Ask HN: How to deal with a co-founder who has wasteful spending habits
94 comments
Like others have said, talk with your co-founder, and consult your own lawyer to make sure you actually are a co-founder (and aren't getting pushed aside).
You might also want to consider asking HN admins if they'd delete this post, since the ~28 employees will realize which company this is, and maybe you'd prefer they not read about a leadership disagreement/misunderstanding on HN.
As we know, a big part of startups is constant learning, and today can be one of many learning moments, for you and CEO.
If it turns out one/both of the cofounders has to tell everyone they made a mistake, IMHO that can double as a great culture message, about honesty, humility, psychological safety, and learning.
You might also want to consider asking HN admins if they'd delete this post, since the ~28 employees will realize which company this is, and maybe you'd prefer they not read about a leadership disagreement/misunderstanding on HN.
As we know, a big part of startups is constant learning, and today can be one of many learning moments, for you and CEO.
If it turns out one/both of the cofounders has to tell everyone they made a mistake, IMHO that can double as a great culture message, about honesty, humility, psychological safety, and learning.
>If it turns out one/both of the cofounders has to tell everyone they made a mistake, IMHO that can double as a great culture message, about honesty, humility, psychological safety, and learning.
If this CEO is already dropping thousands of dollars on beach vacations trying to pretend it's client outreach, I have a sense they're probably one of "the bad ones" who don't really have a ton of ability to contextualize their own actions and how they'd be viewed by others. Much more likely they'd double down on their own megalomania (but this is a forum post on a website, so it's obviously hard to say.)
If this CEO is already dropping thousands of dollars on beach vacations trying to pretend it's client outreach, I have a sense they're probably one of "the bad ones" who don't really have a ton of ability to contextualize their own actions and how they'd be viewed by others. Much more likely they'd double down on their own megalomania (but this is a forum post on a website, so it's obviously hard to say.)
Is the CEO non-technical, older, more focused on wining/dining/if-we-just-land-that-one-logo/we'll-land-investors/social-proof-board-name-dropping/networking-is-the-game/exagerating-sometimes-lying and do you have disproportionately less equity, were you bearish on getting to 30 people in the first place before being a solid, viable, business? Do you find yourself thinking that the company could run with fewer than ten very specific people?
Does work get done more effectively when the CEO does not interfere/mess things up but you don't allow yourself to say so?
Does it happen you watch clips from The Office's Michael Scott and it hits too close to home?
PS: Also, are you sure you're a co-founder and are you certain you actually do have equity? Did a lawyer you (not the company/CEO) have paid go over this? Are you in the bylaws?
Does work get done more effectively when the CEO does not interfere/mess things up but you don't allow yourself to say so?
Does it happen you watch clips from The Office's Michael Scott and it hits too close to home?
PS: Also, are you sure you're a co-founder and are you certain you actually do have equity? Did a lawyer you (not the company/CEO) have paid go over this? Are you in the bylaws?
On the flip side, is the OP a tech dork with no people skills who sneers at any MBA they meet?
Remember that we’re only getting 1/2 (at best) of the story here.
Remember that we’re only getting 1/2 (at best) of the story here.
Glad you made it back from the retreat to tell us the other half of the story.
Joking. I'm curious what the answers will be. OP doesn't strike me as oblivious to what an MBA is about, or as a "tech dork with no people skills who sneers at any MBA they meet"... Although I wonder how many hugely successful companies were founded by people like that.
Joking. I'm curious what the answers will be. OP doesn't strike me as oblivious to what an MBA is about, or as a "tech dork with no people skills who sneers at any MBA they meet"... Although I wonder how many hugely successful companies were founded by people like that.
> Remember that we’re only getting 1/2 (at best) of the story here.
Glossed over the actual important point. OP is kind of a loser for not just talking to his co-founder and airing his laundry on HN. It doesn't show much emotional maturity on his side.
Glossed over the actual important point. OP is kind of a loser for not just talking to his co-founder and airing his laundry on HN. It doesn't show much emotional maturity on his side.
When you are faced with abusive people and have not met people like that before or are accustomed to it, you just feel something is wrong but you need to share your feelings and how you see things with others to be sure you are not in the wrong, that the situation is abnormal, plus you're generally afraid of the consequences of speaking to the abusive. Not everybody can handle conflict well and while it is a good skill in life, judging it morally does not help
How, as an adult, have you not learned to determine what is wrong or right for yourself? This isn't objectively wrong or right. This is just something you'd ask your partner first before doing.
The CEO might have a good reason to do this, and we have no clue if this is abuse from the CEO or he doesn't trust his partner to see his side.
The CEO might have a good reason to do this, and we have no clue if this is abuse from the CEO or he doesn't trust his partner to see his side.
