3 THINGS YOU NEED TO DO BEFORE YOU FIRE A CO-FOUNDER | METASTARTUP #21

Shh do you feel that raw tense emotions stirring inside you well that's what most people feel when they upset with the people they work with generally when you're angry your blood pressure rises a lot of hormonal changes take place inside you that are not optimum for human survival that just make life a pain to live through having those pent up emotions locked inside you month on month isn't good for your health nobody needs to tell you this if you are watching this video let me guess you just got into an argument with your co-founder and you're thinking about why have I even gotten into this company why do I even start this why am i working with this person right and for a second I want you to calm down and understand that human conflict is so natural it's ingrained in our DNA right we need the political environment to thrive it's in our blood to create hierarchical structures and to have the sense of ego of you know I've done this person's not doing enough we have those feelings but the problem is most of the time those feelings can be wrong right so for a second even Before we jump into this conversation of how to get rid of your co-founder I want to think about are you seeing this from the right perspective take a step back zoom out and see the entire picture go back to day one because people forget what other people have done people have very short memories including us including you watching this video me too right and we might forget the contribution that someone has put in place six or eight months or even two years ago we forget that contribution so for a second stop see if it's just temporary emotions flaring from both your end as well as your co-founders now that you're done with that if you still feel like your co-founder isn't adding enough value I'm going to teach you how to fire your co-founder in a respectable and a dignified way before you fire your co-founder there are some prerequisites the first one is that you have to make

sure you even have the right to fire your co-founder in the first place most companies have bored and if your co-founder is on the board alongside you then it's more complicated to fire a co-founder than you think and you will need to involve a lawyer if your co-founders not on the board and you have the Express authority to fire them then that picks this checkbox make sure you have the authority to fire your co-founder this is one of the reasons why I ask a lot of teams not to have equal equity so when then these teams that were together say if it's just two of you and you go founder and you both have 50% then it's hard for anyone to make hard decisions that hurts the other person and sometimes in business you have to take decisions that might hurt people the repercussion of the decision of taking that hard decision is that it will hurt some people and which is why I always believe that the CEO or whichever person in the company the buck stops at needs to have a little more equity than anybody else in the company the second checkbox is that you have to make sure that you had a vesting period in place if you do not have a vesting period in

place and for those of you who don't know what a vesting period is either you can go google it or go watch one my previous videos vesting periods are put in place to make sure that when you fire somebody or when they leave they don't walk away with all their equity on day one you can simply join a company work for two days and say hey I'm gonna leave now right and what would happen is that you walk away with all your shares so view and a co-founder had 50% each and you go founder decide to walk away a week later and he had no resting on those shares he would have 50% the company and he wouldn't have had to work for more than two dates a vesting period make sure that some number of shares are locked in usually most the and every year 25% those shares are given back are released right so you have this for your vesting period and every year 25 percent of the shares are given to the person who owns the shares so you make sure that if you're working with somebody they at least stay with you for four years to get all of their equity all right otherwise it doesn't make sense you haven't put in enough effort you have to put in enough time into the company now that's check box number two because if you didn't have a vesting period in place and you fire your co-founder you basically be giving him free shares in your company doing nothing the third prerequisite is that you need to make sure that the IP rights of the product or whatever you

build is in the company and not in any individuals hands right if the IP is in your hands or you co-founders hands and you end up firing that person and the IP belongs to him or it's unclear where the IP is he can just go build the same product tomorrow right and he can just say I'm gonna build a competitor you I have all this competitive intelligence she need to make sure there's an IP in place and that IP belongs to the company and not to any individual shareholder now that we've got the prerequisites out of the way let me get to the actual act of firing a co-founder the best way to get what you want in a situation where emotions are flaring is to have whatever you have in your head like whatever solution to come from the mouths of the other person so in this case you must the best way to fires a co-founder is to have them tell you that look I don't want to work with you right and I think that we should call it a day with this startup or I'm going to walk my own separate way and you can do it yourself so essentially you want your co-founder to admit that this relationship isn't working out and that the best way forward is for that co-founder to move on by him or herself that's harder to achieve than you think it is the biggest problem is that people have invested time and effort and emotional energy into a company and letting go of that is very difficult for some people and you need to understand that the way I put this conversation in place is to walk up to my co-founder and say look the company is suffering because of the fight that we've been having and I feel like you are in contributing or you can mention the reason at that point you know you had expectations and then they didn't contribute as much which is why I really think that founders should have a founder agreement where everyone's roles and responsibilities are clearly mentioned and this will be in an episode I'm going to put an episode after this called building your core team which has some of this in place I need to have this founders agreement that mentions what the expectations from each person are so that you can point to the founders agreement and say look you are expected to row a B and C but you only manage to do it right this isn't important like you need evidence when you need to fire somebody with heavy within your company then the next thing to do would be to tell them what is the best way we can go ahead in our own separate ways without having bad blood between us that's just putting out there and you know it might seem like in this fit of rage or emotion that you just want to go out and say you know you're fired but that never ends out well right you will always get into terrible situation later because six or seven or eight months later you know there's always that bad blood and pin you co-founder of the company even though that person has been fired there are many ways that person can cause problems so the only way to solve this problem is to do it diplomatically get the solution from their own mouth ask them what is the best way we can move forward without working with each other if the co-founder says that the company itself should be shut down mention that you've built this company and you would like to see it doing well going forward and you're happy to part with maybe twenty five or twenty percent of the shares while the co-founder is leaving which means that you vest 20 percent or 25 percent of their shares now you might think hey this person hasn't put in twenty five percent worth of effort but it's okay it's not worth the backlash that you will get in the future if you have cash on hand then it makes sense to buy back those twenty five percent shares at a particular value at a discounted value maybe seventy five percent of the current valuation of the company but if your company is not valued at a huge sum yet or not valued at all then it might make sense to put a numerical value and this could be random it could be a lakh could be five lakhs whatever your co-founder is comfortable with whatever you think is fair severance compensation and say look I want you to sign a document that says that you left on good terms and here's cash compensation in return and that document will go a long way in Facebook's case the Winklevoss twins and these guys were like very early partners in the Facebook environment they came back years later and told Mark Zuckerberg look we were involved with Facebook so give us some compensation right to avoid scenarios like that in Facebook ended up spending millions of dollars just to you know keep them quiet you don't have to get into something like that if you can get a waiver signed on a document and pay a severance at early stage you might think that you're giving away money and it doesn't make sense but it actually makes a lot of sense considering the fact that there could always be so many problems that come up or creep up yours in the future so that's it for this video summarizing make sure you check off your prerequisites keep the conversation diplomatic have the solution come from the co-founders mouth instead of yours and the best question poses how do we go forward without causing bad blood that's the right question to ask your co-founder if you want a separation this like separating from your co-founder is as bad as you getting divorced from somebody right so which is why I always believe you should choose your co-founders very well and in my next video I'm going to teach you how to choose your co-founders really well where to find them how to get involved what's the best way to do a founders agreement how do you work on expectations moving forward how to nurture and improve the skillset of your co-founders all of that will be covered in the next episode and if you want instant access to the next episode all you have to do is like subscribe and follow me on Instagram this is what we are calling you today