Exiting Well
80% of ventures end their life within the first 5 years. 65% of startups fail due to conflict among co-founders.
Yet, for every 10 startup podcasts on excelling at strategy, sales, growth hacking, leadership, fundraising and unicorn-hunting… no one talks about doing endings or (co-)founder exits well.
For someone awakening to the looming demise of a business or founder partnership, the business administration is largely straightforward, if not tedious. The relational aspects, and commercial settlement? Far less so.
It is not obvious where to turn to for resources on how to best move forward. Who do I ask? How do I crowdsource approaches? (In addition to this article, I’ve got you covered with a resource list compiled from my research and healing process - read to the end!)
Constructive or Destructive?
Co-founder/investor breakups are rarely spoken about candidly, and typically announced in highly-orchestrated, minimal ways. You might see the occasional Linkedin article objectively outlining why a startup is closing, or why a CEO is leaving, that give no hints of what’s “under the hood”.
This subject is sensitive to egos, reputations and bottom lines. Moreover, such stories tend to stir up shame and blame, a dynamic I’ve seen exploited in the rare disputes that do make the news. And sometimes, NDAs and legalities explicitly restrict disclosure.
Suffice to say: with the high personal stakes involved in startup life, breakups between co-founders, or between founder and investors, can be confronting, life-changing and character-defining, particularly if it goes hand in hand with an exit or closure of the business.
It is significantly more painful, and potentially traumatic, when the breakups are destructive.
What are the predictive behaviours for a constructive or destructive breakup? This piece zeroes in on separations between co-founders, and sometimes with their investor(s). I will share 4 predictive traits that I’ve observed in my sample pool, followed by some recommendations and resources for those facing potentially destructive transitions.
The Sample Pool
I have held space - as coach, spiritual guide, shoulder to cry on and tear-wiper - for founders weathering difficult breakups with their co-founder or investor.
My personal co-founder breakup experience led me to earn a certification as a professional in the Trauma of Money in 2022, which augments my coaching practice with trauma-informed financial healing. I’ve explored various forms of financial trauma across 9 money realms in the course of this study.
One such realm is workplace trauma, which encapsulates a spectrum of experiences:
Burnout
Workaholism
Political power-plays
Toxic team or organisational cultures
Co-founder breakups, or
Investors pushing founders out.
In embodying this work, I have processed all but one of the above workplace trauma in my life. I also apply the language and tools to help others navigate and heal through formal coaching.
My curiosity about this subject called me go behind the curtain, conducting informal interviews with founders and investors about their separation experiences, covering questions such as:
How did you first find yourself in this situation?
What would you have done differently in hindsight?
How have you grown as a result?
How do you show up differently now?
The extent of suffering, the price of recovery as well as the ensuing personal growth I’ve witnessed inspired me to aggregate my findings below. Sometimes we are meant to grow through discomfort, but if I can make this bittersweet journey a little easier for you or your loved ones, that is meaning in my efforts.
predictive behaviours for a constructive Vs destructive breakup
Constructive | Destructive |
One model for this is a rare, 1-hour podcast between 2 co-founders, a year after going separate ways on a business venture. Sherry and Raymond are genuine and unfiltered in this unscripted conversation, providing their respective account of events in an articulate, evidence-based manner. At parting, there was clarity, openness and mutual respect which carries through to the present. I highly recommend a listen, to witness the characteristics below in practice and see new ways of showing up.
