The current popular belief among the startup community is that it’s necessary to have a co-founder in order to succeed. In my experience, this has not been true.
Paul Graham, the Co-Founder of Y Combinator, said you need a co-founder in his 2006 essay, The 18 Mistakes that Kill Startups
Have you ever noticed how few successful startups were founded by just one person? Even companies you think of as having one founder, like Oracle, usually turn out to have more. It seems unlikely this is a coincidence.
What’s wrong with having one founder? To start with, it’s a vote of no confidence. It probably means the founder couldn’t talk any of his friends into starting the company with him. That’s pretty alarming, because his friends are the ones who know him best.
But even if the founder’s friends were all wrong and the company is a good bet, he’s still at a disadvantage. Starting a startup is too hard for one person. Even if you could do all the work yourself, you need colleagues to brainstorm with, to talk you out of stupid decisions, and to cheer you up when things go wrong.
The last one might be the most important. The low points in a startup are so low that few could bear them alone. When you have multiple founders, esprit de corps binds them together in a way that seems to violate conservation laws. Each thinks “I can’t let my friends down.” This is one of the most powerful forces in human nature, and it’s missing when there’s just one founder.
David Cohen, who runs TechStars (another tech incubator) had this to say in response to this question in 2010: “What are the chances of a single founder getting accepted in the TechStars Program?”
Low. We’ve done it two or three times out of 70 companies we’ve selected. If there’s a strong team around the single founder, it’s much more likely. If it’s really just one person, TechStars is probably not the place for that person - there’s too much to do for one person in a short period of time. [link]
I believe Paul and David are stressing the importance of co-founders because they’re talking about young founders with no previous business experience. It’s important to remember, however, that they are investors, who are maximizing their returns. Just because they say it’s unlikely that you’ll get into Y Combinator or TechStars as a single founder, doesn’t mean you need a Co-Founder to succeed.
I have thankfully had good success with Treehouse, as a single founder. We’ve grown from three people to 54, and $0 revenue to $3.4m+, all in just two years. I funded the business with cash from my previous business and grew it to profitability and then decided to raise a seed round of $600,000 so we could hire faster. I didn’t ask any of my friends or contacts to be Co-Founders.
Here are the reasons why being a single founder worked well for me …
1. More Equity and Control
We’ve raised over $5,000,000 for Treehouse so far and I still own close to 70% of the company. I also control the Board. If I had a co-founder, I would likely own half that equity and I wouldn’t have complete control of the Board. Equity and control are two extremely important issues and starting with co-founders immediately diminishes your personal control and equity stake.
2. Strong Leadership
I’m a big believer in CEO Founders who maintain control over their companies. Jeff Bezos and Mark Zuckerberg are great examples.
As long as the CEO Founder can adapt to the changing needs of his team as the company grows, they are definitely the best to steer the ship towards their goal. Once they lose control of the Board, I believe the ship can veer off course.
This is also why I don’t ever want to take Treehouse public. I hate the idea of having to answer to outside investors who don’t have day-to-day knowledge of the challenges and opportunities we face. They also don’t share the insane passion that I have for the business.
3. Single Life Goal
I’ve personally seen two startups disintegrate because of different life goals between Co-Founders. Each Co-Founder has their own agenda and picture of what success is. The following issues can be very divisive between Co-Founders:
- Pay - When do we start paying ourselves and how much?
- Work Schedule - How many hours do we work per week? What if someone is working harder/longer than the other Founders?
- Liquidity - What if a buyer comes along and offers you $1m for the company, but one of Co-Founders wants to hold out for $10m in a couple more years?
- Power - Who is seen as the driving leader in the company? What if there’s a clash among Co-Founders?
- Location - What if one of the Co-Founders is getting pressure from his or her partner to move or change their living situation?
Running a company with Co-Founders is like getting married. It’s an insanely serious commitment yet folks just blindly wander in and believe it’ll all work out.
4. Promote from Within
I promoted Alan Johnson, our first Developer, to a powerful position where we effectively lead the company together. His role is similar to a CTO.
If I’m so gung-ho about not needing a Co-Founder, then why have I done this? Well, because it is hard to run the company alone, long term. It’s very valuable to have day-to-day feedback from a trusted and knowledgable colleague. That person needs to know everything about the business so that you can share your worst fears about the business and what’s stressing you out. This person needs to feel completely comfortable disagreeing with you, and telling you about it.
I promoted Alan to this role after working together for over a year. This gave me time to watch him work and make sure our styles, life goals and personalties matched up. He got an increased amount of stock options when he was promoted, so it’s a big win for him as well.
In Closing …
So based on my experience, it can be optimal to be a Single-Founder. Don’t blindly accept the rhetoric of industry leaders about needing a Co-Founder.
Please share your opinions and experiences in the comments - thanks!
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