Ask HN: Has anyone quit their startup (VC-backed) over cofounder disagreements?

Cofounder splits are extremely common. Cofounder "couples" counselors are a thing you could look into to help resolve your differences. Your VC might have recommendations for one. If you ultimately decide to split, I'd recommend at least one of you (or "the company"?) getting a lawyer to draw up a formal separation agreement you both sign in order to split in the cleanest possible way.

I thought this was satire before I looked it up. I mean, it makes sense but it's still so hard to believe.

Agree that these are extremely common but you don't hear about them when you're constantly reading TechCrunch.

I've seen almost 10 breakups from startup friends in the last year and have been through one myself. It's like dating — very few end up in marriage and most marriages end up in divorce. Except maybe worse, because people get married after knowing each other for just a few days, in order to apply to YC.

Do you really need a lawyer here? Presumably the mechanics are pretty simple: you're vested halfway to your share (in what is probably going to be worthless equity), which is what you walk away with.

I ask this because I have on several occasions lawyered up (sometimes adversarially, sometimes just to keep my own ducks in a row) during separations and (if you're working with someone serious who is qualified to manage a founder separation) it's always expensive, but not always valuable.

I also ask this because this is the Nth "I'm splitting up from my startup" I've participated in, and I've noticed that for better or worse, this community has a bias towards dramatically satisfying resolutions, like ensuring for instance that each founder in a doomed startup receives precisely the allocation of company assets that they're entitled to. In the real world, the smart play is often just to walk away.

This is very interesting to me. From this thread: https://news.ycombinator.com/item?id=43472971, I am wondering if there are anecdotal stories of how equity is being handled after a split.

On one hand, if the leaving co-founder retains all equity, it creates a sandbagging situation on a cap table that's no longer useful to the business. On the other hand, it feels right for the leaving co-founder to enjoy some upside for the years they put in.

This problem is what vesting is for.

Standard 4-year vesting doesn't work well for this situation. A founder leaving a worthless startup with 20% of the equity is a huge problem. The remaining founder will need that equity to offer outsize offers to senior (and eventually C-level) folks to replace them. And it's demoralizing for the remaining founder and team to be working extremely hard to make the company successful, while the departed founder reaps the rewards with no effort.

Opinions will differ here, but I think if you're leaving a pre-PMF startup you've created essentially no durable value, and should return nearly all of your equity.

I've heard of startups doing 10 year vesting for founders (with double trigger) to align this better.

I'm sympathetic. We tried to get 10 year vesting together at my last company. But 4/1 is industry standard, and my rebuttal is that partners just bake 4/1 expectations into their decisions. If the partnership is uncertain about a member 6 months in, and kicks the can down the road another 7 months, that's on the partnership, not the structure.

If you can't do 10 up front, you can usually reset founder vesting back every funding round to slow it down. This is fairly common.

You're counting on one reticent founder not jamming everything up, though.

Yeah, but this also offers a clear exit opportunity (during the raise), and limits the "blast radius" to time-since-last-raise, rather than progress against the first four years of the company.