There was a time in my life I worked with somebody who was creating situations similar to the one described by OP. Though in my case all leadership was consisting of people who aimed on creating toxic situations. At the time it felt I was not able to openly name problems with CEO (I actually had a one-on-one with him and pointed problems but was called names). Later CEO was removed by those toxic people, so I did have a point. It does not make me feel that I was on the right side, on the retrospective I think we should have gone a few times and have dinner together to reestablish bond and only then I should have moved to talk about problems. I agree with you that OP should go and talk with CEO, but it might not be the first meeting OP should bombard CEO with prpblems he is seeing...
> How, as an adult, have you not learned to determine what is wrong or right for yourself?
Good to remember that nobody is all knowing, regardless of age or experience.
Good to remember that nobody is all knowing, regardless of age or experience.
Tbh it sounds like you have someone specific in mind! ;-)
"And does he point-click his fingers at you, saying 'my maaaan' as he leaves the room without listening to a WORD YOU SAYY???! Gaaaah!"
"And does he point-click his fingers at you, saying 'my maaaan' as he leaves the room without listening to a WORD YOU SAYY???! Gaaaah!"
I will neither confirm nor deny that. I think anyone who reads that description can think of at least one person :D
> PS: Also, are you sure you're a co-founder and are you certain you actually do have equity?
This was the first thing I thought of. Being a co-founder in name, and legally being one in fact are different things. You'd need to find this out. Lawyer up!
This was the first thing I thought of. Being a co-founder in name, and legally being one in fact are different things. You'd need to find this out. Lawyer up!
What would be in the bylaws about cofounders?
Just to clarify, the event has already taken place? Is that correct?
You said the business partners were supposed to attend, but none of them did.
I think this is probably a good opportunity to sit down with your co-founder and discuss what went wrong.
Rather than just accuse them of wasteful spending, create a learning experience for them (or you).
The type of questions you'll want to ask is
1) Why did they think it was a valuable way to spend company money?
2) What sort of result did they expect? If partners were supposed to attend, did they expect an increase in revenue from the event? If not, why are they spending money on partners/
3) What would they do differently next time?
4) Is there a way they could have reached the same goals without spending the money at all? How can they be more creative, etc?
Perhaps the CEO had a master plan that didn't work out (unlikely), perhaps they just wanted to blow off steam. Maybe they heard it's what other companies did, and therefore thought it was a sign of what they should be doing.
I wouldn't attack them, but make sure they understand that you believe this was not a good use of company funds, and that as a result of these actions, you now must do X, Y, Z in order to get back the money that was spent (how much more sale, how much more advertising, which leads to more hiring, etc).
Paint the picture in clear detail of what the event cost beyond the dollars spent and time lost. For every $100 they spent on the event, the company needs to earn $240 (or whatever your margins are after tax, etc etc).
This way you can make it clear that the next time they attempt to do something like this, that they understand the cost isn't the $$$ going out, it's the cost of getting those $$$ back in!
Also make it clear that there are limits to how much they should be spending without discussing it with you. I assume they wouldn't make a major hire without consulting you, so why would it be OK to spend a huge chunk of revenue.
There are probably some notices you may want to write down about the event to keep just in case of future litigation, etc. But you'll want to speak to somebody with legal experience about that...and do the legal thing after the discussion.
You said the business partners were supposed to attend, but none of them did.
I think this is probably a good opportunity to sit down with your co-founder and discuss what went wrong.
Rather than just accuse them of wasteful spending, create a learning experience for them (or you).
The type of questions you'll want to ask is
1) Why did they think it was a valuable way to spend company money?
2) What sort of result did they expect? If partners were supposed to attend, did they expect an increase in revenue from the event? If not, why are they spending money on partners/
3) What would they do differently next time?
4) Is there a way they could have reached the same goals without spending the money at all? How can they be more creative, etc?
Perhaps the CEO had a master plan that didn't work out (unlikely), perhaps they just wanted to blow off steam. Maybe they heard it's what other companies did, and therefore thought it was a sign of what they should be doing.
I wouldn't attack them, but make sure they understand that you believe this was not a good use of company funds, and that as a result of these actions, you now must do X, Y, Z in order to get back the money that was spent (how much more sale, how much more advertising, which leads to more hiring, etc).
Paint the picture in clear detail of what the event cost beyond the dollars spent and time lost. For every $100 they spent on the event, the company needs to earn $240 (or whatever your margins are after tax, etc etc).
This way you can make it clear that the next time they attempt to do something like this, that they understand the cost isn't the $$$ going out, it's the cost of getting those $$$ back in!
Also make it clear that there are limits to how much they should be spending without discussing it with you. I assume they wouldn't make a major hire without consulting you, so why would it be OK to spend a huge chunk of revenue.
There are probably some notices you may want to write down about the event to keep just in case of future litigation, etc. But you'll want to speak to somebody with legal experience about that...and do the legal thing after the discussion.
This is absolutely the way I’d recommend to tackle the situation. It not only enables you to understand what his mindset actually was but open the dialogue and improve your respective personal processes to avoid the situation again. It’s also a collaborative approach as opposed to an antagonistic one.
