Posts by Author Initialized Capital

Co-founder Conflict

This post was originally posted on TechCrunch here.

Here’s how it felt in the weeks before I resigned from my last startup: I couldn’t sleep. I couldn’t eat. Resting pulse at 120. I had reached a point where I couldn’t agree with my co-founder over the future of the company. I had to step away from the startup that I shed blood sweat and tears over for years. I didn’t want to do it, but I reached a point, physically and bodily, where I couldn’t handle the stress anymore.

This is the first public post I’ve ever talked about it, and through advising hundreds of startups I’ve learned that my story is not uncommon.

Every co-founder situation is different, but one common problem that keeps popping up really revolves around how the founders engage in conflict: either not enough, or far too much.

Being successful will mask co-founder problems

Founder drama happens even in situations where you wouldn’t expect it to crop up. Success will cover up many sins. When things are going up and to the right, things might be going wrong underneath and you won’t be aware of it. It’s the black ice of startups. It’s dangerous because every startup will hit the skids sooner or later. You can’t count on good times forever. Winter is coming.

Posterous, the startup I cofounded in 2008, grew 10X yearly and became a top 200 Quantcast website in that time. But by the end of 2010, growth had flatlined.When things were going well, we were too busy keeping the site online to have anything to disagree about.

I learned the hard way that if you haven’t prepared for conflict in your co-founder relationship, you’ll be at each other’s throats right at the moment when you most need to be working well together.

The mistake that my cofounder and I made was in avoiding the dynamics of our co-founder marriage altogether. We rarely spoke directly and honestly with one another. We didn’t stop to reflect on what he needed or I needed. We never sought professional support to ensure the health of our partnership. When the honeymoon ended, there was no healthy foundation to support the company.

During my time as a partner at Y Combinator, we always looked closely at how well co-founders knew each other before they started. Most people think of good co-founding pairs in purely functional terms: a business person paired with a technical person. This is deeper than that, because when conflict does arise (and it always does), if you have nothing in common other than the startup, you’ll struggle to find common ground at the worst of times. It’s necessary for founders to have something in common, but not sufficient in and of itself.

In my case, I had known my co-founder for over 8 years and we had been friends since college. We had history, but we learned history is not enough — you’ve got to maintain it like any relationship. It isn’t enough that you have been friends for years. It matters what your relationship is like now.

Avoiding conflict

With hindsight, I now realize my rift with my cofounder was entirely preventable. We stopped spending time together because we were avoiding conflict. I wanted so much for us to succeed, and I wanted so much for us to be great co-founders (and to maintain the narrative that we were close and and had a good partnership) that I skipped the hard work that it takes to get that relationship and do our best work: embracing conflict and resolving it. It’s a problem that I’ve recognized over and over again in founders whom I’ve worked with both as an advisor and investor.

If you haven’t spent time together outside of work, ask yourself why? If you see your co-founder coming down the hall, do you alter your course to avoid them? Do you try to keep your interactions at a minimum? If so, that’s a clear sign you’re avoiding conflict by just avoiding them period. That’s just not going to work.

Founders sometimes take the avoidance route to an extreme. One recently told me that he decided to talk to his co-founder only once monthly, claiming it to be the only valid way forward. This was a pretty extreme case of avoidant behavior! I told them they had to either radically spend 10X more time working through issues and resolving them, or prepare to split.

It’s the same script all over again: co-founder conflict is bad, so if we minimize how often it happens, that’s the best possible case. It’s a trap!

My executive coach Cameron Yarbrough points out that this is usually the moment the Four Horseman of the Apocalypse show up: Defensiveness, criticism, contempt and stonewalling. When psychologist John Gottman (author of the Four Horseman concept) identifies those behaviors in marital relationships, he’s able to predict relationship failure with uncanny accuracy. The same thing holds true for cofounders.

Successful co-founders actually embrace conflict, and are constantly in the process of resolving it. If you can’t argue and arrive at the best solution, you’re not doing the work to actually have a real, healthy working relationship.

You have to actually lean into the conflict and come out with a solution that makes sense, over and over again. If you find yourself avoiding it, then you have to consciously expend effort to fight that default behavior.

Don’t agree on something? Don’t leave the room until you have a resolution.

An hour not enough? Cancel your weekend, go on a hike, and figure it out.

In these situations, there’s nothing more important than for you and your cofounders to do the work and come out of it stronger.

Too much conflict? Boundaries

Of course fighting all the time is no good either. It’s a recipe for a frayed relationship sooner or later. When founders are in a situation where they are fighting about everything all of the time, it usually means that their individual roles are not well defined enough. Two hacker founders refuse to give up ground over an architectural decision — product oriented founders with similar skill sets fight over direction, and so on.

