I've cofounded 4 different startups. All were good ideas that bled cash or time and flopped, largely due to infighting or founder differences. One cofounder of one of the companies got really nasty about trying to leave with the rights to the company and we other two cofounders just let him have it. He sold the rights and it's now a successful venture-backed startup with soaring profits (two cofounders). Good for that team.
Since then, I've managed my own single-founder startup. We're profitable, growing, and valued at about $2.2 million. We're implementing a lot more over the course of this year and next, and I will look to exit in early 2018, once our valuation is closer to the $10 million or $20 million range.
I have a lot of other companies I want to start after. I will bring on talented people in executive roles who can complement me and make up for my own weaknesses, but I won't cofound again. I'd rather keep the smart, business-oriented people I know in masterminds where we can compare ideas and bounce thoughts off each other, than wade into business situations where our differences turn us into enemies and destroy the company.
The general wisdom on picking cofounders is pick a behind-the-scenes guy if you're a visionary, or make sure you're comfortable as the behind-the-scenes guy if you're partnering with a visionary. The problem I find (and one I've seen in a lot of cofounder groups) is that most of the people who want to start startups are visionaries.
> The problem I find (and one I've seen in a lot of cofounder groups) is that most of the people who want to start startups are visionaries.
It's simpler than that. Most people just prefer slacking off to working their butts off.
However it's the narcissists and sociopaths that will call their slacking off being "visionary" while the good guys either just leave or start working their butts off as everybody else. Obviously you want to pick your cofounder(s) among the latter kind.
Working your butt off has zero to do with having a executable vision that creates value.
Clearly shit needs to get done, but there's only so many hours in the a life of a startup and being able to see what needs to be done ultimately is more important than just getting stuff done.
__
"I choose a lazy person to do a hard job. Because a lazy person will find an easy way to do it."
Oh, I agree that a startup needs an executable vision. However if someone provides just the vision but doesn't put as much work in as everybody else that's an advisory role, not a co-founder role, and should be reflected in the equity distribution.
The thing is that vision is just so much easier than actually doing the grinding grunt work.
> "Vision without execution is hallucination" - Thomas Edison
I like this one better:
If you have built castles in the air, your work need not be lost; that is where they should be. Now put the foundations under them. -- Henry David Thoreau
Both quotes are getting at pretty much the same point, I think, but the Thoreau quote is kinder, and more encouraging.
Disagree. I've literally run a startup where I took an opportunity I saw, pitched it to a cofounder, got a single client, cofounder did all the work. After year, cofounder was tried of doing work, so I told them how to turn the service into a product and rapidly got five clients; after that, the cofounder didn't have to do anymore work either.
I'm not lazy, happy to do hard work, but if I see an exploitable situation I will not create work just to feel good about things.
Do exactly what needs to be done, nothing less, nothing more.
Footnote: Not a fan of Edison, he in fact was lazy, refused to change, and spent a good deal of his life literally pounding rock to no end.
I didn't exploit the cofounder, I presented them with an opportunity, they were fully aware of the situation. In fact, they were excited about the project, enjoyed the work, and often bragged about it to our friends.
Beyond that, after I told him how to turn the service into a product, I turn something that without me would have had no value after they stopped into something that produced value for years without any major effort from either of us.
EDIT: Truly curious as to the reasoning behind the downvotes and would welcome a comment expressing someone's thoughts on why this comment has received 3+ downvotes.
I believe the reason you're getting downvoted is because of the casual way you reel off how easy it is to found a successful company that you can do it casually, sort of disinterestedly tossing it out of your one limp hand to your co-founding pleb who eagerly grasps at the crumbs of your genius.
In other words, you come off as an arrogant know-it-all.
"I've literally run a startup where I took an opportunity I saw, pitched it to a cofounder, got a single client, cofounder did all the work."
Pretty sure that's why. Also the part where "I told him how to turn the service into a product" is equated with actually doing that work.
Not saying that your contributions weren't important - I wasn't there. Maybe without you getting a client there would've been no business, and maybe your cofounder is super happy with how things turned out, too. But it does read a bit like exploitation, and it definitely raises the question of what things might have looked like if you'd bothered to work as hard as it seems like your cofounder did.
Edit: Also, I think this probably touches a nerve with HN people, many of whom dream of founding their own company and are probably scared of exactly this sort of thing happening to them, but without the happy(?) ending.
You are getting downvoted because you look like someone full of themselves.
You admit you did nothing...
and that your cofounder did everything...
but you refuse to attribute the success of the startup to your cofounder and instead attribute the success to yourself.
You have the audacity to claim that the startup would have been worthless without you, but ignore the fact it wouldn't even exist without your cofounder.
As someone working on getting rid of a cofounder like yourself, where I did all the work and they sat on the sidelines until they saw a product and then decided to reach out to get his share, this shows that you aren't as invested even though you are a cofounder. There's a reason why the "co" is there, because both people are working on founding not one person waiting for the other to do all the work so they can just throw an idea into the bucket every now and then so that they can get a piece of the end result.
I get what you're saying, and i think the whole "you gotta work your butt off to be successful" thing is a lingering noting from workoholic culture. "How many hours you put in?" is the corporate version of "how much can you lift?" And I believe it's not exactly right; working smarter is better than just working harder. But both do entail work.
Then again, isn't there some quote about inspiration and perspiration ;)
Perhaps if he'd managed to skip undergraduate studies straight to graduate school as adviced he'd be wrestling with hard enough problems not to think about writing programs for the upcoming PCs of the era
"Someone else already knows the trade secret for the problem I'm trying to solve, but they won't tell me the solution, because I don't have lots of money. Even if they did tell me, I probably wouldn't understand it, because I lack the perspective of experience." -amorphid
"I have no idea in which direction I need to go, so I'm gonna have to work my butt off to find the right path." -amorphid
"I worked really hard, and found a solution!" -amorphid
The thing you missing is leadership. People won't bust there ass off over and above what they are paid for a lazy person that looks to exploit them. But, if you can work your ass off and have a vision people want to follow with a whole lot of luck you might create something special.
