting with your cofounder? In my experience, there are two realities: You are friends with this person, or you are not friends with this person. What I have found is when you are friends with your cofounder, there will be something in the startup that happens that will frustrate the hell out of you, and you will have a particularly harsh thing that you wanna say. But because you're friends with this person, more often than not, you're not gonna say it, or you're gonna put it slightly differently, or you're gonna ask yourself, "If I were on the receiving end of this, would this motivate me or not?" Unfortunately, when you're not friends with this person, sometimes it's easier just to boom, boom, fire, fire, and then that can create problems.

   2. DCDalton Caldwell4:31

      Yeah.

   3. SPSpeaker4:32

      That can create real problems. So that's probably the first thing that I see with a cofounder fight, is when it's initiated stupidly, right? Like, you're gonna have to fight about some stuff, but it's just like, can we avoid the dumb ones, you know? Like, "Oh, these guys raised money. Why couldn't you go raise money?" So I think that's a big one. Where else are you seeing cofounder fights?

5. 4:55 – 6:31

   The biggest root cause: becoming cofounders for the wrong reasons (low trust)

   1. DCDalton Caldwell4:55

      The biggest root cause is that you end up getting into the relationship for the wrong reasons. And so for better or worse, I can't help but think that all human relationships are fundamentally similar in some ways.

   2. SPSpeaker5:09

      Sure. Sure.

   3. DCDalton Caldwell5:09

      Not always. [laughs]

   4. SPSpeaker5:10

      For sure.

   5. DCDalton Caldwell5:11

      But, you know, if, if you end up getting thrown into a pretty intense experience with a complete stranger, and you've taken no time to understand the other person, the chances that you'll have a disagreement are pretty high. You just don't even have the same context.

   6. SPSpeaker5:26

      Yes.

   7. DCDalton Caldwell5:26

      Um, and so the biggest issue I see is that they don't even... It's like strangers trying to navigate the beginning part of a relationship, and then it sort of dawns on them, "Oh man, this person's a stranger, and I got into this relationship for the wrong reasons."

   8. SPSpeaker5:40

      Yes.

   9. DCDalton Caldwell5:41

      Um-

   10. SPSpeaker5:42

       "And I'm mad at myself. Let me do some lashing out."

   11. DCDalton Caldwell5:46

       Yeah. And so what that looks like in practice is you can't even agree on really basic stuff.

   12. SPSpeaker5:52

       Yes.

   13. DCDalton Caldwell5:52

       Such as the name of the company.

   14. SPSpeaker5:54

       Sure. Sure.

   15. DCDalton Caldwell5:55

       Such as what idea are we working on?

   16. SPSpeaker5:58

       Yes.

   17. DCDalton Caldwell5:58

       Such as what- ... should I be doing with my time and what should you be doing with your time?

   18. SPSpeaker6:04

       It's interesting 'cause, like, there's almost no basis for there being trust.

   19. DCDalton Caldwell6:09

       Yeah.

   20. SPSpeaker6:10

       And if there's no trust, we can fight about everything. [laughs]

   21. DCDalton Caldwell6:13

       Anything. [laughs] Just, just throw something out there.

   22. SPSpeaker6:18

       Forever.

   23. DCDalton Caldwell6:19

       Yeah. [laughs]

   24. SPSpeaker6:19

       You can have endless arguments-

   25. DCDalton Caldwell6:22

       Yeah

   26. SPSpeaker6:23

       ... about everything.

   27. DCDalton Caldwell6:25

       Yeah. [laughs] And especially 'cause you're the boss, right? Like, everything's on the table. [laughs]

   28. SPSpeaker6:28

       Yeah.

   29. DCDalton Caldwell6:30

       [laughs]

6. 6:31 – 7:10

   The “equal value at all times” myth and resentment about effort

   1. SPSpeaker6:31

      So no, I totally agree with that one. I think another thing that was a misconception that I had was that each cofounder is going to add an equal amount of value at all times. And I see a lot of resentment build up when somebody feels like, "Oh, I'm grinding and my cofounder's not," as if, like, we're all working on the car factory line-

   2. DCDalton Caldwell7:01

      Mm

   3. SPSpeaker7:01

      ... and anyone who's not working, the, the cars aren't moving through. It hasn't been my experience things are always exactly that way. What, what's been your experience?

7. 7:10 – 8:19

   Mutual respect is the real issue beneath surface arguments

   1. DCDalton Caldwell7:10

      Yeah, I mean, there has to be a mutual respect.

