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Conflicts Between the Founding Partners of a Business

The usual thing is that it is the job itself that uncovers who is the most capable person to assume the responsibilities required by the position of CEO.

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The usual thing is that it is the job itself that uncovers who is the most capable person to assume the responsibilities required by the position of CEO. But it can also happen that there are two people with capacity and desire for leadership. How do we solve it? “The normal thing would be to divide the tasks. See what is the strong point of each and distribute the tasks between a CEO and a COO. The figure of co-CEO, when you see it from the investor point of view, you say, if they have not known how to organize themselves… I would try to avoid it because in any case you have to divide the tasks between the two and each one will go taking leadership naturally, “says Enrique Penichet, CEO of Bbooster.

“I have been co-CEO with Vicente Arias, at Offerum, and there are other success stories in Spain of co-CEOS, such as Privalia. In our case, we went from a discount coupons company that started from zero to invoicing 20 million and having 120 employees. At the beginning there was a lot of work and many conflicts, because each one of us got into the other’s territory. After talking a lot we decided what roles each should have. We could be co-CEOS, but each with different roles. I was responsible for the commercial area and the financial area, in addition to taking the relationship with current partners and new partners. And Vicente was in charge of the product, technology and marketing part,” explains Jesús Monleón, co-founder of SeedRocket.

He warns:

“When there are two Co-CEOS there has to be a very great harmony between the two. It is a tandem. You have to pedal a lot and the key is that there is a lot of communication. And communication sometimes involves drinking coffee every day for 30 minutes, either to talk about the company or to talk about football. The problems that arise between co-CEOS and partners is because there is no communication and over time problems are generated where there are none.”

EMPLOYEE MANAGEMENT

For this agreement to work, employees must be very clear who assumes what and who they have to go to in each case.

“It happens a lot that workers treat you like parents. I ask this because I know that he will tell me what I want to hear. And there arise disagreements that are resolved by talking a lot and telling it. Look, he called me so-and-so who told me this and I think this. Or be clear about your role, your responsibility. I do not get in the other department. Therefore, if an employee comes from another department, I will tell you that this is the responsibility of another. Do not try to get into the other part. But it is not an easy subject to manage,” warns Jesús Monleón.

Marta Nogueras and Miguel Milián, project managers of Lanzadera, insist on the importance of “agreeing on the distribution of tasks so that there is always a person in charge of each task”. But without forgetting that the CEO should be the ultimate responsible for everything in the end. “It is important the figure of the leader who coordinates the work so that everything flows correctly, and ensures that the execution of the tasks of one department is in tune with those of another.”

NEW TECHNOLOGICAL PARTNER

Another very common situation in the beginning. “Two founders start, one from ADE and another from marketing. As they have no experience in development, they look for an external provider. In the beginning they pay what the technology provider demands from them for work, but there comes a time when they propose that they become a technological partner (and pay for it in shares). Conflicts begin here because it is very difficult to define what concrete actions development should take, what are the milestones, what happens with the errors of the application or what happens if the technological partner receives a job from a large company and has to prioritize between its I work for the startup and the new assignment. In the end, the technology partner ends up thinking that he has done more work than he expected and almost has not charged; on the other hand, the founders believe that they have not done the work they should have done and that in the end they have kept a percentage of the company, “explains Rubén Colomer, director of DM School.

TALENT FAILURE OF ONE OF THE FOUNDERS

In a new project it is usual to work with partners who are supposed to be talented. But then it’s time to prove it. “You start with two partners and over time you realize that one of the partners who had an assigned job is not able to do it at the same level of what you expect. There the worst conflicts are generated. 95% of people adapt and grow with the company but the opposite can happen. It is something that is evident when companies start to grow and there is an area that does not work well. S

A conflict that is accentuated when the one who fails is the CEO himself.

“That is more problematic. It does not usually happen that much, but it happens. Someone is the CEO, maybe because he had the idea, and after six months, when the company starts to pull, investors and other partners realize that this leader is not the best leader … Well, you have to change it. You have to look for another one without measuring susceptibilities if you have more or less percentage or whatever, “says Monleón.

FACING A PARTNER’S DEPARTURE

According to Enrique Penichet, the lack of travel of partners occurs more than we think. And it is logical, since we talk about companies that go from zero to a thousand in a very short time.