I agree with you. And I also have a tendency, based on a few personal experiences, to associate self-proclaimed visionaries, with narcissistic personality disorder. And it is also my experience that, besides being very active in taking credits for other people ideas, design and work, they are typically lazy and a hindrance.
However, somehow, they're alway seems to be able to find people who will do the job for them, from bench work to CEO work, so they can call themselves successful.
Agree. I didn't mean that the role is not there. It is more about people walking around and saying "I am the architect". I've heard that once. He wasn't joking.
There's nothing wrong with someone saying 'I'm the architect' - if that's what they really are. That said, it might be a power thing.
Now - there's more wrong in saying 'I'm an architect' - because architect really is not a profession, really. I suppose you could kind of get away with saying that if you have a lot of experience, and have been in the role of architect for some time, but it's a difficult thing to say and strains credibility if you were to put it on a resume.
I don't know about the word "visionary" or using it as some sort of self-descriptive label, but I do think it's important for the founders investing their time and effort into a startup to have a vision for what they're really trying to achieve and to dream big. That's obviously not sufficient for success, but I suspect that to some extent it is necessary, given the commitment that tends to be needed from founders and perhaps early employees and how difficult it can be to ride out the rough patches without some sort of goal you believe will be worth it in the end.
> Most people just prefer slacking off to working their butts off.
Representing the individual desire to work for "most people" isn't your job or your right any more than it's my right to say your internal view of the world is totally fucked up if you think that way.
It's all well and fine to mention there are sociopaths in the industry, but colluding them with narcissists is unreasonable. Narcissism is simply the ability to externalize one's internal viewpoints in a way that tend to spread that same viewpoint to other's internal views, often at times without empathy for those who it infects. If that benefits the company, whose function is to make everyone there more money, then narcissism may a required trait of the company's leader. If someone can't accept that for themselves, then they should leave the company or never join to begin with.
The whole sociopath matter is another thing entirely. Sociopaths can be untrustworthy, which makes dealing with them problematic.
Somebody worked their asses off to give us an immutable infrastructure on top of which our reality runs. I think rationalizing people being lazy (and speaking for their laziness) is a poor way of approaching things, unless we all just want to be lazy. If that's the case, carry on! :)
Taking a "big salary" is just a symptom of not being careful with how we implement consciousness on the Internet. Taking a moment to appreciate what one has in this moment is far more important than what one may have tomorrow.
Interesting data point. However, we're happily chugging along with 6 co-founders, bootstrapped to currently 30 mln us$ valuation and we've only just begun.
Then again, your point about "visionaries" (with which you probably mean high-ego people needing a lot of approval) rings true to me. We're all pretty low-key hard-working people with a lot of self-reflection and humility - also it helps it's not the usual failing friends, family or uni buddies combo but we're really more of a casting band with a team mixed and matched from industry professionals by our main founder.
In this very setup, it's actually very enjoyable with a lot of pros: Scaling is much faster and easier with invested veterans at the helm, all important departments are headed by founders, also having same-level people in the same company helps enormously with the more difficult decisions and just professional exchange, growing as leaders and 1-1 mentoring. If - and only if - the base of trust is there and continuously honed through communication, this is an amazing way to work and learn.
As someone who actively works researching personality psychology, I can fully attest to this.
There actually seems to be somewhat of a Dunning-Kruger like effect when it comes to people evaluation skills. Generally, those who appear the most confident about their people judgements, also seem to be those who are wildly speculative and inaccurate about what other people are thinking.
'Not knowing what someone else is thinking' - is completely different from 'knowing human nature'.
For example, people tend to be a little lazy, or tend towards 'doing less'. If one could get 100K for sitting on one's butt - most people would take the offer. Some people would rather work, or do something more creative.
This is different from being able to 'read' people.
Yes, but unfortunately people tend to make a lot of critical decisions based around what they interpret other people's motives to be; leaving out that bit of human behavior from the equation can be a big deal.
One ceo may may look at a worker exhibiting stereotypical output of a "lazy" person and decide this person must not care about their work and thus should be fired. Meanwhile another may see this as a symptom of burnout from caring about their work too much and decide the worker should get some time off to relax. Regardless of who's interpretation is correct, it is a decision than can have a big impact on a person.
The behavioural economics approach is definitely worth keeping in mind regardless of people-reading ability, but we should be weary of interpreting such things as being too 'directly applicable' in anything other than very generalized circumstances. Unfortunately, I've seen my fair share of cases like the example I stated above, so it is worth remembering that there is no such thing as "the average person". Not to say there aren't definite patterns of behavior of course, but that's a whole other conversation.
Yeah, I am weary of the slobby fat guy with bad manners being perceived as 'lazy' - those guys can be just as much the opposite of that as any other.
I agree with most of what you say, but I disagree that there isn't such a thing as the 'average person', or rather, we are animals, somewhat predictable, not that unique.
> we are animals, somewhat predictable, not that unique.
Oh I agree completely, didn't mean to give the impression I advocate the "special snowflake" view of the world either. My apologies! My entire field of research is practically based around our predictability ;)
What I meant to say rather, was that while there are definite behavioural patterns, they tend to cluster into discrete groupings, rather than being broad and generally applicable traits that can be used on everyone across the board in aggregate (i.e. a singular "average person"). There are certainly many 'trivial' human traits we all share in common of course, but I've found those to be less helpful in personal decision making situations than more specific correlated traits. But then again, I might be a bit bias given that's my area of expertise :)
You admit you have a main founder. Does this main founder have sorta ultimate authority? Or does he hold the singular original vision from which everyone else's vision/mission/purpose comes from?
