What Should You Do When A Cofounder Quits And Holds Your IP Hostage?

I know the pain too well of cofounders quitting.

I had two cofounders (“Jim” and “John”). I was the CEO, Jim was the marketing guy, and John was the engineering guy.

We had worked together previously, and we understood the plan and direction we were going in. We started pitching VCs after working on the plan for about three months.

John didn't understand my value. John convinced Jim that they didn't need me. They quit the night before we were going to get funding.

I will never forget the last conversation I had with John. John said to me, "I know more about building a company than you do."

Jim and John thought they had left me for dead. I persevered and got funded.

You can persevere through your situation too.

Here’s what I would do if I were in your shoes:

A. Read Chris Voss’ incredible book, Never Split Difference. It is designed to help people in situations like yours. Many of the following points are simplified from Voss’ book.

B. Recognize that you and your cofounder likely can not work together again. He has broken the bond of trust between you.

Once the bond of trust has been broken it is very difficult to trust someone again. So your goal is to understand why he took the steps he took, and to hopefully get your IP and Website back. Then…

C. Talk to your wayward cofounder. Listen without judgement to why he took the steps he took. Likely there is reason (however unfounded there is) that he did what he did.

You goal is to build empathy with your wayward cofounder. Empathy just means that you understand where he is coming from, not that you agree with him.

You want your cofounder to truly understand that you know his side of the story from HIS perspective. This is really, really hard to do.

So summarize the facts to him from his perspective. You’ll know he knows you understand where he is coming from when he says, “That’s right.”

Again, this is not easy to do. You may have to talk for a long time or over several conversations before you get there.

(Read: Learn How Using Empathy Gets The Ultimate From Your Team).


D. Understand what he wants. Now that you know why your cofounder is acting this way, you can ask him what he wants in return for giving you back your website and IP.

Your goal is obviously to get this back without paying anything for it. And that should remain your goal because there are ways around having to pay.

The website piece is easy because you can just create another URL. And you can, as painful as it may be, recreate your IP.

The reason you are negotiating with him because it better for all parties if you can part company as positively as possible. You don’t need another enemy and neither does he.

That’s why you are asking him what he wants. Hopefully, in this case, the answers are around self-esteem and status.

Legally, the IP and the website are the company’s property. He has no leg to stand on, and he likely knows it.


E. Give your cofounder the illusion of control. Ask your cofounder for help in solving this problem. You do this by asking your cofounder to help solving the problem in the way you want.

This gives your cofounder the illusion that he is in control.

You can do this by asking a set of questions that start with who, what, where, and when such as:

  • What caused you do to it?
  • What about this is important to you?
  • What is it that brought us into this situation?
  • How can we solve this problem?
  • What are we trying to accomplish?

By asking your cofounder what he wants through these type of questions, your cofounder will be guided to design a solution that is close to what you want.

Hopefully, negotiating with your cofounder gets your website and IP back, but…

Negotiating is difficult to do, so read Voss’ book.

There’s so much more to successfully negotiating than what I’ve written here. That’s why I started by recommending you read Never Split The Difference.

The techniques in Never Split the Difference were life changing for me. Hopefully, they will be life changing for you too.

Cofounders leave companies.

The cofounder relationship is like a marriage. And like many marriages, many cofounder relationships do not work out.

For more on what do when a cofounder leaves your company, read: What Are The Eleven Steps You Can Take When A Co Founder Quits?

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