Defoundering

How to Avoid Being Pushed Out of the Company You Founded

The relationship between startup cofounders is not unlike a marriage. And like marriage, many end in divorce.
dens naveen italian vogue picyou How to Avoid Being Pushed Out of the Company You Founded

Mr. Crowley and Mr. Selvadurai at a photo shoot for Italian Vogue. (Based on a photo by flickr.com/dpstyles)

Until recently, Foursquare cofounders Dennis Crowley and Naveen Selvadurai—let’s call them Denveen—were social media’s celebrity couple.

The pair stepped together into the spotlight when Foursquare won best-in-show at the South By Southwest Internet tradeshow in 2009 in Austin. After that, they appeared everywhere together. They traded off for media interviews and the presentation of prizes at Foursquare-sponsored events. They finished each other’s sentences in a spot for the USA network; they posed on a snowy New York street bundled in cardigans for a Gap ad. In a spread for Italian Vogue last year, the sandy-haired Mr. Crowley appears in a black suit, his Indian-born cofounder in beige. Mr. Crowley has his hand on Mr. Selvadurai’s arm and they’re looking at each other with oversize grins—not surprisingly, as Foursquare is now valued at more than $600 million.

And yet, a week and a half ago, on the third anniversary of that first SXSW victory, Mr. Selvadurai announced he was leaving the company.

The word came down on a Sunday afternoon, so it took a few days for the tech tabloids to orient themselves. But soon enough, the rumors started. “A source close to Selvadurai tells us the Foursquare cofounder has seemed ‘frustrated’ and ‘lost,’” reported the blog Business Insider; Mr. Selvadurai was “forced out,” according to a followup story. “Dennis and he don’t hate each other—things just changed,” one person told AllThingsD reporter Kara Swisher.

On Saturday, Mr. Crowley took the stage at SXSW, and on Sunday, he and the rest of the Foursquare delegation drank and made merry at the infamous Foursquare shindig, held in a sunken courtyard bar. Last year, Mr. Selvadurai spent most of the party lounging on the top deck with Ashton Kutcher and Demi Moore, or encircled by twenty-somethings on the dance floor. This year, he skipped the conference entirely.

What makes cofounders fall out of love? According to sources, the rift at Foursquare started months ago. Mr. Selvadurai was repeatedly “reorganized” into different roles as Foursquare grew, bringing in experienced executives at the top and whiz kid developers at the bottom. “He’s been sort of jumping around, like from developer to evangelist, all these different roles,” one person close to the company told Betabeat. “Naveen was a great developer, no doubt about it. But Foursquare is a white-hot company that’s hiring the best developers in the world.”

Meanwhile, Mr. Crowley’s star kept rising. Mr. Selvadurai, while king of his own cult following, has roughly half the Twitter followers of Mr. Crowley, the articulate, smiley CEO infamous for two twin acts of gall: reportedly turned down an acquisition offer from Google, and scoffing publicly when Facebook launched its competing check-in service. Investors adore him.

Or perhaps Denveen were never truly in love. The pair met while working for different companies that shared an office in Union Square, and started casually collaborating two years later. Mr. Selvadurai “was the one guy who knew how to make iPhone stuff,” Mr. Crowley recalled of his cofounder in a recent Business Insider profile.

Mr. Selvadurai coded most of the original iPhone app that brought Foursquare to fame. But Foursquare was Mr. Crowley’s idea, the second coming of his first startup, Dodgeball, which was acquired and shut down by Google. Mr. Crowley has had a bigger share of Foursquare and more power from the beginning as CEO, while Mr. Selvadurai, who also happens to be five years younger than Mr. Crowley, was the “junior cofounder,” sources said.

Mr. Selvadurai will finish out the month as an employee and then serve on Foursquare’s four-person board with Mr. Crowley and investors Albert Wenger and Ben Horowitz. “If it was a total kicked-out, full-on backstabbing, the way you see in the movies, he would have been off the board too,” the person close to Foursquare pointed out.

Suffice to say, Foursquare’s board meetings might be a bit tense for a while. One source close to the situation—and who contacted several journalists about it—said it was Mr. Crowley and the new executives who decided it was time for Mr. Selvadurai to go. “He screwed his cofounder,” the source said. “If I were Dennis, I’d probably be praying to God that this doesn’t get out because it ruins his nice, fun, bro image.”

>> DENS & NAVEEN SPLIT! [SLIDESHOW]

When the news broke, Foursquare issued a very brief statement and handed the mic over to Mr. Selvadurai, who wrote a vague explanation on his personal blog: “after three years, i feel i’ve done all i can do and i’m moving on. dennis and i have been discussing timing for a while, and we decided that now, on this anniversary, it feels right to begin the transition.” In this context, his customary lowercase made him sound cowed and underconfident. (His previous blog post, about the end of Foursquare’s residence at the beloved Village Voice building in January, ended on a cheerier note: “to soho!”) It must sting to feel rejected by the company you literally started around a kitchen table.

Still, it’s hard to feel bad for Mr. Selvadurai, one of the few standouts from New York’s low-wattage tech scene and now a millionaire several times over. The terms of his compensation were not disclosed, but they included liquidating some of his shares. “He’s rich, he could just literally go fuck off for a long time,” the source close to the situation said. “But he won’t do that. He’ll go start something and he’ll be able to raise money off of like, a cotton gin. ‘I built a digital cotton gin. It’s gonna be a hit.’ And he’d get a $100 million valuation, Jack Dorsey-style.”

Follow Adrianne Jeffries on Twitter or via RSS. ajeffries@observer.com