What's the equity split like among the 6 of you?
What created that base of trust you describe? Was it everyone agreeing to follow the "main founders" vision, and him being respectful and not ego driven (so that the vision became shared?)
> Was it everyone agreeing to follow the "main founders" vision, and him being respectful and not ego driven (so that the vision became shared?)
Pretty much exactly that plus providing the seed round. In practice, this also definitely had a lot to do with things working out well to have a center piece that's stable, predictable and a little detached, quite the opposite of a show-off. Buying into a main vision and then transferring it into a vision for tech, marketing, sales, product and operations was much easier that way.
Equity split was 50:others by the way.
Now you might argue this isn't a "real" as in "more equal" cofounder dynamic, but giving away 50% of your company before even starting and then treating those people as equals made a lot of difference, including an enormous buy-in at all key builders of the company. After having experienced how well it played out, I'd do it the same way.
What's the salary dispersion among the founders? It sounds like you've solved one of the main issues that prevents good people from leaving their stable jobs to found startups, which is providing actually meaningful equity to a base of qualified and capable people instead of hoarding it between 1-2 founders and investors, leaving only fractions of a percent for the earliest employees.
I'm curious if you also cleared the other huge hurdle: giving up 70% of individual earning power for what is essentially a lottery ticket.
Personally, I think the buck has to stop somewhere, and it's more important to be united in a vision than to be right, or to be struggling for what's right. At the same time, it doesn't work when the person with whome the buck stops is authoritarian. I respect someone who is wrong who at least has a reason for being wrong based on their perspective of the situation. But I can't abide someone who is wrong and who forces the startup to do the wrong thing because they have the authority of position. I find those people are not going to be predictable in the mistakes they make, and more importantly the will not recover from them.
I asked the questions because I think you might be onto something, a way to split things up and have genuine founders without the "everyone gets 1/n of the equity" equality that leads to strife.
Him putting in the seed round and other contributions necessary to give him the weight that makes it a valuable deal for everyone also seems to be a key element in your situation.
> If - and only if - the base of trust is there and continuously honed through communication, this is an amazing way to work and learn.
This is the key, and something narcissist don't do. It's against their nature. They thrive at hugging communication and controlling the flow of information.
I have been self employed for 17 years as a 1-man consulting shop, and enjoy working alone.
I have just started a product activity (making things and selling them to end-users) and can do the work by myself (I design, and then the actual making is done by factories) -- but for the first time I miss someone to talk to, someone with which to explore business ideas and options.
Maybe a co-founder wouldn't help much because they would have a vested interest in the discussion, though.
Thank you; I had never heard the term mastermind in that context before. Is it a well-known concept? The second result when googling "startup mastermind" is the post you mention, and the first one is... a reddit thread pointing to that same post.
But the idea is exactly what I would need, so thanks!!
Glad to help. I've been in one for about a year or so, and can't recommend it enough.
Not sure how known the concept is, but I think it is fairly well known, especially if you run a bootstrapped startup. And if you're listening to the podcast Startups For the Rest Of Us (recommended!), I'd say it's probably close to 100 percent. One way of finding people for your mastermind is to visit the MicroConf conference, run by the same people as the podcast. (It's a lot easier getting a ticket for the European conference than the US one.)
I have found that spending time with clients (users in the trenches especially) is enough conversational stimulation I need. I know I'm encouraging the idea of seeing trees instead of the big picture forest ... but as a lone workhorse resource, you want to avoid non-actionable ideas like the plague.
>We're profitable, growing, and valued at about $2.2 million. We're implementing a lot more over the course of this year and next, and I will look to exit in early 2018, once our valuation is closer to the $10 million or $20 million range
If you positvely have a feature pipeline that is going to increase the value of your company ten times in less than two years, why isn't that the valuation now?
Because no one is certain it's going to reach that valuation. The expected value (chance times possible value) is presumably what makes up the current valuation.
> I've cofounded 4 different startups. ... Since then, I've managed my own single-founder startup."
My suspicion is without the previous cofounded failed startups, unlikely you would have the success later in the game because then you know what you are doing and making up the other half by experience. Can't imagine the success rate of a first-time solofounder who makes to the other side. It's not impossible, but probably very difficult.
> Since then, I've managed my own single-founder startup. We're profitable, growing, and valued at about $2.2 million. We're implementing a lot more over the course of this year and next, and I will look to exit in early 2018, once our valuation is closer to the $10 million or $20 million range.
Did you raise any capital on that one? Or was it bootstrapped + growing?
We've taken no capital. After the experience of losing control of the cofounded businesses, the last thing I wanted was to bring in investors who'd be staring over my shoulder or telling me what to do.
I'd be open to taking capital on a future project, simply because I'm experienced enough now to know what our upside is and what percentage and how much control I'd be comfortable parting with, and for how much. On this present project, I haven't even bothered to explore it, because we have our trajectory over the next 1.5 years mapped out and everything we want to do we can pay for with profits already, so there's not a lot of incentive to take months off from driving the business forward to go shopping around for investors instead.
> pick a behind-the-scenes guy if you're a visionary, or make sure you're comfortable as the behind-the-scenes guy if you're partnering with a visionary
What's your take on the situation where you are both? (Where somebody is visionary, "knows business" and codes as well.)
Depends on what your end goal is and what you're starting with. If the goal is to get big and you have funds (or funding), you can be a single founder and just look for a couple of talented people, or perhaps one right-hand man, to take over the roles you're weakest in or that slow you down the most.
