How often does a business fail because of co-founder problems? Or how often does a co-founder leave due to problems?
Paul Graham of Y Combinator fame said that about 20% of the startups they have funded have had a founder leave.
Harvard Business professor Noam Wasserman did a study of 10,000 founders and 6,000 startups and found that 65% of those shut their doors because of people problems. He roughly correlates that the 65% figure is around co-founder conflicts.
Those numbers are higher than I would have guessed, but they make sense for high growth startups. With big expectations, increased pressure is applied to the co-founder relationship and small cracks become big cracks very quickly. I’ve read several stories from TechStars about co-founder relationships shaking out in the early periods of the startup and then stabilizing, i.e. a trial by fire. That is antidotal, but it seems to echo what I am hearing from entrepreneurs in high growth startups I talk too.
Noam’s study focuses on the health of the entire team at startups. Any problems you have with your co-founder as part of a small business are going to leak into that team. It can easily destroy the entire team’s morale and will to work. Even when I was running a 100% remote company and having issues with my co-founder our team knew that something was off. You can not hide it or fake it, problems with your co-founder must be dealt with right away. I am planning a longer post on how to inform your team in the best possible way.
If you are aware of any other studies on this subject please email me and let me know.