I have bad news for you. Cofounders are like any other employee. You don't automatically get a say in every decision just because you were one of the company founders. Often, the CEO has the power to simply fire you. The CEO certainly has the power to demote you to a non-decisionmaking role. The CEO does not have to listen to you about every little decision like having a company retreat.
First, you should have gone to the company retreat. As a manager it's your responsibility to support team-building things like this, even if you don't agree with the CEO's decisions.
Second, your communication style is hurting you. Don't just reject the CEO's initiative. Don't complain about your boss on HN in a way that, honestly, will be completely obvious to your CEO if they read this thread. Politely bring up your objections, and if the CEO overrules you, accept it and move on. It's a company retreat, you must have more important problems.
First, you should have gone to the company retreat. As a manager it's your responsibility to support team-building things like this, even if you don't agree with the CEO's decisions.
Second, your communication style is hurting you. Don't just reject the CEO's initiative. Don't complain about your boss on HN in a way that, honestly, will be completely obvious to your CEO if they read this thread. Politely bring up your objections, and if the CEO overrules you, accept it and move on. It's a company retreat, you must have more important problems.
* During this economy, how wasting so much money on
beaches, midnight parties at pubs, and yacht tours can be
normal?
* How can I deal with this behavior of treating your
partner like any other employee?
* How can I fix this communication problem and prevent
future abuses?
-----
I've answered your three questions below, based upon my experiences. The answer to your first question is labled #1. The answer to your second question is #2. The third answer, labeled #3, attempts to answer your third question.
1. It doesn't matter whether this is normal. You should ask whether it is useful and acceptable for your company. Above and beyond that, you need to set boundaries regarding co-owned funds. A marriage won't last between two people who don't speak with each other. In many ways founders enter a marriage with each other, so they need to speak with each other and keep their lines of communication open. After all, you've entwined your financial and business lives together.
2. Stop acting like an employee next to your partner. The first step is to talk with them instead of reaching out to random people on the Internet. It's possible that your co-founder does not see a problem but would be willing to change if you spoke with them. It's also possible they do not see you as an equal. Either way, you need to find out what is going on.
3. You actually didn't state a communication problem in this post. That tells me you don't always speak up and in this case may not have spoken your mind with your partner. If you want them to treat you as a partner, you need to treat them as as a partner as well. Otherwise, they'll never know what you want them to know.
> It seems as if you haven't spoken with your business partner. You should do that.
This is the most valuable comment so far. The problem is lack of communication and/or possibly lack of respect of boundaries, but the lack of details and passive-aggressive responses to the event indicate the relationship needs work.
The money does not seem like your primary issue. If you don’t repair things with your cofounder then 10% of revenue (which frankly sounds like it is probably kind of a small number given your other clues) doesn’t matter.
This is the most valuable comment so far. The problem is lack of communication and/or possibly lack of respect of boundaries, but the lack of details and passive-aggressive responses to the event indicate the relationship needs work.
The money does not seem like your primary issue. If you don’t repair things with your cofounder then 10% of revenue (which frankly sounds like it is probably kind of a small number given your other clues) doesn’t matter.
It doesn’t always work.
I came from the other side of the coin - a business partner who was the king of false economies, refused to ever reinvest a single penny into the company, and preferred to just see the corporate bank balance increase. Never mind fun days, he wanted employees to go out and buy their own coffee rather than having a machine in the office. I won that battle, eventually, on the basis that he was essentially paying people to go stand in line at Starbucks, but he’d always make comments to employees about how they shouldn’t drink too much coffee because it cost the business money. He’d have me, everyone, pay for travel expenses out of their own pocket. No such thing as a corporate phone. Hell, he even wanted people to bring their own equipment to work on.
I talked to him about it. Our investors talked to him about it. All he would do is sulk, and dig his heels on further.
After a decade, I gave up and left, to his jubilation. He immediately went and spent £100k on a company car for himself, and started paying his wife, who has literally nothing to do with the business, a salary.
Six years on, the business is on the brink of folding.
I spent far, far too much of my life trying to get him to change - sometimes, you just have to cut your losses and run.
I came from the other side of the coin - a business partner who was the king of false economies, refused to ever reinvest a single penny into the company, and preferred to just see the corporate bank balance increase. Never mind fun days, he wanted employees to go out and buy their own coffee rather than having a machine in the office. I won that battle, eventually, on the basis that he was essentially paying people to go stand in line at Starbucks, but he’d always make comments to employees about how they shouldn’t drink too much coffee because it cost the business money. He’d have me, everyone, pay for travel expenses out of their own pocket. No such thing as a corporate phone. Hell, he even wanted people to bring their own equipment to work on.
I talked to him about it. Our investors talked to him about it. All he would do is sulk, and dig his heels on further.
After a decade, I gave up and left, to his jubilation. He immediately went and spent £100k on a company car for himself, and started paying his wife, who has literally nothing to do with the business, a salary.
Six years on, the business is on the brink of folding.
I spent far, far too much of my life trying to get him to change - sometimes, you just have to cut your losses and run.
