Ask HN: Solving a founder dispute in a successful bootstrapped startup?
I bootstrapped a startup in a very current and attractive field. We have a leading hardware product with a major edge and lots of technology, repeat customers, amazing reviews and cooperation opportunities from very significant companies lined up. We sell high $xx,000 a month at the moment, after a very short time on the market. The venture was primarily developed by me, with a cofounder which worked on this part time while keeping his day job (he's a minority shareholder). We've hired some brilliant people, we're financially balanced and we've still taken no external investment. I'm very proud of what we've achieved.
Recently I've had some harsh arguments with my cofounder, which, to put it mildly, revolve around our differing perceptions of reality. These arguments got to a personal level and I have absolutely no doubt that our vectors are on a major collision course that will end in tears. This situation has to be resolved immediately, without bringing the company down and as amicably and on the best terms possible.
The only way forward that I see is to bring in an external investment, which will buy his shares for an appealing sum and he'll be out of the company. We held off getting an investment until we have a product and revenue, which we do now. Ideally I'd wait a bit more (our second product is going to be a heavy hitter), but this situation calls for an immediate action before the stakes become even higher.
What are your thoughts on this situation? Have you seen similar situations resolved without destroying the entire company? What would investors think of this? Any special structuring we should do?
Building this business has been such a crazy uphill battle, and now this. I should be working on the product now, and not dealing with this crap. Ugh. It really stresses me. At least I feel better sharing this here. If someone wants to take this discussion private, then mail me at disapproval2@gmail.com
Published in 2014, this chronicle by @disapproval details the mechanics of building a profitable, self-funded business without venture backing.
The community focused on B2B customer acquisition channels, cold email vs SEO distribution, and balancing full-time employment with side-project development.
At your stage investors generally want their money to stay in the company and be used to help it grow, not be immediately taken off the table.
How big is the share? People with minority stakes are asked to leave all of the time. He can keep his shares, he just can't be part of the company any more (talk to a lawyer).
The only way you can resolve this is by talking to your cofounder and figuring out what he or she wants. Do you have any paper in place to describe what happens in these types of situations?
What's your company structure? Are you actually incorporated? Do you have an operating agreement in place? Does your partner vest? There's paperwork to that effect?