Those are the two questions I’ve gotten a lot over the past week from venture capitalists and readers (no, not mutually exclusive), ever since Formation 8 said it would not be raising a third fund. In fact, no one can remember a Silicon Valley VC firm choosing to effectively disband without having first faced some sort of performance problems, succession questions or macro headwinds. For all of the innovation that venture capital helps to foster, the market players themselves tend to follow a pretty well-worn playbook. Formation 8 is a notable exception.

Since the original announcement, I’ve spoken with nearly a dozen people either employed by, or affiliated with, Formation 8. Almost all of it was on background, as no one wants to publicly burn bridges — particularly given that, at the present time, the firm’s three founding partners are “getting along” and in the midst of what one source called a “peaceful detente that benefits everyone.”

But here is what I heard (almost) universally about the firm that, in 2013, Fortune referred to as the hottest new VCs since Andreessen Horowitz:

The firm’s official explanation about the founding partners having different investment strategies and interests is legitimate. Joe Lonsdale, for example, is mostly interested in building a broad portfolio of early-stage Silicon Valley tech companies. Brian Koo, on the other hand, is more interested in creating a concentrated group of growth-stage private companies in Asia. And their future plans, which we’ll get to in a moment, reflect that divergence.

That said, the real fissure at Formation 8 was more about personality clashes than it was about strategy disagreement. In short, the founding partners grew apart — creating a tense atmosphere that virtually necessitated divorce. And the sexual assault lawsuit brought earlier this year against Lonsdale — which was dropped early last week, along with Lonsdale’s countersuit against the accuser — only exacerbated existing strains.

“I don’t know that it was so much the lawsuit as the fact that the partners found out just before the public did, and the same thing with the fact that Stanford had banned Joe from its campus,” says a source close to the situation. “Joe swore to everyone that he also was unaware an actual suit would be filed until nearly the last minute — and there is no reason to think he’s lying about that — but it certainly made people more suspicious of each other.”

Or, as another source put it: “Of course it caused stress internally. How could it not?”

Within the past few months, all sides concluded that raising a third fund wouldn’t be fair either to investors or to themselves. Not a simple decision, particularly given the enormous fee streams being passed up.

“It would have been easy to raise another one given the performance of Funds I and II,” an F8 limited partner explains. “They just would have had to ask.”

What’s important to note here is that while the co-founders — and their various factions within F8 — didn’t get along for quite some time, they have come together to do right by their investors. For starters, they’ve reduced the size of Fund II by 10% (and likely will expand that to 15%, depending on follow-on needs) — rather than continuing to suck up fees for capital that will never be committed by the ‘team.’ Second, they will continue to manage out the existing portfolio — with companies split up among the co-founders, each of whom will receive a budget to hire advisors, etc. Thirdly, the whole crew will appear tomorrow at the firm’s annual LP meeting, in order to better explain the situation and answer questions.

So what’s next?

As has been previously reported, Joe Lonsdale will raise a new fund called Eight Ventures with a $400 million target. Sources say that he has held informal conversations with certain LPs, but there isn’t yet a data room or any fund documents printed up yet; expect that to occur sometime in 2016, alongside certain F8 team members like Drew Oetting (who was leading F8’s seed investing efforts). Lonsdale also is working to close a special purpose vehicle called Eight SPV.

Brian Koo also is launching a new firm called Formation Group– see what they did there with the names? — according to a memo he recently sent to existing investors in a separate special purpose vehicle launched by F8 to pursue Asian growth equity deals. Word is that Koo has closed on over half of the $400 million he’s seeking (at least via verbal commitments), and that the SPV now will now “evolve” into the first Formation Group fund. He will be joined by senior advisors Gideon Yu (senior advisor to F8), Joel Sng (Asia-focused managing partner at F8) and Chee Cheong Gay (senior advisor to F8).

From Koo’s memo, which was obtained by Fortune: “I will lead Formation Group as CEO, while Gideon, Joel and Chee Cheong will spend 100% of their time and energy focused on our companies, either at the CEO level or in senior advisor and board member roles.”

In an emailed statement, Gideon Yu added: “While my full time role is CEO and Co-Founder of EVA Automation, a smart home A/V company I co-founded last year, I am excited to continue in my role as Senior Advisor to Formation Group and Formation 8.”

F8 co-founder Jim Kim has not yet disclosed his future plans, although don’t be surprised if he ends up launching some sort of new investment platform with F8 partner Shirish Sathaye (a venture veteran who joined last year from Khosla Ventures).

Finally there is the F8 Hardware Fund, which has rebranded as Eclipse Ventures. As has been previously reported, F8 partner Lior Susan will continue to lead the strategy (F8 COO/CFO Brett Cummings also is listed on regulatory filings). What was undisclosed until now, however, is that F8 senior advisor — and longtime Sequoia Capital partner — Pierre Lamond will join Eclipse Ventures as a full-time partner.

I also must note for the record that Lonsdale disputes my narrative of personal “animosity” driving the F8 split. He points out, for example, that he is among those investing in a Korean restaurant that Brian Koo plans to open in the old Apple Store on University Ave in Palo Alto. One other F8 insider also downplayed the personal and upsold the strategic. And perhaps the post-divorce distance has soothed frayed nerves enough that things now don’t seem as bad in retrospect as most others believe they once did. But I heard the same story from too many people not to give it credence.