As a predictor of startup success, what’s better: solo founders or founding teams?
I’ve been a solo founder and I’ve also been part of founding teams. Honestly, I think my personality is better-suited to being a solo founder (and my former co-founders would probably agree).
But for you, as you’re starting your venture, it is better to be a solo founder or to get some co-founders? This is one of the longest-running debates in Startup Land — if you ask three people in Silicon Valley you’ll probably get five answers.
Historically, venture capital investors have been biased toward teams. Paul Graham of the startup accelerator Y-Combinator, wrote an essay several years ago in which he said “Starting a startup is too hard for one person”. Y-Combinator pretty much sticks to that belief — only about 10% of the startups they admit to their program are run by solo-founders.
Meanwhile, up on Sand Hill Road, most of the venture capitalists I know also still express a preference for founding teams. It has become commonly-accepted wisdom, and the echo chamber is strong on Sand Hill Road¹.
But does the data back this up? Are outcomes actually better for startups with multiple cofounders than for those with a single founder?
Three years ago a research study came out of Wharton that suggests that no, the data does not seem to back this up. The study, titled Solo Survivors: Solo Ventures vs Founding Teams, looked at 3,526 startup companies. They found an interesting dichotomy: indeed investors seemed biased toward teams, as the startups with multiple cofounders raised more money. But in terms of outcomes, they found that startups with single founders tended to last longer and eventually achieve higher revenue.
The researchers suggest this may partly be because a solo founder is more agile in decision-making. Cofounding teams tend to make slower, more collaborative decisions and are less likely to take chances.
I also wonder whether, ironically, the investor bias ends up working in favor of solo founders. It takes them longer to raise capital, and so they’re more ready to scale when they do. Premature scaling remains a leading cause of startup death. A team that raises money early tends to scale quickly, increasing the mortality rate.
If you want to dive into the data yourself, you could use the Crunchbase API. This guy did and found that of 6,191 startups that had a successful exit (either IPO or M&A), slightly more than half of them had solo founders. The average number of founders per startup, in this dataset, was 1.85.
In my years of teaching entrepreneurs at Stanford and Miller Center (and hanging out in the coffee shops of Palo Alto) I’ve often been asked “How do I find a co-founder?” When I ask why they need a cofounder, I’ll usually get an answer like “Well, I’ve heard investors want me to have cofounders before they’ll fund my startup”.
As I’ve ranted often, it annoys the hell out of me when I hear people planning their entire startup strategy around what investors like. Build a company that customers like! Build a product that meets customer needs. Immerse yourself with understanding customers. Building a company based around what you think investors like is completely ass-backwards.
And so I honestly think the venture capital world is guilty of perpetuating the myth that cofounders are better than solo founders.
It’s certainly true that running a startup requires multiple skillsets. Dave McClure famously said that every startup needs a hacker, a hustler, and a hipster (a tech person, a salesperson, and a product design person)². I like Dave’s framework, and I think it’s probably about right in terms of the skillsets required for many ventures. But every venture is different, and a solo founder can hire for the skillsets she/he doesn’t have. So while the hacker-hustler-hipster framework is a clever way of thinking of skillsets, it does not literally mean that every startup needs 3 founders!
Mark Zuckerberg had cofounders. But eventually they drifted off, and the real turning point for the company was the hiring a non-founder, Sheryl Sandberg, who had the skillset that Mark didn’t have. That was the moment that turbo-charged the company. Facebook isn’t a success today because Zuckerberg had cofounders — it’s a success because he made good hires³.
There are many great success stories in the history of entrepreneurship. Some of those success stories began with a solo founder and some began with a group of cofounders. Every venture is different; every founder is different. And when you objectively look at the factors that tend to drive startup success or failure, I honestly don’t think “number of founders” is one of them.
Paul Graham is right — starting a startup is hard⁴. And being a solo founder is especially hard. But there are certain special people who embrace something because it’s hard, and because they are laser-focused on founding a venture that solves a problem worth solving for customers. Those are the people I want to bet on.
Notes:
- My friend, the venture capitalist Danielle D’Agostaro, adds “I mean it’s case by case. Sometimes it’s a personal choice not to have a cofounder. You take everything into consideration when you’re an investor and can usually tell when someone is a lone wolf type who can’t work well with others or if they’re just more efficient without cofounders and can perform a lot of the early roles themselves”.
- A lot of people claim to have coined the “hacker hustler hipster” term, but I first heard it from Dave McClure.
- Jim Breyer, who led the initial VC round in Facebook, says “I would back and invest again and again in Mark Zuckerberg”, suggesting that while there were co-founders, there really was one guy who caught the investors’ attention.
- I am a Paul Graham fan and recommend all of his essays, which can be found on his website.
- This HBS piece has some more good data and thoughts on this topic.
