Co-Founder Mistakes That Kill Companies & How To Avoid Them

**Dalton Caldwell** (0:00)
You definitely want a co-founder.

**Michael Seibel** (0:03)
Hey, this is Michael Seibel and Dalton Caldwell, and welcome to Rookie Mistakes. We've asked YC founders for their Rookies Mistakes, so we can share them with you and help you avoid these common errors. Let's start with our first anonymous story from YC founders on mistakes to avoid. At the beginning, when everything's going well, you don't know how you're going to handle disagreements or bad actions by the other person.
It's extremely hard to deal with a bad situation after the fact if you don't have anything written down.

**Dalton Caldwell** (0:32)
It's awkward to talk about things like who gets what percentage of the company or do you have founder vesting? And you know how human beings are. We don't always remember things quite the way they went down, right?
And so write it down.

**Michael Seibel** (0:49)
I think the biggest error that I see is founders looking for someone with a skill match versus someone that they actually maybe have had a fight with before, like a friend. A lot of founders assume that whatever skills their co-founder has at the moment they join the company are the only skills they'll ever have.
And in my experience, almost everything you learn, you learn on the job. So you rather work with someone you really like and learn together than work with someone you don't know at all and get into fights and then break up.

**Dalton Caldwell** (1:18)
I mean, to put some facts on that, how many founder breakups have we seen where the founder says, my co-founder is excellent, A plus, they just don't have the skills that we need versus my co-founder is a living nightmare and I can't take it anymore, right? Like how many people are like, what a great person that I like a lot. They just didn't end up, I shouldn't have made them my co-founder because they just didn't have the right skills, Michael. Do you ever hear that?

**Michael Seibel** (1:44)
Never hear it. And by the way, it's not that it's not true, it's that that doesn't cause a co-founder breakup. That doesn't kill a company, it's an error but not a fatal one. All right, let's move on to the next one. So, YC founder wrote in, Take arguments with your co-founders seriously.
It's more likely to kill you than anything else. What I see with a lot of co-founder disputes is that the relationship has never been pressure tested.

**Dalton Caldwell** (2:09)
They've just been friends. They've been like, oh yeah, we chat all the time. And then the first time there's a disagreement, it's just a blow up.
And the relationship is broken. And you'll never be able to put the pieces back together again. Versus if it's someone you know in a while, maybe it doesn't seem as shiny, but you've already had some disagreements. You've already had the relationship ebb and flow over years, right?

**Michael Seibel** (2:30)
My best takeaway is that first, you don't always have to come into a resolution. Like if you don't have two people engaging productively, you can pause.
You don't have to keep the fight going. And then the second one is like understanding how your co-founder deals with stress. Like some people deal with stress by attacking. Some people deal with stress by retreating. And like if you understand how your co-founder deals with stress, you can kind of better interpret what they're doing. All right, here's the last comment that a YC founder wrote in.
I chose a co-founder with whom I could not share my honest disagreement. We didn't know how to fight well or come out of those fights better and wiser. Some part of that was conflict avoidance on my part, and some part of that was him fighting dirty.

**Dalton Caldwell** (3:20)
It's crazy when you speak to founders where they'll spend eight hours a day with someone, and 12 hours a day with someone, and they'll be like, I haven't spoken to them in a week.
Like, you know, and I'm like, what are you guys doing all day? Like, you haven't talked to them in a week? Or I haven't talked to them in a month, or I haven't had a real conversation with them in a year.

**Michael Seibel** (3:46)
And I think when things get that bad, I would argue there's a point where breaking up becomes inevitable, and the CEO's job is now not how to repair the relationship, it's basically how to separate in like the most effective and least destructive way.

**Dalton Caldwell** (4:06)
When you talk to folks about this, they know in their hearts that that's what needs to happen, but they just can't bring themselves to actually do it because it feels bad.