The fact OP has to ask signals an even larger communication issue. This should be the easiest thing to hash out or at least bring up. It’s purely business and purely controllable. Doesn’t mean it will be conflict free but just talk about it.
I’d personally just bring up expense management and how I understood the intent but feel as if we need to think of more cost effective ways to engage our team, etc. If they push back, you can always say you think the partners would agree and perhaps is why they did not attend.
Anyways, maybe build a budget together to get aligned as well.
I’d personally just bring up expense management and how I understood the intent but feel as if we need to think of more cost effective ways to engage our team, etc. If they push back, you can always say you think the partners would agree and perhaps is why they did not attend.
Anyways, maybe build a budget together to get aligned as well.
You're going to have to speak to them, and it's going to be a difficult conversation for both of you. I therefore would suggest reading a book called Difficult Conversations[1], I can't recommend it enough. It's part of a series based off of research conducted at Harvard, of which Getting to Yes, and Getting Past No are two of the others, also highly recommended.
[1] ISBN 9780143118442
[1] ISBN 9780143118442
Read "rocket fuel" by Mark Winters.
It sounds like the CEO is a classic visionary - big picture people person, grand ideas, bad with details like operations and money.
It also sounds like you may be their complement - good with details and proper planning - a classic "integrator"
This is actually a great combination, but in order for the company to benefit from your complementary abilities you've got to get separate responsibility appropriately. At 30 employees you should have a fractional CFO or at least a situation where the COO/integrator can keep expenditures in check. CEO needs to let the team do what it does best.
It sounds like the CEO is a classic visionary - big picture people person, grand ideas, bad with details like operations and money.
It also sounds like you may be their complement - good with details and proper planning - a classic "integrator"
This is actually a great combination, but in order for the company to benefit from your complementary abilities you've got to get separate responsibility appropriately. At 30 employees you should have a fractional CFO or at least a situation where the COO/integrator can keep expenditures in check. CEO needs to let the team do what it does best.
There’s not really enough detail in your post to analyze. 10% of revenue could be nothing or it could be millions. Are you venture funded? What’s your burn rate and runway and how much did this cost in comparison?
I know plenty of companies who have gone 100% remote and spend part of the money they save on company retreats in order to get actual facetime with each other. It’s not clear if this applies to you or not.
I know plenty of companies who have gone 100% remote and spend part of the money they save on company retreats in order to get actual facetime with each other. It’s not clear if this applies to you or not.
OP says they have 30 employees and are (barely) profitable, no? That’s enough of an indication to me: cost was about 3 people’s annual salary.
10% of annual revenue is not 10% of annual burn.
Their MMR could be $20k, making the cost $24k or about $800 per person for a week long retreat. That doesn't seem insane.
There's simply not enough information in the post.
Their MMR could be $20k, making the cost $24k or about $800 per person for a week long retreat. That doesn't seem insane.
There's simply not enough information in the post.
> 10% of annual revenue is not 10% of annual burn.
Not in general. But if the company is “barely profitable” then revenue is approximately equal to cost, and thus 10% of annual revenue is approximately equal to 10% of annual “burn”.
Not in general. But if the company is “barely profitable” then revenue is approximately equal to cost, and thus 10% of annual revenue is approximately equal to 10% of annual “burn”.
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If you have 30 employees you presumably have venture funding, and if you're calling yourself a cofounder then you presumably have a decent chunk of equity.
How much equity do you and the VCs have in total? From a purely practical perspective, if you have over 50% then you have leverage over the CEO. You can't credibly threaten to fire him over this one incident, but you can rein in potentially worse behavior.
It would also be wise to figure out why he did this. Does he have a family that he was trying to appease by hosting an event on sandy beaches (so they could tag along gratis)? Is he hitting a wall and worried other people are also, and wanted to let people relax a bit?
Regardless, someone should have been in the loop on this before it went out on Slack. Even a sole founder should be getting a gut check from others before planning a trip that could cost 10% of revenue. If I'm reading this right, did this trip move you from being profitable to being in the red?
But the bottom line is to see who has the majority of the shares. If it's you and others, great. If it's him, then you just have minority shareholder rights, which wouldn't kick in at this point. If he's enriching himself at the expense of the company, then you can take action. Good luck!
How much equity do you and the VCs have in total? From a purely practical perspective, if you have over 50% then you have leverage over the CEO. You can't credibly threaten to fire him over this one incident, but you can rein in potentially worse behavior.
It would also be wise to figure out why he did this. Does he have a family that he was trying to appease by hosting an event on sandy beaches (so they could tag along gratis)? Is he hitting a wall and worried other people are also, and wanted to let people relax a bit?
Regardless, someone should have been in the loop on this before it went out on Slack. Even a sole founder should be getting a gut check from others before planning a trip that could cost 10% of revenue. If I'm reading this right, did this trip move you from being profitable to being in the red?
But the bottom line is to see who has the majority of the shares. If it's you and others, great. If it's him, then you just have minority shareholder rights, which wouldn't kick in at this point. If he's enriching himself at the expense of the company, then you can take action. Good luck!