   2. SPSpeaker7:14

      Yes.

   3. DCDalton Caldwell7:15

      And what happens is there's all these superficial things in an office hours that someone will wanna talk about, and then you just keep digging and digging and digging and digging. And at the bottom is, "I don't respect the job or the thing that this person is doing."

   4. SPSpeaker7:33

      Mm-hmm.

   5. DCDalton Caldwell7:34

      And that it doesn't really matter what all the upper layers are.

   6. SPSpeaker7:37

      No.

   7. DCDalton Caldwell7:38

      It's pretty hard to fix that if at the core is a, is a lack of, of mutual respect.

   8. SPSpeaker7:42

      One of the things amongst friends that can create that respect is, "I feel like I'm working hard-

   9. DCDalton Caldwell7:49

      Yes

   10. SPSpeaker7:49

       ... and I don't feel like you are." And it was funny. In, in my first company, we had four cofounders. And looking back, what I tell founders a lot is at any given time I think we had two and a half cofounders.

   11. DCDalton Caldwell8:01

       [laughs]

   12. SPSpeaker8:02

       And, you know, that means, like, one and a half people were probably not engaged in the core thing moving the company forward at that time.

   13. DCDalton Caldwell8:11

       Yeah.

   14. SPSpeaker8:11

       And only over years did I kind of see how that all balanced out, and it wasn't always-

   15. DCDalton Caldwell8:17

       You know-

   16. SPSpeaker8:18

       ... the same one and a half people. [laughs]

8. 8:19 – 9:14

   Don’t cargo-cult cofounder structures: make what you have work

   1. DCDalton Caldwell8:19

      And this makes me think of, like, a- another point we touched on a minute ago. But look, man, just like relationships-

   2. SPSpeaker8:24

      Yeah

   3. DCDalton Caldwell8:25

      ... everyone else's is different, and if you try to stand in judgment of how other people made it work-

   4. SPSpeaker8:31

      Yeah

   5. DCDalton Caldwell8:32

      ... you're wasting your time.

   6. SPSpeaker8:33

      Yes.

   7. DCDalton Caldwell8:33

      And so some people will be like, "Michael, you were four founders and, you know, you had Emmett and, you know-

   8. SPSpeaker8:38

      Yeah

   9. DCDalton Caldwell8:38

      ... blah, blah." You know, that has nothing to do with my startup. It's like-

   10. SPSpeaker8:41

       Hmm. [laughs]

   11. DCDalton Caldwell8:42

       What, what, what I'm going with this is you're right. That is different.

   12. SPSpeaker8:44

       Yes.

   13. DCDalton Caldwell8:45

       But it worked for them.

   14. SPSpeaker8:46

       Yes.

   15. DCDalton Caldwell8:46

       And you built Twitch.

   16. SPSpeaker8:48

       Yeah.

   17. DCDalton Caldwell8:48

       You built an enduring thing that still lives on and is bigger than all of you guys.

   18. SPSpeaker8:51

       Yes, yes.

   19. DCDalton Caldwell8:52

       And so if you wanna build a big company that's bigger [laughs] -

   20. SPSpeaker8:55

       Yeah

   21. DCDalton Caldwell8:55

       ... than, than all of you individually, don't assume you can just blindly copy or cargo cult another person's playbook-

   22. SPSpeaker9:01

       No

   23. DCDalton Caldwell9:01

       ... and it'll necessarily work for you.

   24. SPSpeaker9:03

       No.

   25. DCDalton Caldwell9:03

       And so to me, the biggest learning from your cofounding experience is you guys made it work versus you must have four cofounders and they must be this and you must act this way.

   26. SPSpeaker9:13

       Yeah. No, no, no.

   27. DCDalton Caldwell9:13

       Right?

9. 9:14 – 10:07

   When a fight is actually a breakup: recognizing “trust is destroyed”

   1. SPSpeaker9:14

      No, no. So let's move into it's not gonna work. I think there's an interesting transition between cofounders fighting, which I think, you know, is gonna happen, and cofounders fighting that when we're talking to them we know-

   2. DCDalton Caldwell9:33

      Yeah

   3. SPSpeaker9:33

      ... they're gonna break up before they break up. We know the trust is destroyed. I think that's a really important time in a startup because I, I always fear with startups, like, when you really know the probability of success is zero, the most important thing is to stop wasting time. And, you know, sometimes I see people living in this, like, "We haven't decided we're gonna break up yet, but obviously-

   4. DCDalton Caldwell9:57

      But we definitely are. [laughs]

   5. SPSpeaker9:58

      Yeah. [laughs] But, like, everything is dysfunctional. It's not gonna get repaired, and it's like, can we get through that phase-

   6. DCDalton Caldwell10:04

      Yeah

   7. SPSpeaker10:04

      ... as quickly as possible? [laughs] Like...

