In this world of startups, we all read articles on the importance of hiring a cofounder every day. But let me tell you this. Hiring a cofounder is completely different from hiring the right cofounder. He is the person who shares equal rights and responsibility. So, shouldn’t he share the equal seriousness as you do? Unfortunately enough, this doesn’t always turn out to be the case and the question arises: why and how should you fire your cofounder?
You may find it a very wise decision to make your friend the cofounder of your company. Why not if he has the proper skills? After all, you know him so well and so the trust factor is not an issue. Well, he may possess the required expertise but without the right dedication, your startup can’t even breathe, let alone survive.
If you are seeing that your cofounder is not giving his 100% due to which your venture is suffering, it’s time that you give it a second thought! But it is easier said than done. It requires very calculative and delicate moves to fire your cofounder. It can become very awkward and an uncomfortable situation to be in.
The foremost thing that you should do is to reach out to him personally and talk to him. Encourage him, tell him to give in his 100% and don’t just make an abrupt sudden decision. Who knows, he might be having some personal issues for which he is getting deviated from his work! If his problem is genuine and resolvable, give him/her some time. Ask him to come for a meeting without specifying the reason. Don’t waste time in small talks and get straight to the point. That can only make the situation serious and pertinent to talk about the issues. Never ever try to settle such issues over the phone or email. If continuous plea doesn’t help, then only take a decision to fire your cofounder
It is quite obvious that two people can’t have the same line of thoughts on each and every matter that comes on the table. While running a startup, decisions are to be taken every moment. If differences in opinions become prevalent to a very great extent, the heat may rise and your cofounder may want to leave. Sometimes it is even not possible to take a second opinion from your cofounder and you may need to decide something then and there. This may lead to misunderstanding which if not resolved can give rise to several problems. So, if it happens that your cofounder wants to leave, be upfront and accept his resignation straightaway. Temporary resolution can’t help your startup to keep going. Be very clear about the profit sharing and equity right from the beginning so that arguments don’t crop up in these situations where you decide to fire your cofounder.
Now, the worst part will arise if he doesn’t work and also doesn’t agree to leave. At this time, you should make him remember the company laws. Equity is shared as per roles in the company and major share holders have the right to decide whom they should keep in their company and whom they should not. Also, make him realize that he is not doing his prescribed work.
When a company is running, all the drivers have equal roles and all the decisions should be taken by mutual consent only. But each of the cofounders should have their distinct roles. When your startup starts growing exponentially, you don’t have time to decide these things and to work on every aspect singlehandedly. So, everyone should know their responsibilities and what they are held responsible for. Absence of mind or laziness may prove catastrophic and should force you to take the bold decision and fire your cofounder.
If you are firing your cofounder, you should have absolutely proper reasons for it. It can be either negligence in handling responsibilities or difference in opinions or any other professional issue. It should never be based on personal matters as that can have negative repercussions on you and your company in the long run. If you fire your cofounder on personal grounds, there is no reason for him not to take it personally. This must have given you a clear picture by now. Things may stretch out to legal levels which is not only an extra headache but also a bad time for your startup. Even reputation and money can be at stake.
If there are many cofounders of your company and most of them vote for firing a certain one who has turned negligent, then it is compulsory for him to leave. But now the question is what to do with his share of equity? How to redistribute it! Hence, you must insert a vesting clause in your founder’s agreement from the very commencing of your venture. That will decide the proper time when you will be able to vest the stock options. Moreover, there is a cliff for the initial year which says that if your cofounder leaves your company without completing the decided term period, he is not entitled to any profit that your company makes.
Hence it is very crucial to decide your cofounder very wisely. In unavoidable situations, you may need to take strict actions but do it very patiently. Anger or ego may destroy the whole scenario making relationships bitter to the utmost level. Also, be very clear about the responsibilities and equities both verbally and on paper to avoid uncomfortable situations.