> learned [...] on Slack [...] 10% of annual revenue
This is a major red flag for me: it is such a huge expense that the CEO should have discussed this with his co-founder and other top-level mgmt before deciding on it and definitely before announcing it.
This is not a lack of communication. This is a lack of respect of other people, thinking their input is irrelevant.
This is a major red flag for me: it is such a huge expense that the CEO should have discussed this with his co-founder and other top-level mgmt before deciding on it and definitely before announcing it.
This is not a lack of communication. This is a lack of respect of other people, thinking their input is irrelevant.
Hire a CFO or head of finance would be a good start - if possible. With 30 employees you are probably missing a lot of opportunities related to accounting and expenses.
In the meantime, clearly setup and define spending controls as it pertains to bizdev. Create -per-department/-per-project budgets and limits (e.g. approvals required over $X amount) with incentives to stay below these lines.
In the meantime, clearly setup and define spending controls as it pertains to bizdev. Create -per-department/-per-project budgets and limits (e.g. approvals required over $X amount) with incentives to stay below these lines.
I've never seen a company with a CFO at 30 employees, that's extremely wasteful. A good accountant would do at that point. It's a huge mistake to hire a CFO too early unless you're a fintech.
Fractional CFO is an option. Someone needs to be doing the CFO job at the strategic level. An accountant is usually not right for that.
Most tech companies don't need to do very complex financials. Accountants are often good enough, or at least advisors.
Maybe your idea of a fractional CFO is the same of my idea of an advisor, in which case it's just a term difference.
Maybe your idea of a fractional CFO is the same of my idea of an advisor, in which case it's just a term difference.
As a former fractional CFO at a 12 person company I saved many multiples of what I cost despite the company having a great accountant whom the CEO spent a lot of time with.
Advising can only get you so far, especially if the CEO is incapable of taking action on it. Sometimes even smaller companies can benefit from more constant accountability.
Advising can only get you so far, especially if the CEO is incapable of taking action on it. Sometimes even smaller companies can benefit from more constant accountability.
My old company hired a CFO at ~800 employees, and the cost-cutting measures looked great on paper, but we lost a ton of excellent talent from them. The CFO eventually left, thinking she had done the company a huge favour and made a blog post about how well she did and how she did it, but we were objectively in a much worse spot.
I wouldn't know where to start with an 800 employee company.
For a dozen person tech start-up, it isn't too hard to figure out how a dozen recent college grads are being financially irresponsible without getting in the way. Mismanaging cash flow, paying for things they can get for free as a start-up, failing to file for tax credits and other literally free money from the government for start-ups, buying things they could have rented, overpaying for certain things, etc.
For a dozen person tech start-up, it isn't too hard to figure out how a dozen recent college grads are being financially irresponsible without getting in the way. Mismanaging cash flow, paying for things they can get for free as a start-up, failing to file for tax credits and other literally free money from the government for start-ups, buying things they could have rented, overpaying for certain things, etc.
Not allowing one person to spend 10% of your revenue in one go sounds like a good place to start.
Yeah. What are the structures that allow a co-founder to unilaterally make this decision?
Do your job, say no.
Do your job, say no.
It’s an absence of structure most likely. Typically this would be budgeted and board approved or spend over a certain threshold would require certain approvals.
[deleted]
There's a good book called Founder Dilemmas that is good thinking through these types of things
https://ia800509.us.archive.org/4/items/TheFoundersDilemmash...
https://ia800509.us.archive.org/4/items/TheFoundersDilemmash...
Are you sure you're co-founders or are you just the first/early employee?
If you're co-founders you need to be able to talk to each other. Not on Hackernews.
There's muuuuuch much bigger issues here than some 'wasteful spending'.
If you're co-founders you need to be able to talk to each other. Not on Hackernews.
There's muuuuuch much bigger issues here than some 'wasteful spending'.
> Last month a company retreat event announced and it is scheduled only 5 weeks forward. I learned that with other employees on Slack
You came to know from other employees about it on Slack? Are you sure you are a co-founder? Have you checked with the other co-founder what your company sells? Who knows the company maybe be selling sea surfing items or beach balls and it would be a perfect thing to invite everyone to the beach to promote the products.
You came to know from other employees about it on Slack? Are you sure you are a co-founder? Have you checked with the other co-founder what your company sells? Who knows the company maybe be selling sea surfing items or beach balls and it would be a perfect thing to invite everyone to the beach to promote the products.
I think there might be a miss alignment of values here.
It all depends on what you see the purpose of the company to be.
Some people are dedicated to the company as an entity of it’s own and the product they build and the people working there. It is a valid and respectable way of looking at things. From your post, I have a sense you might fall into this category. Assuming you subscribe to this point of view, it makes sense to consider the retreat an abuse.
Other people do not see companies like this. Instead, they see the company as an means to an end. A tool to use for enhancing financial opportunities and abilities and living a full, luxurious, rich and comfortable life. I believe this too is a valid and respectable way of approaching things. This is how I personally view companies and their purpose. With this point of view, a vacation expensed on the company is not an abuse. It’s the intended purpose.