10. 10:07 – 11:15

    YC office-hours pattern: private meetings to “present the case” (don’t do it)

    1. DCDalton Caldwell10:07

       Yeah. I mean, what this looked like to me in office hours with a, with a YC company is they would wanna meet with me without the other person.

    2. SPSpeaker10:16

       Oh my God.

    3. DCDalton Caldwell10:17

       And they'd basically wanna present some facts.

    4. SPSpeaker10:20

       About why that person sucks or this.

    5. DCDalton Caldwell10:21

       About why... Yeah.

    6. SPSpeaker10:22

       Yeah, yeah.

    7. DCDalton Caldwell10:22

       And so kind of what I learned to do after many years of this is to say, "The facts don't matter. I am not the judge and jury. You don't need to present the case to me. If you don't think it's gonna work and it's bad enough such that you're trying to meet with me and present facts to me, that sounds pretty bad. I think this is pretty far gone." And so counterintuitively, I think, I'd be like, "Let's not talk about the facts. It doesn't actually matter. Let's just try to create a go-forward plan that is the most positive for all parties involved to not work together anymore-

    8. SPSpeaker10:52

       Yes

    9. DCDalton Caldwell10:52

       ... so that everyone feels good about how they were treated, they feel good about the process.

    10. SPSpeaker10:57

        Yes.

    11. DCDalton Caldwell10:57

        There wasn't a lot of, like, legal threats or problems. You just go your separate ways, and there's not, like, um, permanent toxic waste in the relationship. You're just like, "Cool, we're just gonna go our separate ways," and everyone is gonna be okay with it.

    12. SPSpeaker11:10

        Yes.

    13. DCDalton Caldwell11:10

        Um, that's what I learned to do, and it works a lot if people are super professional and adult about it.

11. 11:15 – 13:43

    Why lawyers can make it worse pre-PMF: fighting over nothing

    1. SPSpeaker11:15

       I think the thing that always frustrated me when giving office hours on this topic was how unhelpful third parties can be.

    2. DCDalton Caldwell11:28

       Yep.

    3. SPSpeaker11:29

       Um, you know, cofounder breakups extremely common with pre-product market fit early-stage companies, right? Another way of saying a pre-product farket- market early stage is, like, it has created no value. So, like, the stock that you have is worthless.

    4. DCDalton Caldwell11:43

       Correct.

    5. SPSpeaker11:43

       You have nothing. And so in a situation where you're having a cofounder breakup and the stock is worth nothing, paying lawyers a bunch of money makes no sense.

    6. DCDalton Caldwell11:55

       It's idiotic. Well, you're fighting over nothing. You're fighting over ego. So-

    7. SPSpeaker11:59

       You're spending money. [laughs]

    8. DCDalton Caldwell12:01

       [laughs] Over nothing.

    9. SPSpeaker12:02

       I don't mind if you fight. Can you just also not spend-

    10. DCDalton Caldwell12:05

        Yeah

    11. SPSpeaker12:05

        ... money with your lawyers to fight? And, you know, the lawyer is trained- Well, there's a .00000001% chance this becomes Google.

    12. DCDalton Caldwell12:16

        Yeah.

    13. SPSpeaker12:16

        And so you need to fight, like... And it's like, sorry, when, when there's infinite O's, like, after the decimal point, it means there's no chance it becomes Google. It means you're fighting over something that's nothing, not worth anything. And the problem is, is that a lawyer can suck up infinite amount of your-

    14. DCDalton Caldwell12:33

        Yep

    15. SPSpeaker12:33

        ... anger and monetize it. It makes me feel dirty just saying that out loud.

    16. DCDalton Caldwell12:40

        It's true.

    17. SPSpeaker12:40

        That's what that's, that's-

    18. DCDalton Caldwell12:41

        That's the, it's a service provider. Oh, the client wanted services, which is to write mean letters to the former co-founder. [laughs] That's a service.

    19. SPSpeaker12:50

        And I, I will provide it. [laughs]

    20. DCDalton Caldwell12:52

        Yeah.

