Question 1

What happens when co-founders fall out?

Accepted Answer

Usually a slow deterioration rather than a single argument — and what determines the outcome is almost entirely **what was agreed at the start**, when everyone got on and nobody wanted to raise it.

**Why it happens so often.** Co-founder conflict is among the most common reasons early businesses fail, and the triggers are predictable:

**Unequal contribution over time.** Equal equity split at the start, unequal effort two years in.

**Diverging ambition.** One wants to scale and raise; the other wants a stable income business. **Both are legitimate and they are incompatible.**

**Role overlap or role drift**, especially as the business outgrows the founders' original skills.

**Money** — salaries, dividends, spending decisions.

**Life changes** — health, family, relocation, a better offer.

**What determines how badly it goes:**

**Vesting.** Without it, a founder who leaves after six months keeps their full stake permanently — the **single most damaging omission** in early-stage companies, because it leaves a large block of dead equity that makes investment and recruitment harder for years.

**A shareholders' agreement** containing good leaver and bad leaver provisions, compulsory transfer terms, a valuation mechanism, deadlock resolution and restrictive covenants.

**Articles of association** covering share transfers and director removal.

**Who has voting control.** A 50/50 split with no casting mechanism produces **deadlock**, where neither can act and the company is paralysed. This is much worse than one person being in charge.

**Whether IP was assigned to the company**, rather than sitting with individuals — if it was not, a departing founder may own something essential.

**How it actually gets resolved:** negotiated buyout at an agreed or independently determined value; one founder stepping back to a passive shareholding; mediation, which works better than litigation and is far cheaper; or, where the agreement provides, a compulsory transfer.

**What to do now, if you are still on good terms:** vest everything, write the agreement, assign the IP, and **have the conversation about what each of you wants in five years** — the disagreement is easier to resolve before it is personal.

General information, not legal advice.

Question 2

What is vesting, and what is a cliff?

Accepted Answer

Vesting means equity is earned over time rather than owned outright from day one. A cliff is an initial period during which nothing vests at all. The standard arrangement. Four-year vesting with a

Question 3

Why is most startup advice affected by survivorship bias?

Accepted Answer

Because almost all of it comes from companies that succeeded, and the failures that did exactly the same things are not available to be interviewed. The classic illustration. During the Second World

Question 4

What is founder-market fit?

Accepted Answer

The match between the founders and the particular problem they have chosen — and investors weigh it heavily because at the earliest stage, when there is little product and no traction, it is close to

Question 5

Should you bootstrap or raise investment?

Accepted Answer

It depends far less on ambition than people assume and far more on whether the business has a structural reason to need capital before revenue — and on what you actually want the business to be. What

Question 6

What are the realistic exit options for a business?

Accepted Answer

Fewer and less glamorous than the coverage suggests. The overwhelming majority of successful exits are trade sales, and several perfectly good outcomes are not exits at all. Trade sale (acquisition).

Question 7

What are the common mistakes to avoid when starting a business?

Accepted Answer

Common mistakes to avoid when starting a business include lack of a business plan, underestimating costs, ignoring market research, and neglecting marketing.

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