Here’s the best way to handle it: Make a list of all of the areas needed for your business. Then figure out who is best at each part, and assign one person to it. If someone’s better at sales, then they should own that. Likewise for DevOps or any other specific kind of task that is core to your business. That person is officially the owner of that thing. Everyone agrees to hear each other out when a decision comes up, but once the owner decides, all debate is over. Everyone moves on. You can’t debate things forever, and co-founders need to be able to trust each other.

Embracing conflict, fighting fair

If this is your first company, this might be the first time you’ve had to make decisions at this stage. What does it actually mean to embrace conflict? What is fighting fair?

Embrace conflict instead of abandoning yourself. Some founders know what they want, and know what’s right, but end up giving up before the fight even starts. If this sounds like you, don’t feel bad about it— that was me too. I’ve always valued harmony in my interactions with everyone I work with. But with time, and again sometimes the hard way, I’ve learned you can’t sacrifice what you know to be right in order to get to that harmony early. You’ve got to fight. Don’t swallow your words. If you have a point, make sure you are heard.

It’s not aggression either. You shouldn’t bulldog your way to a decision. The loudest in the room shouldn’t necessarily and automatically be the one who wins. This is actually conflict avoidance of a different stripe— One that doesn’t give any space to any competing idea at all. You may be sure you’re right, but in a fair and balanced conflict, there’s no downside to listening first and letting the other side know you hear them.

Fighting fair is collaborative and data-based. One concrete thing before you start to work through conflict is to always remind yourselves: you’re on the same team. Everyone in the room wants to win, and all of you want to make this company successful. With that, you’re ready to go talk about the problem as a process, where different viewpoints are aired out and evaluated directly. You fail at this only when you try to skip to the end, either by giving up before you begin (self-abandonment) or asserting you’re right before anyone even gets to get a word in edgewise.

One concrete way to get more direct experience with this is what’s called a T-Group, which is a technique developed for the Stanford GSB’s Interpersonal Dynamics program to train people in precisely this kind of fighting fair. Nonprofit Innerspace regularly hosts them and many founders describe the experience to be extremely valuable.

Get help

Some of you reading this will have been through all of the exercises above, and more. For those of you who are at the end of your rope with your cofounders, I have one final piece of advice: Get help! Talk to your most trusted friends, investors, and mentors. Startups are crazy things, after all. You’re trying to do something nobody else has done, and it can feel very lonely, like you’re the only one who has ever had this problem. Trust me, it helps to get outside of your head here and talk through what you’re seeing with other founders and friends.

Don’t be afraid to bring in the pros. Be open to getting professional help, either individually (to help you respond to the ongoing conflict) or as a group (similar to how a marriage counselor can save a marriage). I can’t recommend executive coaching enough for founders, especially when a company-killing conflict is on the line. You have employees and customers who depend on you to make the right call, and you owe it to them to make sure you do. Athletes have coaches and trainers who help them get to peak performance. Knowledge work can be just as demanding, and I’ve seen many founders find their partnerships saved this way.

Cofounder disputes are the #1 early startup killer, but it doesn’t have to be that way

Cofounder disputes have historically been one of the top reasons why startups fail at the earliest possible stage. Most that do fail happen because conflict (either too much or too little) is left unresolved for too long, but with these tools, you’ll be at least a little more prepared against that possibility.

Embrace the conflict, just the right amount, and you’ll get through this too.

Thanks to my executive coach Cameron Yarbrough for reading drafts of this.


Feeding people more efficiently is a billion dollar business — Why Initialized invested in Shelf Engine

Stefan Kalb ran a multi-million dollar business in selling sandwiches and salads to Seattle area cafes and supermarkets. As an actuary by training, he couldn’t help but notice the profits in the business were driven by how closely his team was able to match supply to demand. Every unit unsold was cost that would not be recouped. He paired up with a friend, Microsoft Hololens engineer Bede Jordan, to figure out a better way.

We’re proud to announce our newest seed investment in their startup, Shelf Engine. We led this $800K seed round with participation from our friends at Liquid 2 Ventures and Founder’s Co-op.

This is a great example of a strong business founder with domain expertise working together with a strong engineering co-founder to tackle a big business lying in plain sight. Both sides of the equation here are exposed regularly to supply/demand mismatch: both food producers (manufacturers and distributors) and food retailers (cafes and grocers). The ordering process today remains a manual one, with nearly all orders still done using traditional methods: phone, fax, or often just pen and clipboard.

When using traditional methods, it’s up to regular operations folks to decide when to up an order or reduce it— but that results in whiplash. If you over-order, then you’ve got waste. If you under-order, then you don’t sell as much as you could have. Individual managers end up increasing or decreasing order size based on what just happened (one data point), which means there’s whiplash as order sizes change dramatically over time.

Food wastage costs grocers as much as 12% of overall revenue, and when large grocers like Kroger average 1.4% long term profit margin, that represents a multi-billion dollar problem that needs to be solved. Shelf Engine has created a food ordering and prediction engine that has already increased annual profit by 7% for an early pilot, and is going live now with beta customers in the Seattle area.

