What I Learned from a Failed Startup: Seeking Advice on Engineering, Co-Founder Agreements & Execution (i will not promote)

Hey everyone! Long-time lurker, first-time founder here. I’m reaching out to get feedback on a recent startup experience—what went wrong, what I could have done better, and how I should approach future opportunities.

The Background

There were three founders in this venture:

• Founder A (CEO, 50%) – The product/growth guy who identified the problem space.

• Founder B (Me, CTO, 37.5%) – A software engineer with a software dev shop and multiple clients. I wanted to diversify into building my own products but am not inherently a “product person.”

• Founder C (COO, 12.5%) – Brought into the mix by Founder A, with the goal of leveraging his network for traction once the product was built.

The idea was to create Product X, a solution targeting the SMB space while competitors were moving upmarket. It wasn’t revolutionary—more of a strategic market play.

The Initial Plan & My Role

• Founder A would define and prioritize product specs, guiding what needed to be built.

• I (Founder B) didn’t have time to code myself, so I allocated engineers from my dev shop (which I personally paid for). My stake was adjusted from 32.5% to 37.5% to reflect this contribution.

• Founder C was more of an observer early on, planning to help with traction once we had a product ready.

We agreed on a 1-year cliff and a 4-year vesting schedule for equity.

Where Things Started to Go Wrong

• Lack of a Clear Product Roadmap – Founder A was very focused on getting something built fast, but we never signed off on a structured roadmap or milestones. I underestimated the complexity of what was actually needed for customer conversations.

• Engineering Expectations vs. Reality – The team (one part-time lead + two full-time juniors from my dev shop) faced early feedback that development was too slow. In response, I ramped up the lead to full-time and added a part-time PM. But Founder A continued pushing for speed, despite real hurdles (OAuth integrations, etc.).

• Shifting MVP Goalposts – Midway, Founder A concluded that an MVP wouldn’t cut it—we needed a more complete product to be competitive. This meant more engineering, more delays, and more of my own money spent on development.

The Breaking Point

Near the 1-year vesting mark, we had an opportunity: a paying client willing to fund an app. I didn’t have devs on the bench, so I asked Founder A to hold off our project briefly while I hired more engineers to avoid stalling either effort.

This was the final straw. Founder A (with Founder C somewhat aligned) decided the arrangement wasn’t working—citing past disagreements and the “slowness” issue. The decision was made to end the partnership.

Now, Founder A, as majority holder, is requesting a full handover of the code, Founder C is indifferent, and all engineering costs I covered are essentially lost.

Key Takeaways (So Far)

1. Crystal-Clear Agreements Upfront – A formalized product roadmap and timeline should’ve been locked in from day one.
2. Business Needs > Engineering Standards – I wanted to build something solid and scalable, but in an early-stage startup, speed to market is king. This was before AI tools became mainstream, so our approach wasn’t as optimized.
3. Don’t Overextend Without Protection – I personally financed all engineering, but without clear safeguards, that investment became a sunk cost.
4. Expenses Must Be Distributed – I was solely covering engineering salaries, which created an imbalance in financial risk. Future partnerships should ensure costs are shared proportionally, rather than one person shouldering the burden.

Where I Need Advice

Looking back, I want to improve as an engineer, CEO, and co-founder.

• What should I have done differently in structuring this partnership?

• How do you balance engineering quality with the startup need for speed?

• As a dev shop owner, how can I better navigate equity deals where I’m also bringing in engineering resources?

I really appreciate everyone who went through this long post and provide any insights from founders, engineers, or anyone who has been in a similar situation. Thanks for reading!

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For readers who might be thinking what set this type of expectation? Because I had a dev shop and I thought my co-founders will be understanding of my business circumstance and I was a bit trigger to build a product with a C-exec team, I gave the impression of "unlimited" engineering which I later realized down the line that it was not feasible for me. Something I learned that I have to be more careful with and set expectations accordingly from the very beginning. And from the feedback of the commenters here, I am much more aware what I should offer and how to set expectations, esp. in the early stages of execution. So thank you all! 🙏🏾

EDIT: I would like to thank everyone who contributed to this thread. You not only helped me but future founders who are considering to get into the startup scene!