The Stages of a Co-Founder Relationship

At some point, every co-founder relationship changes. Yet founders rarely plan how their relationship must evolve.

Recognising the key stages helps you anticipate when your relationship needs to change. Because if you don’t consciously evolve it, the company will force it, usually through conflict.

These stages are not rigid, but they reflect predictable shifts in pressure, responsibility, and identity.

Stage 1: The Early Stage

Founders start here with excitement and shared vision. It ‘feels fair’ to have equity equality, this is rarely questioned from a practical standpoint as trust is essential. You do everything together. The relationship prioritises moving with energy and speed and is built on implicit expectations.

Most founders design their relationship around complementary skillsets but rarely think practically about whether an unequal split would make more sense under changing conditions, much like marriages that begin without a prenuptial agreement. As the company grows, this simplicity begins to break down.

Stage 2: Growth and First Crisis

As revenue builds towards seven figures, there are new expectations of us. Personal risk increases, a cash flow crisis might put pressure on your families as you take on debt financing. Roles become more defined, your respective contribution may feel different. Then, under pressure, you might begin to feel things aren’t so equal anymore. Investors and new shareholders might enter the relationship. You might begin to question what equality and fairness should be, but this is rarely properly addressed once the crisis passes, the funding is secured and we move on, at speed!

Questions that should arise:

• “What happens when effort or personal circumstances diverge?”
• “How do we revisit our agreement?”

Early-stage co-founders must begin to design for future misalignment, not just present alignment.

Stage 3: Scaling and Leadership Crisis

As the company scales, you now have very distinct roles in what must be a more structured organisation. Power and authority shifts between you with changing responsibilities. Expectations of you ramp up significantly. Your job and your relationship is very different from when you started and as your roles change, you may struggle with your identity as a founder versus where your contribution is now most effective. Your personal circumstances may also be very different. Self-awareness is essential to maintain commitment, as you do or do not embrace leadership [See my article on The Leadership Crisis].

Equality, in practical terms, is now a thing of the past and this stage is where most Co-founder relationships fracture. Departures are frequent or the company stalls and fails, often due to dysfunctional leadership dynamics. This is increasingly recognised as the critical reason companies fail as they grow.

Potential co-founder outcomes:

• [One or more Co-Founders] shift to individual contributor role, or
• Shift to key executive VP role that suits natural capabilities.
• Both/all move into board positions only.
• [One or more] leave the company due to not being able to take CEO role (current mismatch in skills).
• Company Divides into different entities, each taking lead role.

Stage 4: Maturity and a dynamic leadership system

The company is now bigger than the founders, and as the co-founder relationship matures, your identity becomes more flexible and you learn to let go of outcomes, and so you become a more dynamic leadership system.

Tension remains where you try to control your position, versus understanding and allowing for what the company most needs of you. A shadow tension may remain concerning contribution vs attachment. Do you ask “Where do I add the most value now?” or do you ask “Where do I feel most needed?”. Are you designing the team and company to be independent of you and run itself, or to be dependent on you?