If you would like to see a decent portrait of this different philosophies I would recommend seeing the difference between Dany Crane and Paul Lewiston in Boston Legal.
Of course it might also be the case this was a miss alignment of business strategy and not fundamental values. If he invited the business partners perhaps he saw it as a business opportunity to renew contracts, perhaps upsell more services, etc.
Whatever the case might be, I think a very frank discussion between the two of you is in order. Business strategy should be aligned, yes, but far more importantly, fundamental outlook on what the company is for.
Best advice I can give you is, don’t leave this unaddressed but address it in a professional manner in order to understand where the other co-funder is coming from. Once you understand his position you will be in a position where you can make an informed decision about your future and the future of the company.
It all depends on what you see the purpose of the company to be.
Some people are dedicated to the company as an entity of it’s own and the product they build and the people working there. It is a valid and respectable way of looking at things. From your post, I have a sense you might fall into this category. Assuming you subscribe to this point of view, it makes sense to consider the retreat an abuse.
Other people do not see companies like this. Instead, they see the company as an means to an end. A tool to use for enhancing financial opportunities and abilities and living a full, luxurious, rich and comfortable life. I believe this too is a valid and respectable way of approaching things. This is how I personally view companies and their purpose. With this point of view, a vacation expensed on the company is not an abuse. It’s the intended purpose.
If you would like to see a decent portrait of this different philosophies I would recommend seeing the difference between Dany Crane and Paul Lewiston in Boston Legal.
Of course it might also be the case this was a miss alignment of business strategy and not fundamental values. If he invited the business partners perhaps he saw it as a business opportunity to renew contracts, perhaps upsell more services, etc.
Whatever the case might be, I think a very frank discussion between the two of you is in order. Business strategy should be aligned, yes, but far more importantly, fundamental outlook on what the company is for.
Best advice I can give you is, don’t leave this unaddressed but address it in a professional manner in order to understand where the other co-funder is coming from. Once you understand his position you will be in a position where you can make an informed decision about your future and the future of the company.
> It is announced that our business partners also will come
I think "beaches" and "midnight parties at pubs" may be cheap way to make better&stronger connections with your business partners
Alcohol despite all shitty things is good at getting people "closer"(?)
I think "beaches" and "midnight parties at pubs" may be cheap way to make better&stronger connections with your business partners
Alcohol despite all shitty things is good at getting people "closer"(?)
> During this economy
It's not 2001 or 2009 (yet). Inflation is high, unemployment is very low, so it's hard to say where the economy is actually at.
It's not 2001 or 2009 (yet). Inflation is high, unemployment is very low, so it's hard to say where the economy is actually at.
"Hard to say where the economy is actually at" sounds like you have a lot of uncertainty about where the economy is at!
True, but "in this economy" usually implies it's bad. It's not bad right now; it's complicated.
Yes, but per the parent, uncertainty (which I don't think anyone would argue with) suggests that one should at least be conservative--which includes being maybe more careful with expenses than otherwise. And an apparently at somewhat extravagant retreat sounds like something to be avoided if I were advising.
I don't think the point of OPs post was to debate about the exact state of the economy.
Have you tried talking to them about it?
I was going to say "yelling" but same idea. I'm guessing OP knows this already but is being avoidant and/or just trying to moan to a receptive audience.
OP: that sucks and it shouldn't have, but you're cofounder too so go tell this guy he just wasted precious company funds on pure vanity and it's damaging the company.
OP: that sucks and it shouldn't have, but you're cofounder too so go tell this guy he just wasted precious company funds on pure vanity and it's damaging the company.
Make more money and your problems will go away.
I've dealt with a similar situation. Some people just don't consider money important until they don't have it. You won't be able to change his ways so don't try. It will just be unproductive confrontations.
An agreed upon budget might help. The budget should have a line item for these type of items. But I suspect you already have a budget and he's not following it.
You won't be able to change him so you need to look at the situation seriously and decide whether it's worth continuing. The reality is that startups without financial discipline will have a hard time surviving. Good luck.
An agreed upon budget might help. The budget should have a line item for these type of items. But I suspect you already have a budget and he's not following it.
You won't be able to change him so you need to look at the situation seriously and decide whether it's worth continuing. The reality is that startups without financial discipline will have a hard time surviving. Good luck.
Sounds to me like you have a fundamental trust problem between you and your co founder. You need to fix this (if that’s still possible) if you want to play an active role at the company going forward.
Immediately, without any context other than what you've provided, I would no longer trust him--you should be included in the loop for any major decision like this. If he has no particularly rare redeeming qualities (or if he does, if you can survive without him), discuss it with the board directly. In my experience it is better to not take chances and to aggressively confront this otherwise later you will regret ignoring duplicitous behavior.
What to spend on and why is a complete and utter judgement call and quite subjective.
The examples have to be pretty extreme before you can declare wasteful.
