Co-CEO Model Gains Traction as Startups Rethink Founder Dynamics

In September of last year, the cryptocurrency exchange Kraken closed a $500 million funding round with barely a ripple of public fanfare. The deal, reported by Fortune, valued the company north of $5 billion and was designed to clear the runway for a long-anticipated initial public offering. What made the raise noteworthy was not the number, which in crypto's cyclical boom-and-bust cadence barely turned heads. It was the management structure the money was underwriting: a co-CEO arrangement in which Arjun Sethi, a venture capitalist turned operator, shares the top job with David Ripley, the longtime Kraken executive who took the reins after founder Jesse Powell stepped back in 2022. Co-leadership at a company barreling toward a public listing is rare enough to count as an experiment. In crypto, a sector built on founder mythologies, it borders on institutional heresy.

Sethi, for his part, has framed the arrangement as a deliberate design choice rather than a compromise. In the Fortune interview, he described Kraken's structure as a response to the particular demands of scaling a regulated financial platform while preserving the engineering velocity of a technology company. The dual-CEO model, in his telling, allows one leader to focus on product and technology while the other steers regulatory strategy and business operations. It is the kind of argument that sounds tidy in an investor deck and far messier in practice. Co-founder and co-leadership disputes are among the most reliable killers of early-stage companies, and the venture capital industry has spent two decades engineering legal and financial architecture specifically to contain them. Kraken's choice to run toward shared power rather than away from it is either a sign of unusual institutional maturity or a bet that the structures that failed other companies will hold this time.

The numbers on co-founder conflict are stark, if imprecise. Writing in Psychology Today in February 2025, the organisational psychologist Matthew Jones noted that co-founder relationships operate under pressures that resemble those of a marriage more closely than those of a conventional business partnership: intense interdependence, ambiguous role boundaries, and a shared identity that can make disagreement feel existential. The research Jones cites suggests that somewhere between a third and half of startup failures can be traced, at least in part, to co-founder breakdowns. The problem is well enough understood that law firms now publish multi-part guides on structuring founder equity to prevent deadlock. Orrick partners Nick Feldman and Cody Peterson, in a series published this spring, advised founders against the intuitive appeal of an even 50-50 split precisely because it creates no mechanism for resolving a tie when the relationship fractures.

But the legal paperwork, for all its importance, is a lagging indicator of a deeper question. What the vesting schedules and cliff provisions and buyback clauses actually protect against is not the argument itself but the cost of the argument when it arrives unannounced. A standard four-year vesting schedule with a one-year cliff, the industry default for founders, means that if a co-founder walks away or is pushed out before the twelve-month mark, they leave with nothing. The structure punishes early departure but does little to prevent the resentment that makes departure feel like the only option. As Jones puts it in the Psychology Today piece, the psychological architecture of a co-founder relationship is built in the first hundred days, long before the lawyers get involved. By the time the vesting schedule matters, the damage is usually already done.

This is the context in which Kraken's co-CEO model reads less as a novelty and more as a wager on a counterintuitive thesis: that sharing power openly, under explicit and negotiated terms, is less dangerous than the informal power imbalances that develop when founders divide responsibilities without formalising them. The company has not disclosed the precise governance mechanics between Sethi and Ripley, and Sethi declined to elaborate on tie-breaking provisions in the Fortune interview. But the experiment is being watched closely by startup boards and venture investors who have spent years searching for a replicable template for shared leadership that does not depend on the specific chemistry of the individuals involved.

If Kraken represents one pole of the debate, the Ethereum Foundation offers a case study in what happens when the structures that were supposed to prevent conflict were never built in the first place. In May 2026, CoinDesk reported on a wave of high-profile departures from the Foundation, the non-profit that stewards the development of the Ethereum blockchain. The exits reignited long-simmering questions within the Ethereum community about how decisions are made inside the organisation and whether its governance model, which vests enormous informal authority in co-founder Vitalik Buterin, is sustainable as the ecosystem matures.

