Business Disputes: You Always Lose

As time goes on with your startup, then your scale-up, then maybe even your public company … you will have to deal with disputes.

At first, they will be rare. Then more common. Then they will escalate, and in many cases, you’ll be pretty sure you are on the right side of a series of disputes:

A customer that doesn’t want to pay a signed deal
A VC that backs out of a term sheet
An employee that was never even really there that sues you, or threatens to
A sales rep that sues for commissions on deals they never even closed
A partner that threatens you for not paying rev share on deals they had nothing to do with
An ex-founder that comes out the woodwork and wants 10% of the company
An advisor who claims they are owned a pile of options
Your first patent threats
Your first IP litigation

It will all happen to you, or at least most of it over time. And it just scales. It starts with thousands at stake, then tens of thousands, and later millions.

All i can tell you over the years is a few things:

First. it’s the party that’s “right” that gets the most burnt out, the most frustrated, and is drained of the most energy.

The side that got away with something, or is a taker, the negative summer? It doesn’t burn up any of their energy. But it will burn up tons of yours.

Second, any business dispute — even if you are “right”, it doesn’t really matter. You always lose. So just try to get it resolved.

Even if you win, you lose. If you win, it takes time, money, and a ton of energy. If you lose, you lose all that and more. The “wrong” side rarely gets burnt out.

Third, always try to do what you can to leave things as strong as possible at the end of any relationship. Especially if they were in the “wrong”.

They never finished the project? They never paid? They never even showed up? Well, probably so. But they don’t care or see it that way. Try to leave things, when things end, in as good a place as you can. Especially if they did the “wrong” think. Pick up the phone. Write a nice note. Don’t be snarky.

Fourth, lawsuits almost always stress out management and are a big distraction.

The CEO getting deposed, the VP having to testify. Even if the company is 0% at fault, it’s a huge distraction. It’s almost never worth it. In fact, the more you are in the right, the more a distraction it is. The party in the “wrong” often even enjoys a business dispute and even litigation on some level.

Fifth, threatening a customer never, ever, never works.

It doesn’t matter if they were in the wrong. Not only will they not pay, but they will never come back. If a customer doesn’t pay, just move on. More here.

What To Do When a Customer Doesn’t Pay? Let it Go and Move On.

Finally, I’ve been doing this long enough to tell you there is no karma.

What goes around does not come around. I’ve had cofounders and VPs walk out the door and make mlliions. I’ve made folks millions that never said thank you. I’ve risked my reputation to vouch for folks that never appreciated it. Chaotic Neutral folks and even sociopaths often end up quite successful.

There’s no karma, but getting stuff behind you quickly helps. Just settle the dispute. In fact, the more you are right, and the more they are wrong, the quicker you should just get it resolved if you can.