If your goal is to get big and you don't have funds or can't attract funding, you'll probably do best to look for a cofounder who's comfortable in the behind-the-scenes roll. If you don't have money but there're two of you, and you complementary and on the same page, you'll grow a lot faster than if you don't have money but there's one of you. The situation I ran into was not having money, and having cofounders who were not on the same page with me - that kills companies.
If you don't have money but just want a lifestyle business, then it's fine to be a single founder. You'll grow slower, but have freedom, and if all it's about for you is freedom then that'll be fine.
It can still be nice to have one, one guys schleps are another persons hobby. Like I'm good at analysis, but bad at dealing with third-parties. The guy I'm working with is good at dealing with third-parties but is a bit slower at dissecting problems. No worries. There's a number of different other pairings of this kind too, some areas where we have overlap, some stuff one of us needs to figure out, some both of us need to learn. And I think that's pretty cool.
Agreed 100%. I could have started my company alone; but then I would've been stuck doing payroll, HR, mediating employee conflict and all that nonsense. My partner is a people person, and I'm not. It works out really well and my staff are happy to not have to deal with me directly (I can be a bit brash).
Not OP, but I'd say consider if you really are all those things. Very few people are, even Zuckerberg isn't, he was a competent coder not a great one but a visionary for sure.
Ultimately no one can have it all, learn to focus on the strengths, though if truly all of those are your strengths break forward and absolutely kill it.
There's simply not enough time to do all those things yourself. Find someone "good enough" in one of those areas and have them take over main responsibility.
I wouldn't think so. What they gain in wisdom they lose in baggage.
It's like the success rates of 2nd marriages are worse than 1st marriages. You would think that people would get smarter with their 2nd, but it's not the case.
5 years. Lots of stumbling around in the dark and making dumb errors before I got serious about ramping the business up and making it a legitimate contender in its niche last year. The first 3.5 years were mostly learning the market + learning how to succeed (and how not to) in business.
> "I will bring on talented people in executive roles who can complement me and make up for my own weaknesses, but I won't cofound again. I'd rather keep the smart, business-oriented people I know in masterminds where we can compare ideas and bounce thoughts off each other, than wade into business situations where our differences turn us into enemies and destroy the company."
Absolutely. I cannot agree with this more.
I don't think the issue is about visionaries vs behind-the-scenes guys. The problem is people making decisions outside their domain expertise. If you have a cofounder (eg a recent example from a company I've worked with) with no software experience his instincts are not going to serve the company well. I've seen this happen constantly, including recently with a guy who is humble, very nice, perfectly well intentioned, but has the wrong instincts and has undermined delivery of a product, probably adding 3 weeks to the development time.
The people with the expertise should have authority in those domains. If your CEO/solo founder is an engineer, then the marketing and sales guys should have authority over their areas-- and be held accountable to metrics, not micro-managed. And vice versa.
When you have three co-foundres you have three visions, even if they aren't visionary, and three people empowered to operate according to their vision, and it's a lot easier to just not fight over every little thing... until it blows up or you aren't executing well because you're executing at cross purposes.
With a single founder you have a single authority and a single vision. And thus you can be consistent in your execution.
The question that most people are interested in is
P(Success | Number of Founders)
but what the article has answered is
P(Number of Founders | Success)
for a couple of different metrics of "success".
They are not the same question! In particular, the average number of founders for a successful startup might be low, but the chances could still be better with more founders.
All startups are successful if you ignore the ones which fail. True, but not very interesting.
Not excluding the failures is the point of the exercise. One cannot choose to succeed, one can only choose the number of founders. The question is how many founders leads to the greatest probability of success.
Although approximately 50% of successes have one founder, it does not follow that approximately 50% of startups with one founder succeed. If 70% of startups have one founder, then those startups are under-represented amongst the winners. OTOH, if 20% of startups have two founders then, with 30% of winners having two founders, they are over-represented.
If the numbers I just made up were accurate, then it would be better to have two founders than one, even though most successful startups have one.
This is pretty bad article because it focuses on # of funded startups, not # of attempted startups. What if 99.999% of startups attempted were attempted by solo founders? It would make you expect that the # of funded startups should also tilt towards solo founders - if all other odds were even, you'd expect 99.999% of funded startups to be solo founders, and it would not mean much.
It doesn't matter which success metric is used, the point still stands. If you only measure the ratio of solo-founder companies that are successful, you haven't measured anything at all about how likely a solo-founder company is to succeed. We need to know how many of each type failed as well.
This is not scientifically sound without the full data, you are right. But I don't think that is the point. If you had all the data and parsed it.. and it told you that as a solo founder you had a 21% chance to exit, and as a group founder you had a 23% chance to exit.. so should you do a group founding as your next project despite not knowing anyone to found with?
I don't think it works like that. Some people naturally do better solo. Some people already have a group on a hot idea. I think you should go with what is working. What the point of this story is, in my mind, is to say "look - a lot of articles say solo founders are bad. Here is some data that it isn't that bad, and perhaps solo founding is a valid way to run a business"
Even if your cofounder has absolutely the best intentions, not everyone is cut out for it. It's very easy to be "Saying the right things" and not even aware they they aren't being honest.
In fact, I'd argue that %50 of the "co-founders" of YC startups are not actually ready to be founders, and I suspect that the number who are still with the startup 3 years after are very small. (and that a large number of the YC companies that don't exist after 3 years don't exist because of a bad choice in co-founder.)
If anything, this analysis under-represents the success of solo founders. Because VCs don't like solo founders, it's less likely they go for a VC path. There must be plenty of successes that are bootstrapped. And these solo founders may not even bother adding their company to Crunchbase.