Buterin, who has publicly condemned Russia's invasion of Ukraine and proposed crypto-driven mechanisms for political reform, has been the gravitational center of Ethereum since its 2015 launch. His intellectual authority is, by any measure, the Foundation's single largest asset. But the departures, which Decrypt characterised as signalling a shift to what Buterin himself called a "smaller ship," have exposed the fragility of an organisation built around one person's vision. In late May, Buterin wrote that the Foundation would pursue "longevity over breadth" and narrow its focus to what he termed "CROPS": censorship resistance, openness, privacy, and security, according to CoinDesk. The statement was received by some in the community as a necessary course correction and by others as an acknowledgment that the Foundation had drifted too far from its original remit.

The Ethereum Foundation's troubles differ from Kraken's challenges in almost every particular, but the two stories converge on a single insight. Organisations that depend on founder exceptionalism, whether in the form of a singular visionary or a pair of co-leaders assumed to be in permanent alignment, are brittle in ways that organisations with formal governance structures are not. The question is not whether conflict will arise but whether the machinery for processing it exists before it is needed.

The legal and venture communities have converged on a handful of mechanisms that, while far from foolproof, reduce the odds that a co-founder dispute becomes an existential crisis. The first is the co-founder agreement, a document that covers equity allocation, vesting, roles and responsibilities, intellectual property assignment, and decision-making authority. As one small-business advisory piece published by MSN noted in December 2025, the most effective agreements also include dispute resolution clauses that specify mediation or arbitration procedures before litigation becomes the default. The second is the regular founder check-in, a practice borrowed from couples therapy that involves structured, periodic conversations about the state of the working relationship, conducted before grievances have had time to harden into positions.

A third mechanism, less commonly discussed but increasingly adopted by venture-backed startups, is the independent board seat occupied by someone whose explicit brief includes monitoring co-founder dynamics. The role is delicate. It asks a board member to function as something between a marriage counsellor, an executive coach, and an early-warning system, and it requires a degree of candour from founders that most are reluctant to offer. But investors who have backed companies through co-founder breakdowns describe the cost of the seat as vanishingly small compared to the cost of a blow-up that could have been caught earlier.

The vesting schedule, for all its ubiquity, is perhaps the least interesting of these tools. It exists to manage the financial consequences of a split, not to prevent the split from happening. The more sophisticated investors now treat the vesting conversation as a gateway to a broader discussion about founder alignment. If a founding team cannot agree on who gets what percentage and why, the reasoning goes, they are unlikely to navigate the harder conversations about product direction, hiring, and strategy that lie ahead.

Kraken's path to an IPO will be one test of whether the co-CEO model can survive the scrutiny of public markets. Public company investors are, as a rule, allergic to ambiguity, and dual leadership structures introduce ambiguity by definition. Every earnings call becomes a Rorschach test: which CEO speaks to which topics, and what does the division of labour signal about the balance of power inside the company? The few public companies that have attempted co-CEO arrangements have tended to abandon them under pressure, Oracle and Salesforce among them. Kraken is betting it can be the exception, and the $500 million it raised last September buys it the runway to try.

In the meantime, the Ethereum Foundation's contraction offers a mirror image of the same problem. An organisation that was never designed to scale is discovering that informal leadership structures, however elegant in their early simplicity, become liabilities as the stakeholder map grows more complex. The departures from the Foundation are not, in themselves, evidence of a crisis. Organisations shed talent for dozens of reasons. But the public nature of the exits and the volume of community questions they provoked suggest that something about the Foundation's internal architecture was not communicating stability to the people inside it.

What both stories make visible is a truth that startup culture has been slow to absorb. The mythology of the founder, the lone genius in the garage, the visionary whose certainty substitutes for process, has been so thoroughly commodified by venture capital storytelling that it has begun to obscure the actual mechanics of how durable companies are built. Durable companies are not built by founders who never disagree. They are built by founders who have built the machinery for disagreement before they need it, who have written down the answers to uncomfortable questions while the answers were still easy, and who understand that the governance structures they install in the first year will be the ones that either save them or fail them in the fifth.

Sethi, for his part, has signalled that Kraken's structure is not a temporary arrangement. In a CNBC interview in late May, he discussed the state of the crypto sector and the company's preparations for listing without suggesting any imminent consolidation of the co-CEO roles. The quiet confidence of the posture is itself a data point. Whether the market rewards it is a question that will be answered in the filings, and then in the quarters that follow.

The best governance structure is the one that founders build when they still like each other. Everything after that is just damage control.