(But don’t be too hard on yourself if you don't measure up. In this video, they have the benefit of hindsight and have started on their next chapters.) | I did not set out with any hypothesis, but my interviewees/ coachees narrated an overwhelmingly resonant shared experience, entirely unprompted, of a narcissist-codependent dynamic. Most of the accounts named consistent red flag behaviours they saw in their partners; and some recognised their own codependent tendencies. A minority exhibited narcissism traits themselves. I have captured these examples and quotes to paint the picture. Narcissism has long been linked to mercurial startup leaders but we tend to only see the wins, and not the damage. |
1. Maturity and Growth Orientation
High individual maturity in all parties involved. | One (or both) are of low maturity - and this may not necessarily come with age or work experience. |
All parties have high self- and situational-awareness, with a keen commitment to understand themselves and develop their individual capacity. They would typically be relatively well-rounded individuals. That both Bluejay founders invested in working with a coach - at individual and team levels - shows that they actively valued awareness. | It often correlates to having low interest in personal growth - the work of understanding or developing ourself. Less about consuming books, it is the willingness to adapt by integrating cognitive and emotional wisdom into one’s life. It can also look like over-reliance on one strong suit, while neglecting gaps. |
2. Sense of Self
A secure sense of self can be seen in two ways:
| The root of narcissism is the need to be special. Constantly seeking recognition of their superiority, they might:
|
Those who are secure don’t need the limelight or assurance 100% of the time. |
If their specialness is under threat, their responses vary by brand of narcissism:
|
3. Capacity for Self-Reflection
They were able to speak about both personal challenges and business strategy candidly, objectively and with curiosity. Such conversations are geared towards:
Others’ points of view are acknowledged, without getting into the blame game. All of the above make for psychologically-safe conversations and productive discussions. | A narcissist’s desire to be come out on top/ be seen as the “winner” usually trumps their ability to take ownership. e.g. “I’ve never heard X take responsibility for something that didn’t go well. It always seems to be someone else’s fault.”
Apologies lack specifics, culpability and even subtly shift the blame back e.g."I was going through a lot, can you see why I did X? I am sorry that you feel upset" What a proper apology looks like They do not respond well to being held further to account. You or your team may feel unsafe to engage as any authentic expression can be exploited as a counter-attack. |
4. Relational or Transactional Approach?
In a constructive dynamic, all parties have room to show up as whole persons, without fear or self-protective mechanisms
The real test of just how relationship-centric one truly is when facing existential issues of survival, in a resource-strapped environment. Look for such evidence in your partner's past experiences. | At the heart of a destructive breakup is a dehumanised worldview that sees others as “here to help me get ahead”. You may be the exception to the rule as you observe your cofounder manipulate and control others:
You may already have started second guessing yourself e.g. “I hope X doesn’t talk about me like that behind closed doors…” ehind closed doors…” Or the gaslighting may already have begun e.g. “You need me. I don’t think you can run this business by yourself.” |
Although Sherry and Raymond make it look really easy to separate well, one cannot assume that things naturally end on the same rosy, well-intentioned note of beginnings.
If there are many more examples from the “pear-shaped” end of the spectrum, does it mean that it only takes one narcissist to push things over the edge?
Well, for every narcissist that ran wild, is (at least) one twin flame who unknowingly enabled them - a codependent.
Let's not judge them for having missed the signs that, to an outsider, are completely unacceptable and avoidable. The trouble - and the biggest secret - is: in a narcissist-codependent relationship, even an intelligent and grounded person can become conditioned to gaslighting as the norm.
Here are the 5 core symptoms of codependency and the reasonings that founders who have suffered silently past breaking point shared:
Low self-esteem and dependency: “I can’t do it alone.” "1+1 is not 3 or even 2, but 1.5 is still more than 1.”
Caretaking in the form of mission martyrdom: “I really wanted to make it work and bent over backwards.” “This was never going to be easy and struggles would be worth it if we accomplish our impact.”
People-pleasing behaviours and difficulty setting boundaries: “I will turn the other cheek to keep the peace, or not create more work to deal with.”
If you have said any of this to yourself, please know: there is no “greater good” or impact great enough to justify staying small, repressing your needs or tolerating a narcissist.
How can I mitigate the makings of a destructive breakup?
What if you’re reading the list above with a growing sense of dread and recognition that…
your cofounder exhibits narcissistic traits…
or you have codependent tendencies…
Is it game over?
Difficult situations/ questions tend to not have a direct and quick fix. Here are some recommendations and resources I offer to move forward:
Be guided by your Future Self. There will likely be hard choices and conversations to face. Putting on the hat of your Future Self can give you courage and clarity on how to show up and act.
Your Future Self will have only immense gratitude to Present You for seizing the moment, acting on all the information at hand and doing the best available to you.
Allow yourself to be supported by others. Breaking the isolation and re-establishing human connection is the first step to taking back control and triumphing over the narcissist’s rule of shame.
