Most VC and PE firms piss away money.
Not intentionally. But consistently.
I’ve spent the last decade watching it happen from the inside. Smart investors backing smart founders. Then seeing it all unravel.
This isn’t theory. These are battle scars.
The Patterns I Keep Seeing
I’ve seen a co-founder get surrounded by his senior leadership team then pushed out by his own board. Watched a company bring in a “big d-swinging” operator from another industry who imploded the culture in six months. Watched a CEO execute his leadership team one by one until there was no one left to blame... and then the board shot him too.
Different companies. Same patterns.
Let me break down the five I see most often.
1. Bad Hires at the Top
An operator comes in with a playbook that clashes with founding culture. They ran it somewhere else. It worked there. So they assume it’ll work here.
Six months later, the team is fractured and the new hire is gone.
But it doesn’t stop there. The “friends of friends” syndrome spreads. The new exec brings in their people. Those people bring in their people. Before long, the original team — the ones who actually built the thing — are outnumbered by strangers running someone else’s playbook.
Expensive lesson. Predictable pattern.
What’s really happening: The board wanted “adult supervision” or “someone who’s scaled before.” They optimized for resume over fit. Nobody asked whether this person could actually work with the founders, or whether the founders could work with them.
2. Ignoring the Human Side
Money pours into product and growth while the co-founder relationship quietly erodes.
Two people who started as partners now avoid hard conversations. They communicate through Slack. They stop having the real talks. Small resentments compound.
By the time it surfaces, one of them is already looking for the exit.
What’s really happening: Everyone assumed the co-founder relationship would “just work” because it worked in the early days. But early-stage scrappiness is different from growth-stage pressure. The relationship needed investment. It didn’t get it.
3. Communication Breakdown
Board meetings become performance theater.
The founders present the version of reality they think the board wants to hear. The board asks questions designed to sound smart rather than surface truth. The real problems get discussed in parking lots and text threads.
By the time misalignment surfaces, it’s already a crisis.
What’s really happening: Trust eroded somewhere along the way. Maybe after a bad quarter. Maybe after a hire the board pushed that didn’t work out. Now everyone’s managing perception instead of solving problems together.
4. Delayed Hard Conversations
Everyone knows something needs to be said. Nobody says it.
The co-founder who’s not pulling weight. The exec who’s in over their head. The board member who’s actively unhelpful. The strategy that isn’t working.
The cost compounds until it becomes unavoidable. By then, it costs millions instead of a difficult afternoon.
What’s really happening: People confuse being “professional” with avoiding conflict. They wait for the “right time” that never comes. They hope the problem will resolve itself. It doesn’t.
5. Talent Churn
Key leaders burn out or leave because nobody noticed they were running on fumes.
The founders kept pushing. The board kept asking for more. And the people who actually built the thing walked out the door.
Then everyone acts surprised.
What’s really happening: High performers are often the last to complain and the first to leave. They don’t send warning signals. They just update their LinkedIn and take a call from a recruiter. By the time you notice, they’ve already decided.
The Root Cause Nobody Wants to Talk About
The people inside the companies feel it long before the culture surveys or spreadsheets do.
Same root cause every time. Relationships.
Founder to board. Co-founder to co-founder. Leader to team.
When those relationships have friction, everything slows down. Decisions get harder. Trust erodes. Good people leave. Results tank.
This isn’t soft stuff. This is the operating system of the company.
You can have the best product, the biggest market, and the most capital. But if the relationships at the top are broken, you’re building on a cracked foundation.
Why This Keeps Happening
Three reasons:
1. Relationships aren’t on the dashboard.
Boards track revenue, burn rate, pipeline, and headcount. Nobody tracks the health of the co-founder relationship or whether the CEO and the board actually trust each other. If it’s not measured, it’s not managed.
2. Everyone assumes relationships will “just work.”
Especially among smart, successful people. The assumption is: we’re all adults, we’re all aligned on the goal, so we’ll figure it out. But relationships under pressure don’t “figure themselves out.” They deteriorate unless actively maintained.
3. Conflict avoidance masquerades as professionalism.
In most boardrooms and leadership teams, directness is seen as risky. So people hedge. They hint. They wait. And small problems become big ones. Or they read Radical Candor and that gives them free reign to be an a-hole.
What Actually Works
I work with founders and leadership teams on exactly this. The relationship that’s costing too much. The conversation that keeps getting postponed.
Here’s what I’ve learned works:
Name the friction early. The longer you wait, the more expensive it gets. If something feels off between you and a co-founder, board member, or key exec — say it. Not aggressively. But clearly.
Invest in the relationship before you need to. Don’t wait until there’s a crisis to have a real conversation. Regular, honest check-ins between co-founders and between founders and boards prevent the slow drift that leads to blowups.
Get outside perspective. It’s hard to see the patterns when you’re inside them. A coach, advisor, or peer who’s been through it can spot the friction you’ve normalized.
Have the hard conversation today. The one you’ve been putting off. The one that feels awkward. The one you’re hoping will resolve itself. It won’t. And every day you wait, the cost goes up.
The Question I’ll Leave You With
What’s the hardest relationship you’ve had to manage in a company?
Not the hardest project. Not the hardest market. The hardest relationship.
Because that’s usually where the real story is.
If any of this sounds familiar, I’d love to talk. I work with founders and leadership teams on the relationships and conversations that are costing too much. Reach out if you’re ready to address what’s been slowing you down.
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FAQs
Why do VC and PE-backed companies struggle with leadership relationships?
The pressure to grow fast often means relationships get deprioritized. Boards focus on metrics, founders focus on product, and nobody invests in the human dynamics until they break.
What’s the most common reason VC-backed startups fail?
Beyond market fit and capital issues, relationship breakdowns between co-founders, founders and boards, or leadership teams are a leading cause of preventable failure.
How can founders improve their relationship with their board?
Regular, honest communication outside of formal board meetings. Sharing real challenges, not just polished updates. And addressing misalignment early, before it becomes a crisis.
What is the “friends of friends” syndrome in startups?
When a new executive brings in their network — people they’ve worked with before — who then bring in their people. It can quickly displace the original team and culture, often creating friction and turnover.
What relationship is costing you the most right now?
I help people solve high-stakes relationship problems that drain trust, energy, and results. Lab Notes is where I share one insight every week to help you make more progress faster. If someone forwarded this to you, please subscribe here: resultslab.io/subscribe
Better Relationships | Great Results