Founding a company is hard work. The odds are against you from the beginning. The company survives on nearly no money, established businesses don't take you seriously, and your personal life is a shell of what it once was. Your team becomes your family. Together, you have seen it all and you wouldn't be where you are today if it wasn't for your amazing colleagues. Cofounders enter into what is essentially a marriage and, odds are, they see you more than your family does. So what happens when you realize that it is in the best interest of the company to let your cofounder go? Regardless if it is because of differing views in company strategy, commitment issues, or simply because the company has outgrown their skills, breaking up is never easy to do. Below are some key considerations to deal with this tenuous process:
Move quickly to end it:
This is probably the hardest but most important thing to do. The longer that the person stays in the role and is blinded to what is going on, the more difficult it becomes. As soon as you and your advisers have decided it is the right thing to do, let the person know so that you are on the same page and they can prepare alternate options.
Given your longstanding relationship, it is extremely important to be as generous as possible, both in financial and emotional terms. Venture capitalist Fred Wilson suggests giving additional severance or vesting stock early to make the transition easier. Entrepreneur Paolo Gaudiano suggests offering to phase them out over a few months so that they are still employed and part of the team, but can job search without feeling pressured. This is often overlooked and can alleviate a lot of anxiety and worry for the departing party. If possible, don't completely cut off the relationship, they can be a helpful resource in the future.
Make sure you have your i's dotted and your t's crossed
The most obvious step here is involving legal but there are other key logistical items that need to be considered. Jim Poolman, the Director of the IALC, prepared a strategy for safeguarding your assets after a divorce. His advice can be readily applied to startup founders who are getting "divorced" as well. Make sure you have access to all intellectual property and confidential information such as passwords, contact information and future plans. You should create a contingency plan and talk to your executive team about how you will divvy up the departing employee's responsibilities.
The difference between a personal divorce and a business relationship is that with a business relationship, often times, we don't allow ourselves time to feel. After all, we still have a company to run and employees are depending on us. However, if we move on too quickly without evaluating what led to this point, we are opening ourselves up to repeating this situation again. Use this as a learning moment and contemplate ways to prevent this from happening in the future.
Share your story
Too often we in the startup community only want to share our strengths and triumphs, we are afraid to show our failures and hard lessons. Writing is a great way to clear your mind and confront your emotions head on. Whether or not you choose to share with the public, your significant other, your board, or with your team internally, it is important to talk about what happened. Being vulnerable and honest, especially with your team, humanizes you and adds a level of trust and respect.
Do you have any other advice on how to handle terminating an employee? Please share in the comment section below.