    21. SPSpeaker12:52

        And so the number of times I then see founders in the situation where it's like, oh, crap, like, not only are we in a deeper fight, but we now have, like, debt. I've seen situations where an individual founder who's leaving has debt-

    22. DCDalton Caldwell13:06

        Yeah

    23. SPSpeaker13:07

        ... on a, on a company that's not worth anything.

    24. DCDalton Caldwell13:10

        Yeah.

    25. SPSpeaker13:10

        And like, man, I hope your feelings feel better, 'cause, like, your bank account is gonna suffer. So a lot of what we've tried to do at YC is kind of create, like, a basic framework w- to deal with these breakups. And, like, what I love about giving these office hours is, you know, at OIC, we have these written down.

    26. DCDalton Caldwell13:26

        Yep.

    27. SPSpeaker13:27

        So it was like, I, you know that I didn't, I'm not taking a side.

    28. DCDalton Caldwell13:31

        [laughs]

    29. SPSpeaker13:31

        I didn't invent this. Like, you can post fact-check me.

    30. DCDalton Caldwell13:35

        Oh. [laughs] Oh, Jesus.
12. 13:43 – 14:43

    A “no-fault, clean breakup” standard: silence, professionalism, and vesting

    1. SPSpeaker13:43

       And maybe we should talk about some of these standards, some of these, like, hey, how a co-founder breakup should go.

    2. DCDalton Caldwell13:49

       So again, to start with, the way it should go is sort of no fault from both sides.

    3. SPSpeaker13:55

       Yes.

    4. DCDalton Caldwell13:55

       And so, again, unless you catch them committing a felony, okay-

    5. SPSpeaker13:59

       Yeah

    6. DCDalton Caldwell13:59

       ... that's, that's, uh, outside the scope of this conversation.

    7. SPSpeaker14:01

       Yes.

    8. DCDalton Caldwell14:01

       But for the most part, make it no fault.

    9. SPSpeaker14:04

       Yes.

    10. DCDalton Caldwell14:05

        Don't try to ruin the other person. Don't try to ruin their reputation. Don't try to contact the investors and all this other crap.

    11. SPSpeaker14:13

        No, no.

    12. DCDalton Caldwell14:13

        So make it no fault.

    13. SPSpeaker14:14

        Yes.

    14. DCDalton Caldwell14:15

        Optimize for cleanliness for both sides-

    15. SPSpeaker14:18

        Yes

    16. DCDalton Caldwell14:18

        ... so it requires the least amount of mental angst and anger to separate ways.

    17. SPSpeaker14:23

        Yes.

    18. DCDalton Caldwell14:23

        Make it so that you don't say things you can't take back.

    19. SPSpeaker14:26

        Yes.

    20. DCDalton Caldwell14:26

        Preserve the ability to interact with them in the future, any employees.

    21. SPSpeaker14:31

        Yes.

    22. DCDalton Caldwell14:31

        You know?

    23. SPSpeaker14:32

        Yes.

    24. DCDalton Caldwell14:32

        Keep your mouth shut, basically, both parties should.

    25. SPSpeaker14:34

        Yes.

    26. DCDalton Caldwell14:35

        And then vesting is good. Uh, hopefully you have vesting.

    27. SPSpeaker14:38

        Yes.

    28. DCDalton Caldwell14:39

        Um, vesting protects both parties in this case-

    29. SPSpeaker14:41

        Yes

    30. DCDalton Caldwell14:41

        ... because it makes it cleaner to separate.

13. 14:43 – 15:38

    Equity realism: leaving founder should give back to motivate the team

    1. SPSpeaker14:43

       Yes. I think that oftentimes what we tell founders is that if you're pre-product market fit, and the company's gonna continue operating, and you're the leaving party, you have to understand that the vast majority of the value this company could create hasn't been created yet.

    2. DCDalton Caldwell15:00

       Yep.