> Sooooo… You can start a company alone. Should you?
Only if you are young and without dependents or if you can afford to write the effort off.
Success is one metric, but another metric is the stress levels. Having been through both single- and multi-founder startups I can certainly confirm that former is incomparably more stressful than the latter. Assuming of course you are trying to build a functional company and not just play with it.
I am the first “technical” hire of a startup. I think my contribution to both business capabilities and building the product is significant, maybe as much as a co-founder, but I would never call myself a founder. I founded an other company in the past that I kept running for 9 years, and I can tell the emotional and caring is very different regardless your impact and effort, even if it is 24/7. It is feel like being a stepfather. Maybe the best one, behaving and treated like a real one, but still…
It is, however, significantly easier to walk away after several years with a meaningful amount of money. One founder means you get all the profit (either in its entirety, or shared with investors)
Success rate is what matters when you are weighing co-founding or investing, not just the number of successful companies.
It's as if the article discovered that fifty percent of those in American prisons are black, and came to the conclusion that there's no difference in crime and poverty beacause that's roughly half. That's meaningless. Base populations matter.
What percentage of new startups are single founder?
... But then you would have to count the bias against single founders and all the investments they didn't get thanks to that bias. And also count all the accelerators than discarded them for this issue.
Plus, there is also the "fake co-founder" tactic some people use in order to avoid this bias from others; so you would have to count those as well, but that data is not public. So yeah, I think you are trying to count the uncountable.
The article would be a lot more interesting if the number of successful startups could be compared to the number of unsuccessful ones, depending on the number of founders.
This is likely putting too much faith in the Crunchbase data.
In my experience, Crunchbase very frequently leaves out some founders. Often, only the most prominent founder will be reported, thus underreporting the instances of having 2+ founders.
But then again how many of these companies with cofounders, really only had cofounders-in-name-only? Where one person really drove everything but at some point thought - oh shit, if I'm going to be successful, I need a cofounder!
Given the dogmatic advice "YOU NEED A COFOUNDER", I'm sure a lot of it's title inflation - what would normally be first employees are elevated to founder status to look good for the pitch deck or just to follow the advice. That said, they're still going to be quality people - less met at a find-a-technical-cofounder event, more Biz Stone style "can my title be cofounder lol?"
Probably the vast majority of startups have a dominant cofounder. You might call them cofounders-in-name-only, but that still validates the notion that you're better off finding a cofounder (even if they're not as central).
Reflexive question from reading the title: Suppose lots of people have been told that you shouldn't start a startup by yourself, and people are inclined to heed that. Some people will disobey this advice. These will disproportionately be people who have strong reasons to believe they'll succeed. If their judgment is at all accurate, then we might well get the result that single-founder startups are generally more successful, even if the single-founder status is always and everywhere mildly detrimental to the business. The question is, did someone mention this possibility?
And it turns out the article doesn't even mention the relative success ratios (i.e. percentage of startups that succeeded out of startups that were started, broken down by founder count), AFAICT. D'oh. I guess it's valuable information that there are a lot of successful single-founder companies. But "data shows" sounds like a lot more than what is shown.
I don't think the article proves the point it claims to make (you don't need a founder), or disproves the message from YC: having a co-founder increases the likelihood that your startup will survive.
First of all, most startups fail when they are least funded, before they ever get past friends and family money. When you have close to zero money, mountains of work, and no traction or social proof, there's only one way to convince someone to do the important stuff that you can't do yourself, and that's by giving them a lot of equity. Founders: People satisfied with paper and an idea. (If you're already wealthy, sure, you can hire all the help you need. But that's not most people or most startups.)
The advice YC gives to co-found a startup with someone you can depend on addresses several early-stage startup problems: 1) Most people have severe limits to what they can do. Those limits come in terms of time and talent. Maybe they can code but they can't handle logistics or paperwork. Maybe they can sell an idea to investors and customers, but they can't build software. Startups require much more than one person can give. 2) Early-stage startups should be in a very active conversation with the world about what to build. The startup needs to be taking in a lot of information, reflecting on it deeply, and acting on it intelligently. With the right co-founder, you gather more information, think about it in ways you wouldn't have alone, and execute better and faster with the extra mind and hands.
The whole reason starting a startup is so stressful, and why you need co-founders, is because of the need for rocket growth to satisfy investors. Take out investors and you take out the need for ridiculous growth and the stress and the need for co-founders.
No it's still a startup. It can be a very high growth startup, shooting to a $100M valuation.
It's just not the wannabe unicorn that VCs want.
There's a HUGE gap between what VC wants and a "lifestyle business" (I hate that term, thanks for not using it.)
Redefining startup to be this very, very narrow set of "businesses that will be over $1B in valuation within 5 years" is wrong, it's silly, and it's getting worse.
9 years ago on Hacker News the difference between "lifestyle" and "startup" was "businesses that will reach over $100M valuation in 10 years."
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Reply to @danieltillett because HN won't let me submit 4 posts in an hour!
Put another way, I would take a %10 chance of having a $100M business over a %0.1 chance of having a $1B business. (assume in both cases you end owning %5 of the stock at exit, though realistically without VC money you'd likely own more equity percentage at $100M than at $1B)
VCs generally want you to take the second bet, even though the statistical value is 1/10th as much for you!
Worse, you can only found one business at a time, while the VCs can invest in dozens at the same time. So your risk is much higher (not even mentioning that they are investing OPM)
Your numbers are tautological. Everyone including your straw man vc would take 10% of 100 instead of 0.1% of 1000. 10 > 1, qed, but you don't get any points for that observation.
(yes, there are situations where taking investor capital leads to divergent interests between investors and managing founders. But not gross arithmetic differences.)