Engage with your stakeholders. Your people - those who have stood for your highest self, believed in you when down - always welcome hearing from you and find meaning in being there for you.
Learn as much as you can about narcissism and codependency. It gives language for your experience and trauma is often pre-verbal.
You’ll also form a roadmap of the shortcuts (e.g. what not to respond to) and potholes (the tactics they might employ) as you navigate leaving a narcissist.
At some point, you may get mad with yourself; accept that as a step of the grieving process as you transition out of codependence into an empowered, new self.
Assemble the circle to address all your needs. These circumstances call for a circle of diverse resources to create clarity on their desires, shine light on blindspots and carve your path forward
Emotional - Professionals, loved ones or friends who validate and hear you without judgement. These are times when it can be hard to differentiate our triggers from our truth, which emerges only when we feel safe (see #5 and #6)
Practical - Strategise next steps with work buddy/ mentor, fellow founders, coach who get your operating context
Expert - Lawyer, corporate finance banker for commercial solutions; Accountant, company secretary for the corporate “how-to’s”; Therapist / coach for recovery; Financial advisor to model the personal ramifications
Vet yourself for these blindspots 1️⃣ Attaching your identity/ self-worth to the business
“This is my last chance to make something of myself/ hit the jackpot”
"I've been doing this for years, I can't imagine what else I'd do."
2️⃣“I am right” - but is it also the right time and place?
Know what you want and table it clearly Some of the important, open-ended questions include: 1️⃣ Who takes the business forward? 2️⃣ How to price the leaving founder’s efforts/ investment? (and other money issues) 3️⃣ How to manage stakeholders of the business “What do I want?” can be the hardest for those with deep people-pleasing wiring. I recommend the practice of “Asking 5 layers of ‘Whys’” to build deep personal alignment.
Don’t be complacent about the law. So you didn’t make the amateur mistakes of 50/50 shares, skipping the founder talk, not working together on something smaller before. You may even have in place the best-in class founder agreement and comprehensive documentation with solicitation, competition, disparagement and vesting clauses up the wazoo. Here's the reality: legal documents cannot protect you from unscrupulous tactics or the poison of erroneous gossip. Narcissists who suddenly stop getting their way with you are particularly vitriolic at spinning stories and manipulating media and processes.
The founders who remain with the business usually have more to lose, which can't always be quantified as damages should you undertake legal proceedings.
Most of all, whatever you do - Start healing now. If the foundations of a destructive breakup are in place, there’s a good chance you are in some form of trauma response.
Tend to that, whatever the financial stakes are or regardless of which clients/ investors are knocking urgently. You will navigate this best by healing proactively, from this present moment. No one can act well on the world’s best advice with an activated nervous system. Healing is neither linear nor predictable. I have seen things get worse before improving sometimes. There is no avoiding it though - what you gain by putting off healing now, you will pay back compounded, down the road.
“Time does not heal all wounds; it just gives them space to sink into the subconscious, where they will continue to impact your emotions and behaviour. What heals is going inward, loving yourself. accepting yourself, listening to your needs, addressing your attachments and emotional history, learning how to let go, and following your intuition.” - Yung Pueblo
List of resources
Dr. Ramani, Youtube’s resident psychologist expert on Narcissism
Cofounder horror stories An article from Vestd, with co-founder prenup templates
The Co-founder’s Show A podcast exploring various flavours of this relationship e.g. going into business with family/ best friends; decision-making; communication styles
Books
The Founder’s Dilemmas by Harvard Business School professor Noam Wasserman
On healing financial/ workplace trauma: Decolonizing Wealth by Edgar Villanueva
To beat codependency: Codependent No More by Melody Beattie; The Courage to be Disliked by Fumitake Koga Ichiro Kishimi
Book a call with me. Something in this piece struck a chord, and you want to process it further? What does healing look like?
Many who have taken up my listening say they felt “whole” and “cared for” afterwards. Rest assured: any insights/ observations I glean will be anonymised.
I spoke in a panel on Exits in May, that only scraped the surface of this rich and complex topic.
If you’re interested to hear other aspects of workplace trauma from the raw interview material, let me know what question interests you. I have numerous half-written drafts that might be completed with a nudge!
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