What Should You Do When Your Ex Cofounder Promotes Your Competition?

“I think you should pull over.”

I didn’t. I sensed what was coming.

 

A little backstory is appropriate here.

 

I joined a venture capital firm a few months earlier as an Entrepreneur in Residence (EIR). VC firms will bring people like me on board, as an EIR, with the hope that they will incubate a company. The VC firm gets first dibs on investing, and, as an entrepreneur, you have an investor all lined up ready to invest.

And that’s exactly what I did: incubate a company.

I knew exactly what I needed to do, and I set about recruiting a top-notch team. The first person I added was Jim.

Jim and I had worked together years ago, so he was a known quantity. Still, I checked with my old boss, Ziya, because Jim had worked for Ziya. Ziya thought Jim would be great, and so did I.

 

Jim and I started looking for a VP of Engineering. A really good VP of Engineering is really tough to find.

 

Jim started looking in his network, and I started looking in my network.

Jim suggested we talk to John. Jim worked with John before, and Jim thought he would be great.

The three of us met for lunch at Buck’s in Woodside. Buck’s is an institution in the Silicon Valley, and it was crowded and very loud as usual.

I really don’t care for Buck’s, truth be told. Yes, it is conveniently located near Sand Hill Road, but the food is just not that good.

I had a rubbery chicken salad of some sort. I don’t remember what Jim and John had.

More important than the food, John and I got along well. Plus, I thought we shared the same vision for the company.

Jim, John, and I spent some more time together before we added John to the team. I checked with several people that knew John, and the consensus was clear:

John is a guru! You will hit a home run if you can make him part of the team!

I decided to go forward and add John to the team as our VP of Engineering.

 

We needed to complete our business plan before we could raise money, so Jim, John, and I met at my house every day to complete the plan. We also needed to complete our pitch.

We started the laborious process of raising money with the pitch complete. We had the money lined up, but problems started popping up.

I started pushing John to line up design engineers in expectation of our launch.

“Not yet, not yet,” was the reply.

A week later, I asked again.

“Not yet, not yet,” was the reply.

“Okay John, when?”

“Once the money is in the bank.

“By the way, I think we should raise less money…”

The conflicts between John and I continued.

Back to my conversation with Jim…

 

I didn’t pull the car over as Jim requested because I knew what was coming.

“Brett, I am resigning.”

John manipulated Jim into quitting. Why? Does it really matter? You only want people that want to be there. There was no reason to try and keep him.

My next call was to John. I’ll never forget what he said:

“I know business better than you. I know how to run a company better than you.”

 

Jim sent an email to the partner at the VC firm I was working with. The partner shared it with me:

“…The business concept is very good and will be very successful with the right leadership and team.”

Jim and John’s strategy was clear: steal my plan and try and raise money without me.

 

Jim and John assumed I would be dead without them, roadkill waiting to swept-up by vector control.

I was bummed in the moment. What was I going to do?

I didn’t feel it at the time, but Jim and John did me the biggest favor in the world by leaving. Why? More on that later.

So what do you do when a cofounder leaves and promotes a competitor? Kick Ass and use their betrayal as motivation.

 

The idea that you’re going to sue them is likely a waste of time, energy, and money. And you don’t have enough of any of these things when you’re starting out.

You need to stay focused on what you can do.

I reconstituted the team with better people that were more aligned with my vision. I started raising money with the new team in tow.

At the same time, I began hearing rumblings that Jim and John were also raising money.

A VC friend of mine showed me the slide deck they were using: The bastards were using my original slide deck!

How nice.

We lost a couple potential investors because Jim and John were trying to raise money at the same time as us. However, we persevered.

Despite the Great Recession, and despite Jim and John, we were able to close our funding.

 

To Jim and John, all I have to say is:

Thank you.

Thank you for quitting. The quickest way to destroy a company is with the wrong people. We were not a good fit together. It could have been your fault, and it could have been my fault.

It really doesn’t matter, does it?

I was able to pursue my vision, and bring on a team that I was more closely aligned with. A passionate team. A team that was willing to sacrifice. A team that spilled their blood to win.

Thanks again for quitting.

We couldn’t have done it without you,

Brett

For more, read: What Are The Eleven Steps You Can Take When A Co-Founder Quits?

Do You Want To Grow Your Business?  Maybe I Can Help.  Click Here.

 

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