Maybe they are, but all you can really say is that you have two different approaches and personalities, and that is something you have to figure out before getting into bed with someone who either doesn't work the way you approve of or understand.
They may think you are sabotaging the business by being too myopic and focussing on the wrong details. Failing to deliver the load of goods by avoiding buying the truck or the fuel, or attract the right driver, or attract the right customer.
Personally the cost of such a retreat wouldn't matter to me at all. What would matter is if the employees consider it just more insufferable work imposed from out of touch bosses, or actually a good thing. What is the stated purpose of the reatreat? Is that purpose valid? Does it actually attain that purpose?
It sounds like you have no idea about any of those questions or their answers. Is that because they were never communicated or the cofounder has no idea either, or might it just be that you don't see it and it's really just a limitation of your own?
An event like that is not automatically damning, but acting like it is, is actually a bit of a red flag against you, as though you don't recognize any indirect values and only think that spending money is bad. There is always the "in this economy" excuse. It can be said every day forever, and so is actually meaningless.
A retreat like that is more likely to be a bad idea if it's some horrible forced-fun work-intruding-on-personal-time thing that only the boss wants, no one else wants, and the boss has no coherent plan and purpose that maybe makes it correct to initially override what everyone says they want.
The examples have to be pretty extreme before you can declare wasteful.
Maybe they are, but all you can really say is that you have two different approaches and personalities, and that is something you have to figure out before getting into bed with someone who either doesn't work the way you approve of or understand.
They may think you are sabotaging the business by being too myopic and focussing on the wrong details. Failing to deliver the load of goods by avoiding buying the truck or the fuel, or attract the right driver, or attract the right customer.
Personally the cost of such a retreat wouldn't matter to me at all. What would matter is if the employees consider it just more insufferable work imposed from out of touch bosses, or actually a good thing. What is the stated purpose of the reatreat? Is that purpose valid? Does it actually attain that purpose?
It sounds like you have no idea about any of those questions or their answers. Is that because they were never communicated or the cofounder has no idea either, or might it just be that you don't see it and it's really just a limitation of your own?
An event like that is not automatically damning, but acting like it is, is actually a bit of a red flag against you, as though you don't recognize any indirect values and only think that spending money is bad. There is always the "in this economy" excuse. It can be said every day forever, and so is actually meaningless.
A retreat like that is more likely to be a bad idea if it's some horrible forced-fun work-intruding-on-personal-time thing that only the boss wants, no one else wants, and the boss has no coherent plan and purpose that maybe makes it correct to initially override what everyone says they want.
> Personally the cost of such a retreat wouldn't matter to me at all
It probably should. If your only question is "what is the value of this?" and not also "and what will it cost?" then you aren't doing a particularly useful analysis.
> It sounds like you have no idea about any of those questions or their answers
This strikes me as needlessly presumptive and rude to OP
It probably should. If your only question is "what is the value of this?" and not also "and what will it cost?" then you aren't doing a particularly useful analysis.
> It sounds like you have no idea about any of those questions or their answers
This strikes me as needlessly presumptive and rude to OP
> This strikes me as needlessly presumptive and rude to OP
What's rude is airing your dirty laundry to strangers and not talking about it to your partner. Imagine if OP was talking shit about his wife here. It's incredibly immature.
What's rude is airing your dirty laundry to strangers and not talking about it to your partner. Imagine if OP was talking shit about his wife here. It's incredibly immature.
It's a throwaway account and a description of events applicable to what is surely tens of thousands of companies; it's functionally anonymous.
Anonymous or not, he should have a talk with his partner first so he can have the full picture. It would also give us more info to give advice if he still needed advice then.
hey, you need a psychologist (expensive therapist) to talk to weekly - to process your own feelings as a foundation for communication with co-founder; you can offer couples counseling as well but that is less in your control - impactful communication starts by having your own affairs in order which is in your control.
How much equity do each of you have?
If you co-founder put in a lot of money, but you didn't, he/she might be able to out-vote you.
Do you have a board or VC oversight? Maybe they instructed him/her to do this?
Also, did you mean partner == "business partner" or were you actually dating? Because that would be an entirely different dynamic.
If you co-founder put in a lot of money, but you didn't, he/she might be able to out-vote you.
Do you have a board or VC oversight? Maybe they instructed him/her to do this?
Also, did you mean partner == "business partner" or were you actually dating? Because that would be an entirely different dynamic.
I know there is a quote (maybe Paul Graham?) about the sign of dotcom-era startups failing being when they bought Aeron chairs for the office. But to me, there's a big difference between putting money theoretically into the company's work environment, branding, physical presence, etc. even if a bit extravagant, and blowing through 10% of revenue on bacchanalian pursuits that don't leave you with anything of value whatsoever a week later. This raises serious concerns about whether the CEO is actually upholding their duty to shareholders. Someone else should have been involved in planning for something that expensive anyway.
How much equity do each one of you have?
Regardless of what it says on paper, you two are not co-founders.
This is a leadership issue (yours) and a culture issue.
