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The most common reason why startups fail – and how to avoid it

Why do bad things happen to good startups?

In his book, The Founder's Dilemmas, Harvard Business School professor, Noam Wasserman, examines the most common pitfalls founders face. According to the research, Wasserman draws on that 65% of startups fail due to interpersonal conflicts within the founding team. Yep, that means two-thirds of failed startups could potentially have been saved if the founders had had more time and resources to work on their relationship!

This is the pitfall that all too many startups fall into. Founders are so busy growing their company, making sure that all their employees are doing well, that they don't have time to attend to the relationship they have with each other. And that relationship is the glue holding the whole company together.

From small frictions, a great problem is born

Cofounder relationships are often like a crayfish in a boiling pot. When founders first start working together, everything seems to be great! And since nothing changes dramatically, it's easy not to take action even when things start to go south. Then all of a sudden, founders find themselves in a situation where working together is no longer efficient or fun.

Problems in cofounder's relationships usually begin with small, seemingly insignificant frictions in communication: an eye-rolling here, a sharp reply there. They are often the results of negative feelings such as frustration, insecurity or worry, which are inevitable when working in a high-stress environment. If these feelings are not openly discussed, they tend to leak out in a passive-aggressive way. The friction is often not openly addressed because it seems so small, unimportant, and unsuitable for the work-centred discussions of day-to-day life. The cost of the time used to discuss those things seems to outweigh the perceived benefit of the discussion.

Over time, as these unexpressed thoughts or feelings pile up, they begin to take more and more headspace. Sooner or later, the friction turns into a crack in the trust cofounders have for each other. The internal model you have of your cofounder starts to change, which leads to you interpreting them differently. What seemed like just an inconsiderate comment before, is now starting to feel like a clear sign of mistrust. 

The founders may notice being more and more cautious around each other, and suddenly they may not even feel safe raising those issues anymore. It starts affecting the quality of their decision making, problem solving and communication, as well as personal satisfaction and wellbeing at work. Even those discussions that used to be effective now become unpleasant and unproductive. At this point, the problem is usually so evident that it's impossible to ignore. The water in the boiling pot is already painfully hot.

Once you and your cofounder have entered that cycle of negative communication, it can be hard to turn things around. After all, interpersonal conflicts are rarely the results of conflicting opinions only. They are the results of unexpressed and unresolved thoughts, needs, hopes and fears.

3 ways to nurture your cofounder relationship

  1. Take your time. 

Dedicate time for regular discussions with your cofounder. Make sure that you are both able to be completely present in those moments, focusing only on each other. Intentionally slow down the pace of the conversation, taking turns to share your thoughts and making sure you don’t interrupt each other. 

  1. See things from the other person's perspective

When having important discussions with your cofounder, use active listening techniques. Try to really get inside the other person’s head and understand what he or she is thinking and feeling. Ask a lot of open questions.

  1. Understand your communication patterns

Prolonged problems in cofounder relationships are usually caused by a negative loop: the more you do this, the more it makes me do that. Together with your cofounder, try to identify recurring patterns in your communication to understand what kind of behaviours are keeping you stuck in the loop.

Laavu's solution? Cofounder coaching. 

Especially if some resentment has already started to pile up between you and your cofounder, it can be hard to open that can of worms without the help of a neutral facilitator. Having someone there to look at your situation from the outside can help you discover blind spots and make sense of the cycle you are in. That's where Laavu's cofounder coaching can help you.

Cofounder coaching is to a startup as couples counselling is to a marriage. It allows cofounders to sit down together and immerse themselves in issues they don't have the time or energy to discuss in their day-to-day life, and with the support of an experienced coach who facilitates the conversation. Coaching is a place where those unexpressed thoughts and feelings can be put on the table, explored and dealt with in a constructive, solution-focused way. It's not just a way to fix the problems that you already have; it's also a way to proactively strengthen the most important relationship in the company – the one you have with your cofounder.