Am I crazy to stay on this boat?

I’m a minority partner in a large scale food business that I helped start several years ago. We had significant traction in our initial offerings, and have pivoted multiple times to adjust to more scalable opportunities that became available to us. We’ve done what we needed to survive, but due to the shifts, our partnership has devolved into dysfunction.

The primary partners have little in the day to day and are essentially disconnected and allow managers to handle specific functions. We do have a viable product and there is significant traction and opportunity on the horizon with it. However, due to the internal dysfunction, I am extremely skeptical in our team being able to execute – especially at the scale of our impending opportunities. As a team, our long term planning ends up akin to shooting from the hip — not the brightest idea with what is essentially a manufacturing operation.

Our saving grace is that the opportunity is large enough that we continue to have many investors wanting to buy in (when we need money) — diluting us further — which allows us to continue to stay afloat but barely survive when we continuously underperform on the opportunities given, but now with a much higher monthly overhead cost due to the opportunity’s increased scale. It’s incredibly disheartening to see such opportunity not maximized. I almost get the feeling that we are simply scaling to be larger to become “too big to fail” by our investor’s egos, suppliers, etc, but never really fixing the foundation (right team and methods) to scale properly. Worst of all is the time spent feeling that I’m wasting precious time/energy on this project. I’ve privately touched on this in a gentler way with my partners so that it doesn’t become personal, but I didn’t perceive that the other partners genuinely want to change their behavior so we continue the status quo.

My biggest fear is that I leave now with the opportunity so large that an established player acquires us to gain market share in this niche, but I see myself caring less each day because of the lack of vision and execution. And honestly, it simply goes against how I imagined my company to have evolved into. Have I stayed past my welcome? What would you suggest?

  • Well, I understand your dilemma. I also left a partnership and gave up my stake at a startup I co-founded. I did that because the partnership was bad with some of the partners.

    Ultimately it sound like you lack any faith in your partners, and lack energy. Without knowing much about your specific company, it sounds like a bad mix. The loop of “what if I’m all wrong about this and we may succeed” creates a vicious cycle, unless there is a viable exit strategy you believe in, and an end date for attempts.

  • Assuming you can afford it, leave. Your partners and the situation aren’t going to change.You need to be the one who changes something.

  • My father was a senior person at a diet startup the 1970s and he likes to tell me their story. The company had done incredibly well, the founding eight partners were now selling a couple billion dollars a year worth of product. The company was founded by eight very different partners, of the eight partners seven believed that the company could grow from a couple billion dollars a year to Tens of billions of dollars a year. The one partner who didn’t believe in the vision or the market ended up selling his share in the company. At the time the shares were generally valued by the media at around $400 million. However, there was a clause in their operating agreement that required the other partners to be able to purchase the shares before they could be offered for sale public. The other seven partners did not want this partner to leave the company so they valued this one partner share at $40 million. Much to everyone’s surprise the one partner didn’t complain or fight the valuation. That one partner took the $40 million exit from his multibillion dollar company. Within a year or two lawsuits sprang up against the diet they sold and the company was bankrupt, all other seven partners lost all their money. They did eventually when the lawsuits. Meanwhile that one partner is still wealthy today. If you see the writing on the wall you should sell out of the company and do right by your family.

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