There is a famous inspiring movie in China named “Chinese Partners”. The movie described the story of the well-known education institution—-New Oriental. In the movie, you will see how Chinese startup grow up and how did the co-founders separate. Leading role in that movie said a famous saying “Never set up a company with your best friends” after he broke up with his co-founders.

You would say it’s impossible in real life, but it happened several times in China.

This November, co-founders of self-media “Chief-Entertainment-Officer” revealed their dispute on WeChat Public Platform. Because of the severe disagreement of the stock equity distribution between co-founders, the founder team of “Chief-Entertainment-Officer” separated.

Zou Ling, one of the co-founders of “Chief-Entertainment-Officer” published an article to express her strong disapproval of what Chen Yanyan—- the other co-founder—- has done. Share ratio between Zou and Chen is 4:6. “Chief-Entertainment-Officer” was about to raise the next round fund, but if they accepted the investment, Chen would lose the entire control right of the company because her share would be diluted. So, Chen asked Zou to give up some shares to ensure she’s the majority shareholder of the company. Definitely, Zou disagreed. Then Chen changed the password of the account to threaten Zou to compromise.

Via Prophet

Via Prophet

Under heavy pressure, Zou has to reveal what Chen has done to criticize Chen’s bad act and try to protect her right. That article was very hot in social media this week, and people are talking about the co-founder relationship.

Things keep on updating. But the result of “Chief-Entertainment-Officer” is to dismiss the company. The co-founder relationship between Chen and Zou would terminate and their friendship would break up.

Generally speaking, fighting or quarrel between or among co-founders can be settled in peace. But to some extreme, the result is bad.

Top reasons why co-founders breakup:

  1. Uneven share equity distribution
  2. Uneven profit distribution
  3. Nonfeasance of the co-founder
  4. No written agreement before set up the startup
  5. Distrust between/among co-founders
  6. One co-founder brings a close advisor to intervene company operation

These are the top reason we often see when startup co-founders breakup. The biggest and the most serious result of the breakup is business dissolution. It’s no wonder that a falling star failed, but a new star’s falling could cause people feel sorry for it.

Entrepreneurs, do some homework before you set up your company. Write all the staff related to money down to the paper. If possible, get a lawyer to do this for you and your co-founders. Without economic-relationship, co-founders are friends, but with obscure or oral commitment, the chances that co-founders falling into a severe fight are very high.

Back to the story of “Chief-Entertainment-Officer” co-founders breakup, a lawsuit between Chen and Zou is inevitable. And another irretrievable things they made is the hurt to their readers or any users who have suffered from this kind of co-founder breakups. No matter who wins the lawsuit finally, both will lose their readers’ trust.