I’d recommend you discuss this with your leadership coach and address the underlying communication and relational patterns of which this is a symptom so you can get leverage on the culture.
If you don’t have that kind of support, happy to gift you a session or two from EarthPilot.org
Great opportunity here to take deeper responsibility, to grow, and ultimately take your project to a new level.
I’d recommend you discuss this with your leadership coach and address the underlying communication and relational patterns of which this is a symptom so you can get leverage on the culture.
If you don’t have that kind of support, happy to gift you a session or two from EarthPilot.org
Great opportunity here to take deeper responsibility, to grow, and ultimately take your project to a new level.
Two things kill a lot/ most startups:
* Money problems
* Founders alignments
You at least have one of these problem, possibly two in the future.
Only way to fix this is to re align and make sure you don't run out of money.
Re align means discussion and demonstrating what works.
A good book on how to conduct these discussions and gather clear data on the company (that shows afterwards if an action was good or not): Traction
Good luck my friend, entrepreneurship is hard.
* Money problems
* Founders alignments
You at least have one of these problem, possibly two in the future.
Only way to fix this is to re align and make sure you don't run out of money.
Re align means discussion and demonstrating what works.
A good book on how to conduct these discussions and gather clear data on the company (that shows afterwards if an action was good or not): Traction
Good luck my friend, entrepreneurship is hard.
In my first startup one of my two cofounders was the initial CEO and I wanted to be the one who managed the cash. As it happened we only had to have a couple of those tough conversations because the three of us were all pretty parsimonious, but I slept better having some controls in place and knowing we wouldn’t run out of money.
Is this a one-off thing or are there similar instances of wasteful spending?
If its a one time thing, maybe your CEO had a reason - he/she might have felt that the employees had been working too hard and deserved a break, or might have noticed that productivity and morale were flagging.
If its a one time thing, maybe your CEO had a reason - he/she might have felt that the employees had been working too hard and deserved a break, or might have noticed that productivity and morale were flagging.
Why didn't you sign an operating agreement from the get go? You engineer automatic, axiomatic, algorithmic systems but failed to engineer your most important system for success. You're screwed. This kind of 'partner' isn't.
Meh. 10% isn't a make or break move, and it may be worth the cost if it keeps employee retention up.
Real problem is to figure out if you guys got what you paid for.
Real problem is to figure out if you guys got what you paid for.
My personal opinion, may be off, vacation etc rarely keeps retention up. Noone stays saying "wow off-site 6months ago was amazing, I should stay".
If anything, this actually speeds up some people. "Wow, I can't stand these people at the work and now I need to bear them NOT at the work?"
Oh some absolutely do, based on the bonds formed during that off-site.
Especially for a remote company, these team get togethers can be make or break. An annual all expenses paid visit to an exotic destination is a life changing benefit to some people and adds a physical dimension to relationships with coworkers that Zoom doesn't. It translates directly into more trust and retention. It's a significant cost but well within what you can afford if you lease little to no office space.
Come on, live a little. A small vacation of 6 months to Bora Bora never ruined a company! Enjoy. Life is short. Carpe diem.
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Honestly, this seems like a play to get rid of all the business partners. One plane crash to kill ’em all.
I'm not sure how the first thing that came to your mind isn't "I better talk to them about it.".
Co-founder relationships are like marriages, only losers go vent about their partners on the internet to give their side of the story. Smarten up, go talk to them. Maybe the lack of emotional intelligence on your side is why he didn't tell you ahead of time.
Co-founder relationships are like marriages, only losers go vent about their partners on the internet to give their side of the story. Smarten up, go talk to them. Maybe the lack of emotional intelligence on your side is why he didn't tell you ahead of time.
Beat them to upping the burn rate by.. a lot, until neither of you own anything.
Everyone needs financial controls and financial accountability. No one should be able to spend without cosigners. If you set that up early, it will be in your company's blood. If you don't, you will ALWAYS have a culture of wastage.
Everyone needs financial controls and financial accountability. No one should be able to spend without cosigners. If you set that up early, it will be in your company's blood. If you don't, you will ALWAYS have a culture of wastage.
It's actually very common to have a spending limit without having to ask other directors. This company should have it as well.
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You might need a mediator to bridge the communication gap.
This sounds like a made up story to me. The numbers don't even make sense.
I think the crux of the problem is not expenses themselves but that you learnt it from slack. It doesn't matter if the CEO is wasteful or miser, it looks like his decision making is one sided. I don't see much future in things frankly.
Last month a company retreat event announced and it is scheduled only 5 weeks forward. I learned that with other employees on Slack. It is a 5 day beach vacation to very far away. It cost like 10% of annual revenue of the company and company is barely profitable. It is announced that our business partners also will come so all managers including me must attend (None of our business partners attended). I rejected and didn’t go.
During this economy, how wasting so much money on beaches, midnight parties at pubs, and yacht tours can be normal?
How can I deal with this behavior of treating your partner like any other employee?
How can I fix this communication problem and prevent future abuses?