    3. SPSpeaker15:01

       And so regardless of your vesting, um, you need to make sure that that company has as much equity as possible to motivate the people who are there, the people that might be hired, to come create value. I often talk to that person first, and I basically am saying, "You get to go and live your life, and that company, if it ever creates value, you're gonna get some money for it-

    4. DCDalton Caldwell15:24

       Yep

    5. SPSpeaker15:24

       ... even though you don't have to contribute to it at any time." Like, you get the hedge. The founder staying doesn't. Make sure the founder staying has as much incentive as humanly possible-

    6. DCDalton Caldwell15:35

       Yep

    7. SPSpeaker15:35

       ... to try to make that thing valuable. [laughs] Because, like-

14. 15:38 – 16:50

    Reputation and infinite games: scorched earth hurts your career, not your lawyer

    1. DCDalton Caldwell15:38

       Well, and again, it reminds me of the-

    2. SPSpeaker15:39

       ... it's free option

    3. DCDalton Caldwell15:39

       ... the lawyer thing, which is legal advice for certain types of advisors will be, like, trying to help you craft the ways to maximally screw the other party and extract every penny of value, and basically just, like, scorched earth-

    4. SPSpeaker15:53

       Literally

    5. DCDalton Caldwell15:54

       ... the situation.

    6. SPSpeaker15:54

       Yes.

    7. DCDalton Caldwell15:55

       And guess what? They will take your money to go do that.

    8. SPSpeaker15:59

       Yes.

    9. DCDalton Caldwell15:59

       And then their reputation does not suffer because they are lawyers.

    10. SPSpeaker16:02

        No.

    11. DCDalton Caldwell16:02

        Whereas you are still, you have a career-

    12. SPSpeaker16:06

        Yes

    13. DCDalton Caldwell16:06

        ... and everyone will remember you from doing the scorched earth thing. And so I would encourage people to think about this as, like, a game theory, infinite games situation, which is if you handle this unremarkably in a good way, like if you do- [laughs]

    14. SPSpeaker16:19

        Yeah

    15. DCDalton Caldwell16:19

        ... if you're unremarkable and it's like, "Oh, yeah, I worked, we, we worked together. It didn't work out. I went and did my own thing, and it was no big deal," very good for your career.

    16. SPSpeaker16:28

        Yes.

    17. DCDalton Caldwell16:29

        But being known as the super litigious scorched earth person, you're never gonna work again.

    18. SPSpeaker16:33

        Nope.

    19. DCDalton Caldwell16:34

        And your lawyer's not gonna tell you that.

    20. SPSpeaker16:35

        Nope.

    21. DCDalton Caldwell16:36

        [laughs] And so if you're just thinking about this, this is actually going on your permanent record-

    22. SPSpeaker16:40

        Yes

    23. DCDalton Caldwell16:41

        ... that you were, like, cool about it and didn't-

    24. SPSpeaker16:43

        Yes

    25. DCDalton Caldwell16:43

        ... cause a lot of problems, and is likely, like, the most important takeaway from this part, right, man?

15. 16:50 – 19:42

    Generosity from the staying founder: severance, morale, and leadership signal

    1. SPSpeaker16:50

       I completely agree. And I think that for the founder who's staying, I, I always try to reframe it in their head because I think oftentimes anyone who feels bad, like, the first instinct is to make yourself the victim.

    2. DCDalton Caldwell17:03

       Yep.

    3. SPSpeaker17:03

       And I'm kind of like, well, that person's leaving and you're staying, so it's like-

    4. DCDalton Caldwell17:07

       [laughs]

    5. SPSpeaker17:09

       They prob- like, like, you know, like, let's not debate victims, but, like-

    6. DCDalton Caldwell17:11

       [laughs]

    7. SPSpeaker17:11

       ... I, you probably don't deserve the-

    8. DCDalton Caldwell17:13

       Who's the bigger victim?

    9. SPSpeaker17:13

       Yeah. [laughs]

    10. DCDalton Caldwell17:13

        Let's have that debate, Michael. Michael, please tell us. Please take my side-

    11. SPSpeaker17:17

        [laughs]

    12. DCDalton Caldwell17:18

        ... um, about what a victim I am.

    13. SPSpeaker17:19

        Yes, like what, what I'm experiencing, right? [laughs] And w- w- what I often tell that person is you have an opportunity to be generous, um, especially, like, if you've got funding, when it comes to severance. Like, you have an opportunity to make sure that that co-founder who's leaving can get back on their feet, live their life, go move on to the next thing. And your incentive to do it is, one, if this is your friend, like, you want your friend to be okay, right? And then two, understand that everyone in your company is looking at you-

    14. DCDalton Caldwell17:53

        Yep

    15. SPSpeaker17:53

        ... right now. And, like, this is the person who, at least theoretically, you trusted the most. How you treat them, will you treat anyone else better? And it is so cheap to be nice. [laughs]

    16. DCDalton Caldwell18:08

        [laughs]

    17. SPSpeaker18:09

        And, and it creates so many positive dividends amongst the other people who are staying. But it's very, very hard to be nice when you think of yourself as the victim. Right? When you're the victim, then it's like, well, that person has what's coming to them. And I would say that if you think of yourself as the responsible party and you act that way, often you don't trigger victimness on the other side, too. Whereas, like, so often I'll see the lawyers be like, "Well, you better protect yourself because, like, they might come after you."