Obviously if the expected value of the smaller sized business is greater, you choose that one. The only time these questions (whether to take capital/shoot the moon) is when the expected value of the larger business is greater. So to refactor your example, what about 10% chance at 100, or a 1% chance at 2000? Now you have more of a real question on your hands.
Much more interesting when contemplating whether to go big or stay small is the notion that there are invariant personal "fixed costs" regardless of the size of the opportunity you're pursuing. Meaning, you can overwork yourself and burn out on a $100k/year business as surely as a 100 M/ year business. So if you are going to give something your all, just make sure the expected payoff is worth it.
That's my point. You should invest your life in something where the value is higher. VCs would rather take a much lower chance at a higher payoff because they spread their risk around more, you cannot do so.
My numbers are hypothetical, but they are not tautological. That's my point- the VCs will take the lower expected payout, whether this is because they are bad at estimating risk or not I cannot say. I can say this is how they operate, because I've seen it, in every single startup that took VC investment.
I resigned from the company I started with two other co-founders. Building a new firm now as a single founder. I expect many things will be harder though few will be insurmountable if at any at all.
Building my first company, to the second largest deep learning firm in Tokyo was exciting. But if I had to break down my time so much was wasted driving consensus where none was really required.
I know most investors hate a single founder. Traction though solves all problems.
Now you're having less fun, but I feel like we have this idyllic fantasy of cofounder - not unlike a romantic partner. It sounds exciting and exhilarating, but what are the odds that it ends in divorce (liquidation)?
Starting companies is much easier with a cofounder. There's more momentum and pace with somebody together. Especially with first time founders, a team is the driving force when starting a venture.
But unfortunetaly every relationship changes or ends at some point--always. Then, it's about a quick and smooth separation without briging the company in danger. But this rarely happens, the separation is usually a tedious process over many months till the company breaks.
So yes, solo founding is better in the long run but in most cases there will be no founding at all because of momentum lacking.
Usually a tech and a non-tech co-founder partnership works really well because you cannot scale up if the person building the technology/product is also building the marketing and sales machinery.
Single co-founders only work in domains where either of those two - technology/product and sales/marketing - are much less resource consuming than the other so that one person is able to focus on both. That model breaks at scale.
In Fire Someone Today: And Other Surprising Tactics for Making Your Business a Success [1] by Bob Pritchett, cofounder of Logos Research Systems, Inc., chapter 4: There Can Be Only One—Plan for Your Partner’s Departure covers the issue of cofounders. I highly enjoyed and recommend this book.
Here's an excerpt from the beginning the chapter:
When I was a teenager, I toured a factory and met its owner. Dreaming of having my own business, I asked him for the best advice he could give me. His response was two words: “No partners.” When I started the business I run today, I did not take his advice—I started it with one partner and soon added another. Starting a business is hard work, and having a partner made it a fun adventure rather than a lonely quest. We did everything together, from the paperwork to set up the business to sales calls to taking all of our meals together so we could work on the business every waking hour. We became best friends and worked well together for years. When the day came that my original partner decided to leave the business, though, we realized that our lack of planning had endangered the multiyear investment we had all made and had changed the nature of our personal relationships. There is no way I could have started the business or seen it grow the way it did without my partners. As much as I now believe that “no partners” was great advice, I know that a partnership is sometimes the only way you can launch and build a business. But if that is the case, you need to make planning the end of your partnership part of planning the start of it.
Forget co-founders or not. The greater the number of valuable, diverse inputs the greater the likelihood for success. This depends entirely on the founder's or cofounder's ability to manage those inputs.
This is why there is a preference for founding teams over solo founders, but it's also why a singular vision and solo founder's ability to distill and manage those inputs may perform better than a team.
> The greater the number of valuable, diverse inputs the greater the likelihood for success
But is that really true? Seems like more of an unsubstantiated platitude. "The more colors you use in a painting, the more beautiful it is!" Until you get a brown mess
Yes, it is. I think the sentence that follows the one you quoted provides the required context. It's up to the founder or cofounder to determine and prioritize the value of inputs. This is why such an emphasis is put on the people (often over the idea itself) in startups.
To be clear, I didn't say the greater the number of inputs, i.e. use all of the colors until they are a brown mess.
You don't need a co-founder, but you shouldn't do it alone.
Every founder will have days where an investor or employee is driving you nuts, or worse - you're struggling to keep the business afloat. At these junctures, an outside coach (not linked to your funding so you're truly open and honest) can be a lifesaver, helping you work through the complex journey of growing a business.
Co-founders or not, the underlining reasons are alike for people (entities) with different personalities (characteristics) working together.
Only one person in charge will always do, if he or she has a very strong personality and also has appropriate supporting subordinates.
Two person founding team will be great if their personalities are complementary, thus one plus one is bigger than two. There are many very successful enterprises in this group, such as Apple, HP, etc.
In initial phases of founding companies, projects, etc., always avoid groups of three strong personalities at all costs. Trinity is a very special case that will ensure endless internal fighting/competition, low efficiency and sustained tensions. However, trinity is good for long lasting (market) competition and ensuring all parties will not be easily wiped out. Example cases: a) US-Russia-China relations; b) President-Congress-Senate structure. c) Firefox-Chrome-Edge browsers;
For groups bigger than three, if the number of prominent members with strong personalities is less than four, see previous cases. Otherwise, avoid at all costs.
Can't tell if you excluded startups where the founder had a previous successful startup (solo or otherwise) but it doesn't look like it?
I think this would massively distort your results. Founders with a history of success are vastly more likely to succeed in a new venture for numerous reasons, but most people who are interested in these stats (both founders and investors) are interested in the pre-big-win founder case.
