My co-founder and equal partner is on the leadership team, but the business has scaled past their ability to lead their specific department. How do we address this capability gap when they have equal equity and history?

Question

Tyler Smith · Accepted Answer

This is one of the hardest conversations an owner will ever face, but cracks at this level appear as canyons to the rest of the organization. You must separate ownership from operations. Having equity in the business does not automatically grant someone a seat on the leadership team.

To resolve this, you need to have a clear two-hats conversation. Put on your owner hats first and discuss what is best for the value of the business, especially if you are preparing for a clean exit. As owners, you both want a highly capable leadership team that increases the company's valuation.

Next, put on your operator hats and look objectively at the Accountability Chart. Evaluate your partner using the GWC™ tool. Does your partner truly get, want, and have the capacity to run their seat at this new level of scale? If the honest answer is no, then keeping them in that seat is hurting the business and dragging down the value of their own equity.

Transition your partner out of the operational seat and into a pure owner or board-level role. This allows you to hire a highly capable leader for that seat while preserving your partner's equity and dignity. It is a tough conversation, but running a business requires making decisions based on capability, not just loyalty or equity split.