    18. DCDalton Caldwell18:42

        Yep.

    19. SPSpeaker18:43

        And you inadvertently, the founder who's staying, triggers the fight.

    20. DCDalton Caldwell18:47

        Yes.

    21. SPSpeaker18:47

        And you're just like, "What are you doing?" [laughs] Like, we generally tell people, "Hey, even if you vested, like, get down to under 5% of the company. If it's within the first year, under 2%. Do reasonable severance, sign clean paperwork, and, and peace out," right? Like, you could do that whole thing in a week.

    22. DCDalton Caldwell19:06

        Yep.

    23. SPSpeaker19:07

        And spend, like, $2,000. If you're not doing that, it's like you're taking a very hard route. Um, and I would say that, like, it's really, really important in these fights, just make sure no one's taking advantage of you. Any time you're spending money, be worried that someone's [laughs] taking advantage.

    24. DCDalton Caldwell19:30

        If there's a, yeah, if there's a service provider-

    25. SPSpeaker19:32

        If there's a bill

    26. DCDalton Caldwell19:32

        ... that is excited to offer you services, and there's a bill, and they're paid for their time and not ...

    27. SPSpeaker19:38

        Hmm.

    28. DCDalton Caldwell19:40

        Yeah.

    29. SPSpeaker19:40

        Ugh.

    30. DCDalton Caldwell19:40

        That's an issue. [laughs]

16. 19:42 – 22:45

    Final playbook and mindset: don’t litigate the past; make it a footnote

    1. SPSpeaker19:42

       Yeah. Here's my last piece of advice. It, it comes back to what you were saying before. Who, if you're using someone to mediate this, don't make them the judge. Don't make them-

    2. DCDalton Caldwell19:53

       Because it doesn't matter.

    3. SPSpeaker19:54

       It doesn't matter.

    4. DCDalton Caldwell19:54

       If you're not gonna work together anymore-

    5. SPSpeaker19:56

       It doesn't matter

    6. DCDalton Caldwell19:56

       ... it doesn't actually matter what happened.

    7. SPSpeaker19:57

       No.

    8. DCDalton Caldwell19:57

       It's irrelevant.

    9. SPSpeaker19:58

       No. No.

    10. DCDalton Caldwell19:59

        Right?

    11. SPSpeaker20:00

        No. And, like, come on. It was a startup. The expected outcome.

    12. DCDalton Caldwell20:04

        [laughs]

    13. SPSpeaker20:04

        Like, this is the expected outcome. [laughs] Like, don't, don't treat this like it's Google breaking up-

    14. DCDalton Caldwell20:11

        Yep

    15. SPSpeaker20:11

        ... when it's not Google breaking up. And I think oftentimes service providers, in their minds, they're like, "Company, public company."

    16. DCDalton Caldwell20:18

        And I would kind of bring this back to one of the original points I made on this one, which is if you handle this well, this is a non-mortal wound. Like, part of the reason there's so much, "I never wanna have a cofounder because I heard my friend and this happened to them and blah, blah, blah,"-

    17. SPSpeaker20:32

        It's this stupid bullshit

    18. DCDalton Caldwell20:32

        ... is 'cause it was handled horribly.

    19. SPSpeaker20:34

        Yes. Yes. Yes.

    20. DCDalton Caldwell20:35

        And if you handle this well-

    21. SPSpeaker20:37

        Yes

    22. DCDalton Caldwell20:38

        ... this is a footnote in both of your careers.

    23. SPSpeaker20:41

        Yes.

    24. DCDalton Caldwell20:41

        This is a footnote in the history of the company, right?

    25. SPSpeaker20:44

        Yes.

    26. DCDalton Caldwell20:44

        Apple had a third cofounder. Remember that guy?

    27. SPSpeaker20:46

        Yeah.

    28. DCDalton Caldwell20:46

        And then they bought him out and then-

    29. SPSpeaker20:47

        Yeah

    30. DCDalton Caldwell20:47

        ... like, it was fine.

Episode duration: 22:47