Also, I suspect far more 'startups' have a single founder, purely because it's so incredibly easy to 'start' something alone. Having a cofounder implies a certain level of organization and commitment - it doesn't really work with that pet project you dabble with occasionally. If solo dabblers far outnumber 'team' dabblers then you'd expect them to be over represented in successes even if their success rate was much lower.
The data isn't well-presented (52.3% of exits would be a negative if 68% of the companies considered had only 1 founder, as that would mean less received an exit than would be expected), but if you normalize the percentage of exits with the percentage funded, you roughly see that the author's original claim is likely true.
1: 52.3 / 45.9 = 1.1394
2: 30.1 / 31.9 = -1.0598
3: 12.5 / 15.0 = -1.2000
4: 3.7 / 5.3 = -1.4324
5: 1.4 / 1.9 = -1.3571
Maybe the idea is that a single founder situation is preferred, but as creating a startup can be stressful, trying, and involved, maybe doing so with a single partner (that complements your skillset) is a compromise?
I had never considered creating a business with a partner/co-founder. There would just be too many issues. People have a difficult time understanding what I'm trying to do even when I explain it in plain English, so I shudder to think what it would be like if I were doing something completely new/groundbreaking/different.
I can't deal with someone nagging, draining, or getting in the way as I try to do what I'm doing. It's always been fairly clear to me that the route I should take is to found a company solo, then bootstrap it to profitability, while keeping the employee count low (43-73, or 259-585). Then not go public. That is, I should avoid dealing with a co-founder, investors, or the overhead/inefficiency/bureaucracy/politics that comes with having more than a certain number of employees.
Also, it became clear (especially in the world today with so many service-oriented companies to contract out to) that it's entirely possible to do almost anything with 42+me employees (which is the "ideal" number of employees (1 CEO/founder + 6 leads/executives/managers + 6 individual contributors per lead/manager/executive), as there's only one layer of "management").
>We are often told that starting a startup on your own is madness.
That statement remains true. It's a trade-off.
As a solo founder, maintaining both motivation and momentum becomes far more difficult. The upshot is you at least have a singular, unified vision and (hopefully) less drama.
Of course, you're also stuck with all of the work.
I couldn't really proceed without a business co-founder. I enjoy building stuff from the idea to a shipped product, but at that point and before it I would totally need support from a co-founder who is good at business, marketing and other magic stuff I find boring and tedious.
You can't just build an universal rule like the title suggests, data is meaningless in individual cases. "Data shows people can live underwater" ;)
I am a solo founder as well, and can attest to this fact. I raised from billionaires Tim Draper and Marc Benioff of Salesforce for an Open Source database http://gun.js.org/ (like Firebase).
Been trying to write up a blog post on my experience over the last 2 years, and will hopefully post it. Hit me up if anybody has any questions though.
In summary, number of co-founders doesn't necessarily matter. What does is (in no real order): the ability to raise cash, the ability to produce something that has value, and the ability of however many co-founders you have to get along.
Could have been a much shorter article since the data are so full of confounding factors as to be meaningless. It does make for a nice headline though.
But what is a co-founder exactly? I can't imagine a startup being started, built and brought to an exit by a single person -- every employee contributes to some extent, and in my view an early employee who contributed a great deal should in all fairness be considered a (minority) founder.
I think investor preference for multiple founders is almost entirely because it makes it easier to make voting control of the company not be in the hands of a single founder they might disagree with. Two founders provides twice the opportunity to take control.
Well, I would say that the metrics that Techrunch uses to measure success are not quite correct.
Raising money is not a proof of success, neither is exiting.
I would say, more like creating a sustainable long lasting company with good culture, cutting edge technologies, and people that love coming to work at the morning.
It's always been pretty obvious to me that the desire to have multiple cofounders in a venture backed startup is to derisk investment, divide & conquer, etc.
Simply put, most investors prefer that there are cofounders for the reasons stated above.
I started several projects, most of them I would not even call startups. Most of them unfinished, some failed, some successful.
I have tried several times to start something with a buddy from university, with him it's always the same: We talk about it, like the idea, I start to build it, he does not really join in and I lose motivation myself.
The one product which is the most profitable (or profitable at all if you factor in your own hours) is a rather lame one: A sitebuilder for small businesses. I buildt it while still in uni, lived off of it and literally put customers in one by one. Very stressful.
Another one I started after that with a an economics student, who had the initial idea. It was a dating app for students, when Tinder was on the rise in the US and had not gotten to Europe yet. I could not care less about that space, but I knew it was coming and I just wanted to start a real thing with a cofounder, which was totally different, so we did it. Collected a few hundred users from the local universities, ultimately failed, but I learned a few valuable lessons. It was nice having the cofounder around, but he could not really help at that point. He helped a bit with some guerilla marketing and started to work on our investment. I did the main work. That feeling of unfairness - even though you know that it is not on purpose, was really bad.
After that several other people approached me and I said no several times. I really wanted to build something in a team and have it play out. The feeling to fail alone is not good, but cofounders come with a different set of bad feelings. The failed attempts are costly, because you can only endure so much, before you need a success.
So I decided to approach my consulting as a startup and see the company with it's processes involved as the product. Have several employees and work with freelancers. I meet really interesting founders, I can learn from. I get approached to cofound all the time. I did not think that this would be enough, but really I already have the social interactions I was looking for in a cofounder. I just prefer to always have money exchanged for services. You can still be a good partners and maybe join in later, but I am a huge fan to simplify the relationship with payments. I even did some projects with the uni buddy, which work out great all the time.
The sitebuilder is still profitably tucking along. I know see it less as a lame project, which needs so much work, but as an asset and investment potential. Over the years it has brought in several nice opportunities.
