What is the best time to quit my startup?

I joined an acquaintance-friend about a year ago as a co-founder on an idea he was working on. The guy I joined is someone I wasn’t super close to, but have been friendly with for quite some time. A third co-founder joined us shortly after.

Over the first few months, I discovered he had kept some details from me and overstated what he had already achieved. To make things worse, new information he had 'forgotten' kept coming to light every few months – we made some poor decisions because C3 and I had incomplete information.

Finally, he also mismanaged our finances, which put us in a tough spot that we’ve been climbing out of for the last four months. We gave him the benefit of the doubt as being overoptimistic and made the best of things. As part of that we’ve had to modify our plans to focus on the part of our business that generates immediate revenue.

At this point, the initial idea is pretty much on the back burner. We’re executing fairly well and should be financially stable in two months, but my heart is no longer in it. On a parallel track, my relationship with Cofounder1 has deteriorated quite a bit. I’ve argued all sides of this in my head for months, but the bottom line is I can’t trust him any more. I also think he's incompetent at everything but sales, but a neutral observer may disagree on that, I don’t know.

I’m 99% sure that leaving is the right thing to do, for me and for the company in the long term. I’m just having a really hard time figuring out the short term - how and when - for a couple of reasons

1. I feel like I’d be abandoning the ship and letting down a lot of
   people when times are still tough. I’ve become quite close to many
   members of our team, Cofounder 3 in particular. I recruited some of
   these people. I told them we’re in this together for the long haul.
   The last few months have been brutally hard at times, and even
   though things are finally looking clear, there’s still hard yards to
   be put in.
2. We (perhaps stupidly) dealt with some of C1’s issues by
   just taking over his responsibilities for him when he failed. So my
   leaving would dump a hell of a lot of work on C3. It would put him
   under enormous pressure.

Asking C1 to leave is not an option. He’s the largest shareholder (although the rest of us do constitute a majority) and the little money we’ve raised so far was raised from his friends/family.

So at this point, the only thing I know is I cannot work with C1 long term, even if we do eventually refocus on the idea I was passionate about. So when do I leave? I don’t know if I’m just being chicken and doing a bigger disservice to them by staying. Or if I owe it to the remainder of team to put my issues aside and be a good soldier until my leaving would be less disruptive.

I know this is a subjective question, but I'm hoping for input from people who've had to go through a messy process like this. I couldn't really come up a way of objectively capturing the element of personal relationships in this, which is what I'm most concerned about.

This is indeed quite delicate situation.

First action I would recommend you is to sit together with C1 and C3 and discuss OPENLY all these issues. No taboos, no politics, no velvet gloves - it can hardly be worse than the situation you describes.

Hopefully C1 will realize that things are not 100% smooth and all of you may manage some new way of working (based perhaps on some rules, some CLEAR division of responsibilities,...).

If not, leave. It can be hard in short term (especially regarding to the people you brought to the company) but if there is not trust anymore, it can't work on long term. It can just be worse and it will accelerate. So better leaving now with few personal/financial damages than to wait it becomes unlivable. Imagine that you stay and then things become really bad - what will the people you brought to the company think at that moment? That you lied to them? They trusted you and you didn't "warn" them that things were not going well? I think that would be worse than say "I trusted the idea, I wanted you to participate to the challange... but I was wrong. Sorry, I am as desapointed as you are..." But first, discuss (but I stress: witout taboos) between C's and get things clear. Then it will be easier for you to take the decision to stay or leave.

I lived this in my first start-up and felt much the same way as you do with a C1...

My Story: Many years ago I had a partner (largest shareholder) that I just could not trust. The company was stable, sales were growing, but I was tired of always fighting fires and cleaning up the mess behind C1 who was the main sales guy so he promised the moon to prospects and made me deliver. I was working 24x7, and every deal he made required me to basically redo major portions of the product in very unrealistic time frames. When an acquisition opportunity came along, I was thrilled with the prospects of moving the product into a bigger, more professional channel. Unfortunately, the deal didn't go through due to misinformation from C1, and my emotions took over for rational thought and I walked.

I hired lawyers, C1 hired lawyers, and after almost a year of legal battles we settled, and C1 and I have never spoken since (25+ years and counting). In the end, I got a modest return on my time (2 1/2 years) while C1 and C3 continued on without me and sold the company 4 years later for a tidy sum (almost 14x my pay-off).

Before you walk here is some advice that I did not get:

1. The company WILL survive without out YOU and probably be worth a lot
   more than it is today.
2. When you are gone, the company will do everything legally in its power to devalue your stock (if you own more than 5% the courts will not protect you).
3. No matter how close you are to other employees, their loyalty is to their paycheck, and unless you offer them money, they will stay and be loyal to C1.
4. If you leave, and C1 sells the company for millions, you will regret it.

A big difference between my experience and yours is that my C1 spent a lot of time using me against C3 and vice versa, to the point where C3 and I would NEVER join forces to control C1.

Therefore, my suggestion is work with C3 to manage C1. Don't take on C1 alone, or force C3 to do it. Forget about personality, you two might never mesh. Work together with C3, united as one, and then you will have a better chance of controlling C1 so that you can all prosper.

I generally agree with DataSmarter's input. But please let me throw my own two cents in regarding a few things you should do before going through his recommendations. This is based on my own experience having a variety of difficult conversations.

A) Figure out what you want to say before hand. Sit down, with some paper and a pen, and think.

Write down some notes around "why did you get involved with this in first place?" "What has been the best part about it?" "What are the facts around C1's bad behavior?" "What are three specific times when you and C3 had to pick up his mess?" "What has happened when you brought this up before?"

B) Make a plan about what you're going to say during this meeting and write it down. You need to do some serious editing because the answers to "what has happened when you brought this up before?" are going to be grenades that are primed to ignite emotional rampages. Especially if you are as central to the success of this group as you feel you are, there is a high probability that C1 will try various tactics to bully/persuade you to stay.

So write it down. From my experience it's best to start with "I've been looking at my options and I have decided that it's time for me to leave this company." Then it helps to be ready with three subsequent sections (1) how great it has been so far//major accomplishments; (2) why you are leaving... base anything that is 'accusational' in specific facts and actual events; (3) how long you are going to stay with a hard and fast 'drop-dead' date, and what you will do that you think will leave the company prepared to be run by others at that time.

C) Send it to them before the meeting. (at least in outline form) This can be as easy as an email that says "Hey C1 and C2, I've been looking at my options and decided it's time to leave the company. I'd like to talk tomorrow/Monday/whenever about a few things as I prepare to head out: (1), (2), and (3)."

From my prior experience this can really help to contain any significant emotional outburts, because they'll usually go through all the rage and etc beforehand. If they come to you angry before your group chat and want to talk, tell them you'd really rather cover it at that meeting.

If things really blow up in the meeting, behave like an adult and stick to the facts. Unless they physically assault you, who cares what they say or think about you. If it gets really bad, just skip straight from "ok I'm leaving" to your #3 "Here's what I'm going to do before I go."

That piece allows you to leave on your terms as a mature co-founder, and can help to justify to those you've recruited that you're not slighting them.

And then, GO! Be happy. If you've got the means to do it, treat yourself to a quick day trip somewhere or a mini-vacation to really sever the ties and make it so you're gone. Otherwise you'll probably find that C1 really wants to contact you about one last thing for months and months after you said you were gone.