“Since they are companies that have a lot of technology, something usual is that at the beginning the development of technology is very important. If the team has been set up with a CEO, a CMO and a CTO, the company is divided into equal shares for each of the founders. At first the CTO takes a lot of work but then the figure of sales and that of the CEO takes more weight than that of the CTO. It may even be necessary to hire a CTO more senior than the founder. This is something that can be given and, since it is difficult to quantify at the beginning the tasks of each one and the importance that they will have in the long term, how will the needs of talent vary, etc. It is advisable to establish in writing what the departure of the founding partners will be like: with the figures of good leaver and bad leaver. A pact of partners that says: one hundred percent of the value of the company we distribute among the partners one part and leave another in a pull that we will be distributed according to what happens in the future. That, or let the participations consolidate over time, with vesting clauses. “

PARTNERS WHO DO NOT COMMIT THE BUSINESS

Another very usual situation. A person has an idea and seeks friends to develop it. But nobody is committed to the business.

“AIUDO is a support project for elderly people and people with dependency that I founded through personal experience; My mother was sick. I started with another career partner and for work reasons I passed other partners who collaborated with me on the project, but we never reached a sales phase “, explains Daniel Ibiza, CEO of AIUDO. A castling situation that ended when “I left my job, with a leave of absence, and looked for a programmer for a job search application. I proposed to enter as an employee or as a member and liked the idea of ​​being a member more. From there, we already formed the company and sales began, we hired our first employee … In the end, you have to take a risk and get together with those people who are committed and in love with the idea. In 30 months in the market we already invoiced 220,000 euros and now we are in the phase of attracting more financing”.

A YOUNG CEO

Typically, the most senior profile assumes the maximum responsibility for the project, but not always. “We had one with the founder with 21 years and a partner of forty-something. It is a team that is formed because the CEO is very bright, but in spite of everything, he lacks part of the experience of the other. They are teams that work very well at the beginning and are capable of taking the company to a spectacular level of results. But it is a tandem that has to dissolve sooner or later because as the youngest grows up he will not see why he has to pay attention to an uncle of 40 or 50 years. There is a lot of ego there. Now, until then, the result is spectacular, “says Quino Fernández, director of Conector.

“Having previous experience helps you minimize errors in your next projects, but does not guarantee that they will be successful. Age influences more in the commitment to the project, the bigger the person the bigger the opportunity cost if they decide to start, so a mature entrepreneur usually transmits more confidence than a very young one, because you know that he will give everything “, Says Marta Nogueras and Miguel Milián.

LACK OF RESOURCES TO ATTRACT TALENT

“It’s very common to have team turbulence in the first three years. There are more startups, whether successful or not, that have had some turbulence of equipment that those that do not. So, knowing that you are most likely going to have some kind of turbulence almost certainly, what has to be reflected very well in the partners’ agreement is what happens if a founder leaves. There are many startups that die because a founder is leaving, because if he leaves and does not release the share of shares that he has of the company, it is possible that there are not enough resources to attract a substitute. Especially if the one who leaves is the CTO, who have salaries of more than 50,000 euros. I need to recover shares to give in shares what I will not be able to pay in money,” says Enrique Penichet.

CONFLICTS BETWEEN TECHNICIANS AND MANAGERS

So far we have always talked about the clash between positions of similar training. Especially among ADE people, marketing and out there. What happens with the technical profiles? “Among them there are usually no problems, because they have more clear areas of knowledge. The work is distributed calmly. I dedicate myself to the application and you to the frontpage, for example. The technicians usually have conflicts with the business ones. The technician always wants to improve the application and the marketing invest in campaigns… CTOS with business vision there are very few, “says Quino Fernandez.

INVESTORS PARTNERS AND WORKERS PARTNERS

There are also conflicts between founding partners that do not occur “both because of the distribution of responsibilities and because of what those responsibilities are worth. You can not say that, as I know a lot of motorcycles and the startup is motorcycles, I put 10,000 euros, you 10,000, I’m the one who will take the startup and we have 50% each. That does not make sense because the entrepreneur who really is going to manage the business is the one who contributes the most. Too often participation is made only on the basis of the money they contribute and that ends up generating conflicts between those who work leaving their skin and those who participate sporadically or do not participate in the work. Unless you put a salary, which does not usually happen. And in the case of people who contribute money and not work, make it very clear from the beginning and that those who only contribute money understand that the other is contributing more than money. It is bringing knowledge, work, etc. “, warns Quino Fernández.

“The percentage of participation must be proportional to the commitment of each one. Who is at full time should have more percentage. Another option is that whoever is part time compensates contributing more euros,” they recommend from Lanzadera.

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