To conclude: My solution sounds one-dimensional, but it really is "have a bit of money and success first". The more you have of it, the more interesting the conversations get. It is a nice filter, because people who have it are more likely to be successful again, plus they have the option to just pay you to build their ideas. You become able to do that yourself with yours. The relationships with your partners are just so much easier, you don't depend on the one perfect match, but different people can fulfil different roles, without the risk associated with a cofounder. Even your own projects appear in a better light and look nicer, when your time becomes more valuable.
>It was nice having the cofounder around, but he could not really help at that point. He helped a bit with some guerilla marketing and started to work on our investment. I did the main work. That feeling of unfairness - even though you know that it is not on purpose, was really bad.
Could not agree more. I hate this feeling and realize that IN THE FUTURE the nontechnical/sales/marketing cofounder could absolutely have a longer lasting effect on the success of the business. However, those first months where you're building the product and he/she isn't really doing much or isn't proactive in finding ways to contribute are very tough.
In the future, I'm thinking I'll start out solo building the MVP and trying to get traction, then when there's enough, find a nontechnical cofounder whose equity is based around hitting users/sales/funding milestones.
After decades as an employee and cofounder, and seeing many startups fail first hand (so smaller data set, but much richer information) I agree that the stigma against single founders is in error.
The number one and two causes of startup failure in my experience are fights between the founders and VCs forcing the startup to do the wrong thing (which often causes fights between the founders with one saying "we know the market better than those guys" and the other saying "but think of the signal if we don't pivot into widgets for baby monkeys and they decline to pro-rata our B round???!")
But the bottom line is, if you don't know someone you can cofound with, you shouldn't jeopardize the future of the company by just picking one. I don't think you can pick a good co-founder with less than a year of experience with them. Founding a company strains previously good relationships by greatly raising the stakes for every decision and disagreement, compared to your previous relationship with each other. PG forcing Dropbox's founder to get a cofounder seems shockingly dangerous (unless that cofounder was really always going to be number 2 in authority).
If you know someone you've worked with for 4-6 years and they work their butts off, then that's a great potential co-founder. I had one of those, but we got divorced. :-) Still on good terms, but I am not going to start a company with him.
But if you don't have anyone like that- you're ADDING relationship risk to your Startup Risk. And you're unlikely to be reducing your startup risk by the same amount. That co-founder could be hired with a significant opportunity to earn equity, at about the same time, and be just as successful at reducing startup risk without adding the relationship risk by being an "employee". The difference is in control.
So, my plan is to be the Founder, and then get a set of co-founders who get founder stock[1] but don't have the authority to overrule me, even if they all gang up (eg not an equal equity split). Hopefully this will be acceptable to TechStars. This will show others are willing to work on my idea at least- which is the claimed reason for a cofounder cause it's early social proof (also a really silly signal).
[1] I don't believe in multiple classes of stock. A dollar put in by an employee from under market salary is just as valuable as a dollar put in by a VC firm, and the employee is taking more risk- they can only "invest" in one job at a time.
The "just a warm body, any warm body!" mentality is what's so detrimental about the co-founder craze. Both financially (~50% of equity!) and in terms of more risk. It's a bad idea unless they're at least as talented and motivated as you (preferably in an area that complements you), and even then it's dangerous because you give up a lot of control.
If it's your idea and your vision, why not build the prototype, get some traction, then bring on a talented employee for 5% equity? Much better than 50% with someone you met at a "find a tech-cofounder" event
I don't think its preferable to find a cofounder in an area that complements you. I think that this can be great, but what's most preferable is the right co-founder relationship. If the right co-founder is also an engineer, then that's fine. One of you should be CEO anyway, you can always hire business guys.
I think the classic mistake startups make is the duo where ones "business" and ones "technical" and the engineer ends up spending all this time building the product and the business while the business guy takes the CEO spot and controls something he doesn't understand. (assuming it's a technical business, if it's a non-technical business like a sport drink then a business guy for CEO makes sense, as sales are step key operational effort)
Are there perhaps political reasons for it? Do investors prefer having two or more founders they can divide if necessary? Does it increase "bus factor" or otherwise derisk the venture?
My opinion: two or more founders who are really invested and work well together > single founder > forced cofounder relationship. I say this as a single founder.
The hardest thing about being a single founder is cognitive load. I don't necessarily mean time. There are usually enough hours, but switching between at least five hats really strains the brain. It can also be hard to maintain energy. I find groups with other founders and working in a good startup oriented coworking space very helpful.
There are absolutely political reasons for it. Both the dividing founders reason you mentioned, plus the fact that single founders are more likely to be technical while when two people found one of them is likely to be a business founder. VCs feel they can control the business founder (or replace him if needed) much easier than the engineer, because VCs are not engineers. (and they are not entrepreneurs in my experience either, though they seem to think they are and are happy to trot out the "exits" they were vaguely involved in, usually via friends and family equity.)
I agree with your priority- a pair of fully dedicated good founders is ideal.
Since then, I've managed my own single-founder startup. We're profitable, growing, and valued at about $2.2 million. We're implementing a lot more over the course of this year and next, and I will look to exit in early 2018, once our valuation is closer to the $10 million or $20 million range.
I have a lot of other companies I want to start after. I will bring on talented people in executive roles who can complement me and make up for my own weaknesses, but I won't cofound again. I'd rather keep the smart, business-oriented people I know in masterminds where we can compare ideas and bounce thoughts off each other, than wade into business situations where our differences turn us into enemies and destroy the company.
The general wisdom on picking cofounders is pick a behind-the-scenes guy if you're a visionary, or make sure you're comfortable as the behind-the-scenes guy if you're partnering with a visionary. The problem I find (and one I've seen in a lot of cofounder groups) is that most of the people who want to start startups are visionaries.