What Cofounder Coaching Reveals About Power in Founding Teams
Trust is the antidote all cofounders need to build successful companies and relationships with team members.
Power is present in all cofounder teams, but how power is experienced and expressed is unique to each partnership.
As a licensed psychologist coaching cofounders to navigate conflicts more effectively, I often identify power struggles and help arm founders with the tools and frameworks they need to address them.
Learning more about what power is and how it is expressed in cofounder partnerships is an important way for founders to better navigate the complexities of building successful companies.
Power in cofounding teams can be defined as the capacity to influence the behaviors of others in a particular way.
Often, power is assumed to be relegated to who possesses the most equity, who holds the title of CEO, or who makes the final decision. But these are the domains in which power dynamics are expressed not power itself, which can manifest in more subtle forms than these categories convey.
To examine power within the context of founding teams, I will present three case studies from my work with top venture-backed startups. Each of these examples demonstrates the rocky foundations upon which businesses are built and reveals subtle power issues influencing growing teams.
All identifiable information has been changed to preserve confidentiality.
…
Case Study I
George and Bob built a startup centered on revitalizing an outdated component in the education sector.
Prior to raising a seed round, George, a serial entrepreneur with a previous hundred-million-plus exit, invested upwards of $500k to accelerate business development with his friend and first time founder, Bob.
While George brought finance, network, and previous operational experience, Bob brought the subject matter expertise needed for success. The team entered cofounder coaching with a strained relationship due to recurring arguments and underperformance.
George’s narrative involved Bob’s incompetence, poor communication, and lack of hustle. While Bob agreed he had much to learn, he felt George was unnecessarily harsh and inpatient, though he struggled to share these thoughts directly.
As a team, we worked to uncover the key issues related to power:
George held power due to his financing, greater share of equity, and previous experience. Bob lacked experience, but held power in his subject matter expertise.
When George noticed Bob not performing to the standard George expected, he experienced fear of losing his investment, which he expressed through angry criticism and thoughts of firing and replacing Bob. Sensing this disapproval, Bob shrank and withdrew, leading to more criticism from George.
The dynamic between the two improved through the following sequence:
George discovered his level of risk in being both the lead investor and only founder with previous experience intensified the pressure he placed on Bob to execute quickly, despite Bob having no previous experience.
George learned this pressure reduced Bob’s effectiveness and disempowered the very individual he needed to step up.
Bob uncovered he was wanted, needed, and possessed the one thing no one else had to the same degree: Subject matter expertise. Seeing this reflected to him gave Bob confidence.
Bob took proactive steps to set boundaries with George and voice how criticism negatively impacted his ability to lead.
George noticed praise, encouragement, and support was a more helpful approach to improve the team’s performance.
Power was unequal in this partnership and the dynamic needed to shift for the cofounders to realign and improve their teamwork.
The next case study highlights how power can become complicated by multiple relationships with your cofounders.
…
Case Study II
A group of three cofounders entered coaching to repair a damaged relationship when things took an unexpected turn.
Backed by one of the most successful VC’s, this group was full of young first time founders with high potential. Mark, the CEO, and Jared, the CTO, worked on the company for three months before bringing Mark’s girlfriend, Jessica, CMO into the founding team. They had immediate problems.
Jessica felt devalued when she was offered 10% less equity than Mark and Jared despite her subject matter expertise involving the core of the business. She advocated for and then received an equal split among the three cofounders. These conversations were difficult and led to a lack of trust between Jared and Jessica, who had quite distinct personalities and working styles.
While the group learned and implemented more effective conversations early in our work, the power dynamic threatened to tear apart the entire company when Jessica decided she was unable to work with Jared any longer.
Jessica told Mark, “It’s him or me. Choose.”
Mark was placed in a difficult position: lose a friend whom he started the company with or lose his romantic partner. This textbook definition of manipulation was a grab for power.
In the end, Jared exited the company. This led to the majority of our work focusing on repairing trust between Mark and Jessica.
Jessica learned to vocalize her needs for power and recognition clearly. She also signed extensive documentation regarding how she is to handle grievances in the future and vowed to never again jeopardize the wellbeing of the company through manipulative tactics.
Mark learned the importance of exerting more power in the cofounding relationship through more direct interventions, rather than playing peacekeeper and allowing conflicts between team members to escalate.
Power issues must be named early and often.
When they are not, they may appear in unhealthily attempts to reclaim it, which threaten the health and stability of young organizations.
The final case study will highlight how unaddressed power impacts teams after subsequent rounds of funding.
…
Case Study III
Joe and Jim were friends prior to starting their company.
Because each were passionate, highly motivated, and possessed diverse generalist skillsets, they decided to name themselves co-CEOs. While they successfully raised millions of dollars from reputable VC’s and renowned accelerators, their power struggles became most visible after closing their Series B.
We identified Joe and Jim’s decision to become co-CEO’s may have been related to unaddressed power dynamics in the partnership.
Both felt the need to be involved in decisions and though they became better at dividing roles as they grew, they continued struggling with a tension between strategic decisions and task execution.
Over time, they came to the realization that business tensions had contributed to the deterioration of their friendship, which left them at an impasse: Their roles needed to change to address the growing needs of their company.
Jim was a master at leading important projects that added real value to the organization. Everything from fundraising to social events and analyzing growth metrics were handled by Jim.
On the other hand, Joe was an expert at thinking through the next several years and developing the strategy for how to achieve success. He handled most management responsibilities and hiring.
Our work helped them build a foundation of effective tools for navigating complicated, uncomfortable discussions.
They leveraged these frameworks to name their broken friendship, focus on repair, and internally shift their roles in such a way where Joe effectively operated as CEO and Jim focused on his world-class IC work.
Though they have not changed titles externally due to their needs for power and recognition, they have internally restructured in a manner more conducive to future growth. This example reveals the importance of working to address power at early stages and re-assessing as a company scales.
…
These three stories highlight the subtle and overt ways power dynamics influence the performance of founding teams.
As a cofounder coach, I think it is important to remind people about the difference between power over and power to be.
Power over someone may help someone feel valued and recognized (as in the first and second case studies), but it ultimately deteriorates the foundation needed for the founding team to execute at a high level.
Power to be involves greater openness, as team members can feel connected to their agency and utilize their power to make effective decisions on their own. This type of power is shared.
The difference between these two types of power is trust.
Cofounders who trust one another and have open conversations about the complex personal and professional dynamics influencing their partnerships build more effective cultures and make better decisions than relationships where such discussions are avoided.