This early stage startup is tackling precisely the kind of file cabinet business we know desperately needs smart software, and we’re proud to be backing this team.

Welcome Eric, Vince and Jen to the Initialized Capital Team

The Initialized team has grown, and we’re very lucky to call these talented people our partners. It’s always been a priority for us to bring on people who are experts at what they do who also happen to be genuinely good, kind, and empathetic.

We’ve gone out of our way to find people who can help with the nitty-gritty of building a company — in going from zero to one. Successful startups are able to navigate not one or two, but thousands, of landmines that stand between them and building a successful company.

With these new additions, we have just upped the ability of our founders to diffuse problems on this path. When a startup reaches the other side of product-market fit, it’s magic, and we are happy that with these great folks, more will be able to cross over.

Eric Woersching, General Partner

Eric is able to help startups understand their metrics and put together operating models that make sense as they hit scale. He is a seasoned financial analyst and investor, and worked for legendary investor Peter Thiel for 9 years, first managing the trading desk at Clarium Capital Management and then as a portfolio manager and macro analyst at Thiel Macro. Eric has also been an angel investor in Y Combinator startups. He is a CFA charterholder and has a BS and MS in Electrical Engineering from Stanford.

Vincent Chu, Partner

Vince has consistently built distributed systems that have handled world-class scale, while also having the empathy and product vision to build software that deeply satisfies what users need. A physicist turned software engineer, Chu worked with me as Director of Engineering at Posterous. At Twitter, he worked on the backend systems that power the public API and consumer-facing features for the home timeline. More recently, he was an early employee at Clara Lending, building its mortgage lending platform. He has a AB in Physics and Mathematics from Harvard, and a PhD in Applied Physics from Stanford.

Jen Wolf, Partner

Jen is a talented interaction designer who can also build, manage, and inspire teams of product managers and designers to build products used by millions. She was recently Chief Product Officer at Reserve, a hospitality platform that connects restaurants and diners. A startup veteran, she was previously the CEO and Founder of a boutique product and design consultancy where she worked on successful projects with companies like Apple, Twitter, Chase, Nordstrom and Starwood Hotels. She has a BA in International Studies from the University of Washington.

Why Initialized Invested In WorkRamp & The Future of Employee Training

Work is changing a lot, and great software remains at the heart of that. Around the Initialized offices, we often talk about how easy it is for someone to share a photo with a friend with great consumer software, but nearly impossible for very simple things to happen at work. 

Today, we’re announcing that we’ve invested in WorkRamp, a graduate of the most recent Y Combinator batch, that is re-imagining how companies train their workers.

Imagine for a moment: A room full of 100 people looking at PowerPoint slides together. The dull videoconference where half the people have the browser minimized. The long-winded email that managers spend days agonizing over, but most folks skimmed briefly and archived immediately. Incredibly, the best option for folks who wanted to train their organizations was to use MailChimp to send the email and check the open rates! 

Enter WorkRamp. The company has built a knowledge management tool that lets employers easily create training guides. These are living documents that are actively pushed to large teams, with sections that train people through tasks, tests and videos. These guides can be revised over time into a master plan that folks use for new employee onboarding, rolling out a new sales plan, or even for engineering teams to share the best security practices. 

Managers can get real feedback about whether the guides are useful, and if their teams actually retain the knowledge presented. For instance, a salesperson can shadow calls with senior sales people and get certified in their skill pitching people, using video, all inside of WorkRamp. Once a whole team has been through the training, the VP of Sales can easily see who’s up to speed and who might need some extra coaching. 

We love that WorkRamp guides are the obvious replacement for the dumb out-of-date wiki, a painful all-hands, and the boring videoconference. Their smart learning management software is already helping companies like Square empower more small business owners, and Off Grid Electric bring electricity to more homes in Africa. 

WorkRamp’s CEO Ted Blosser previously led teams at Box and Cisco, and his cofounder Arshdeep Mand was Director of Engineering at YC-funded SpoonRocket. It’s a winning combination: product/engineering founders who can sell. Here’s what Ted had to say about starting WorkRamp now with more experience:

My first company failed and I promised myself that I would go learn from the best before taking another shot at starting my next one. I spent almost 5 years at Box, learning and doing everything I could — from sales, to product management and go-to-market. I was able to work with top leaders like Aaron Levie and see first-hand what you needed to do to make your company successful. Right before my fifth anniversary, I felt the market opportunity was right and my skill set was developed enough to make the leap again. Building a company is a long journey (especially in enterprise SaaS), but there hasn’t been a day so far where I’ve regretted the timing of my decision!

We’re very excited to be investors in this startup with great co-investors and friends like Leo Polovets at Susa Ventures, Semil Shah at Haystack, Wei Guo at Wei Fund, Mike Ma and Mike Miller at Liquid 2, and super-angel Elad Gil. 

WorkRamp is available now at