Case #3 Crisis in partnership. How to keep a startup alive and reach a new level?

CLIENT

B2B2C FinTech startup with two founders. Launched in 2018.  100+ employees. 

INLET CONDITIONS 

Two leaders founded a successful FinTech startup. They brought the startup to the break-even point and stack on the verge of the next great transition to scaling. The partnership became stagnant.

Everything was simple as long as the goal was survival. They worked shoulder to shoulder, supported each other, risked, and overcame obstacles, fully committed to this goal. And they survived.

Then it was high time to grow to its full potential. New challenges required new goals, strategies, resources, competencies, and, what was most important, relations at a new level.

The partners had their own visions for the future. Each of them strived to defend his opinion as the only right one. It became harder for partners to reach an agreement. They even thought of splitting or selling the business. But leaving the partnership was facing an even bigger challenge and cost and they understood that.

CONTRACT

The goal was to reach a new level of partnership. That means improving their relationship and coming to a reasonable agreement, which meets the long-term interests of each party as well as regulates conflicting interests, and contributes to keeping the startup alive and reaching a new level.

GETTING STARTED

We held deep interviews with the founders of the startup to better understand the current situation, as well as their readiness for change to be ready for change. The results of the interviews highlighted the growth points as a focus of the work.  

GROWTH POINTS

• Partnership crisis. It looks like their relationship is collapsing. There are challenges in reaching agreements and smoldering conflicts that can’t be solved in a constructive way.
• There is something that stops them from being honest and open in terms of what they want and expect from each other or how they will change their roles in the new stage of development of the company.  
• 1:1 meetings are unproductive. The discussion of important issues spills over into an emotionally charged self-defense position. Things don’t actually move. Important decisions can’t be made.
• Partners do not accept that each of them may have a unique vision of development worthy of respect, although it is unnecessary to agree with every aspect. 
• The quality and productivity of their work are slackening.
• The absence of clear boundaries gives them а green light to move within the territory of each other with a minimum sense of responsibility for the consequences.
• The partners try to control each other. Mutual distrust increases.

DONE

• During individual and pair sessions, we explored the level of compatibility between partners. They have the same values, but they look at the world, interpret what is happening around them, and build relationships in different ways.  
• While there was a goal to survive, this difference was not so obvious, but the new challenges of the startup were so stressful that they highlighted their otherness.
• Otherness within a team can become a great competitive advantage because it allows for making non-standard, creative, complex decisions. Especially in turbulent times. If they know this, can they accept, respect, and trust each other? Will it be possible for them to continue a challenging journey together?
• The partners realized they were spending a lot of time and energy trying to figure things out. Their actions are driven by impulses under the pressure of accumulated emotional charge that destroys them from the inside, instead of following agreed precise decisions.
• Reviewing the consequences of their actions/behavior, they realized the quality of work and productivity had decreased significantly. They realized that if they got bogged down in this conflict, the losses for them, investors, and the entire business‌ could be huge in the long-term perspective. 
• The partners realized that their areas of influence and boundaries of responsibility were not clearly defined. Being co-founders, they believed they had the right to interfere in each other’s affairs without asking, by default. Since they communicated through different messages, there was disagreement within the team.

OUTCOMES 7 MONTHS LATER

• Founders clarified the reasons they need a partnership, the contribution they are willing to make, and each other’s expectations.
• To minimize the risks of partnership disagreements, we assessed personal compatibility with each other. 
• The partners have considered how their differences can manifest themself in their daily work, how they can be turned to their advantage, and how to act if the differences become obstacles. 
• They have clearly set highly specific business goals and strategies, and have thought through exactly how they intend to achieve what they want.
• They defined their roles, areas of influence, and boundaries of responsibilities.
• Created a unified reporting and tracking system to ensure maximum transparency. 
• Their interaction has become more constructive due to trust and mutual respect, which increased their productivity and quality of work.
• All these changes have had an overall impact on improving team relations, growth in key metrics, and attracting new investors.

RESUME

During coaching accompanying, co-founders moved their partnership to a new level. They mastered tools and practices for the further development of their relations and business. They have gained:

• new purpose for cooperation;
• partnership agreement;
• agreed on goals and strategies;
• unified reporting and tracking system;
• tactics for resolving disagreements and conflicts;
• new skills of constructive contact and feedback.