Myth 3: We will be co-founders forever
No relationship can stay perfect forever, and that applies to co-founders as well. Whether it’s differing ideas, opinions, or basic personality conflicts, human conflict to some degree seems inevitable in any startup. And while we hope that your partnership can endure those rough patches, it is an unfortunate reality that many times one or more parties decide to part ways. That's why it's important to make sure that you're prepared, should the day come that one of you decide to leave.
It’s important that you have co-founder agreements in place from the beginning, if possible. You and your co-founders should address any potential pitfalls and issues early to avoid more difficult situations down the line. You don't want the spectre of a potential parting of the ways hanging over you as you try to move your business forward.
Your co-founder agreements should cover the areas of IP ownership, equity and buy-sell agreements, and any other potentially sticky areas that might arise. There are fewer things that could potentially damage your company more than heading to court over a dispute about the rights to your company's product. Having everything in writing from day one will help all parties involved sleep easier knowing that the company's future won't be endangered.
Co-founder lawsuits can happen in companies of any size. Most of us are familiar with the lawsuits surrounding Facebook from the movie The Social Network. And while that may have been somewhat dramatized for the big screen, the potential for risk is very real. Last September, Snapchat settled a lawsuit from its co-founder Reggie Brown, who was accusing his fellow co-founders of unfairly removing him form the company and not giving him proper credit or fair compensation for his contributions. And while the terms of the settlemet were'nt disclosed, the suit took over a year to reach a conclusion.
Click below to find out what kinds of risks you and your co-founder may be creating, whether due to ownership, or a lack of contracts:
After completing the free Business Risk Assessment, have you realized you need to create and sign a contract ASAP? Shake Law is fantastic, with contract templates segmented by purpose. They have apps for both Android and iOS so you never have to forgo protecting yourself for the sake of "convenience."