
Sole Survivors: Solo Ventures Versus Founding Teams (2018) - kristiandupont
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3107898
======
Abishek_Muthian
Being single founder is of high risk venture, as anything with high risk it
has potential gains as well.

I ran my company successfully as a single founder for 5 years, till one day I
was told I would become a quadriplegic & I had to close my company as there's
no other executive to take care of it.

I had Facebook Fb Start accelerated product with 2,50,000 customers , any
company expressing interest in acquiring my product wanted me to work for
them; which wasn't possible as I was recovering from surgery.

Being single founder has it's merit, but when things go south with your health
or anything personal; you'll loose your company.

~~~
lazyjones
OT: I read your story on your personal web page and we have some eerie
similarities there. I was a solo founder for 14 years when I sold most of my
company (not out of obvious necessity, I had grown tired of it somewhat and a
good offer was on the table). During the last few months I had developed some
tingling / pressure sensations in my fingers and legs, which I first
attributed to bad posture, discs etc.

It turned out that I had a tumor growing in the spinal cavity between C2 and
C4 - luckily benign, but still causing stenosis effects and eventually leading
to me becoming quadriplegic unless removed. I also had severe Vitamin D and
Calcium deficiency (and nothing else) and was discharged after 10 days from
hospital when I had surgery. My scar is naturally very similar to yours and I
have 20 Titanium screws and 6 plates implanted. My day-to-day challenges are
not flexibility issues though, it's chronic pain in the hands and much worse
typing skills than before surgery.

Fortunately, I found an obvious successor (the most self-motivated and
responsible one, not a trained manager) in my company when I left (we had 57
employees then) and he's doing great. Good luck with your company!

~~~
Abishek_Muthian
The problem with Tingling sensations are that it can occur for any number of
reasons, in the order of occurrence - Anxiety, Spinal issues, Issues with the
nerves in the hand; unfortunately I had reasons to believe, I had all of them.

Apart from treating spinal stenosis, the tingling sensations were not treated
specifically as the none of the tests isolated the reason for it. But, after
spine surgery tingling sensations haven't occurred much which seems to suggest
whether spinal stenosis was the reason for it.

I will link[1] the article you read just for the context of others. I haven't
updated it, since then my neck movements have improved.

As you say, I'm facing severe hand numbness & pain after surgeries. Medical
tests didn't help with it. I have isolated the issue to pressure on the nerves
in hands while sleeping on that side. I bought wrist splint to avoid flexing
my wrists while sleeping & have generally avoided sleeping on that side; it
seems to have helped. This physio therapy video[1] talks about the techniques
I follow. I hope it helps you too.

I'm glad that you didn't have to close your company, you took correct steps to
prevent it. I helped my developers get good offers from other companies and I
have closed my company.

[1]: [https://abishekmuthian.com/i-was-told-i-would-become-
quadrip...](https://abishekmuthian.com/i-was-told-i-would-become-
quadriplegic-68c0371e6f05)

[2]:[https://www.youtube.com/watch?v=rRCnRYOupCo](https://www.youtube.com/watch?v=rRCnRYOupCo)

~~~
animal531
I have scoliosis and my one hand also sometimes falls asleep when I'm lying on
my one side. Good tip on getting a wrist splint, I'll try that out, thanks.

~~~
Abishek_Muthian
No problem, do use tissue between the splint and the skin to ensure it doesn't
bite during first few weeks (i.e. like new shoes which doesn't fit perfect).

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ltbarcly3
Sigh. This study is useless.

They have two sources of data, publicly available data (which they say has
major censoring problems) and kickstarter projects.

People will incorporate at the point that they believe it is worthwhile to
incorporate. This is basically a tautology, but just think about it. When
would a solo founder incorporate? When the benefit of incorporation makes it
worth the time to do it. This might be when they are taking investment, when
they have customers and need to limit their liability, or when they are making
profits and want tax benefits. What about pair founders? In many cases on the
first day, but often very early on because it is necessary to legally
establish their ownership stake in the company. So you are selecting solo
founders who have a functioning business and pair founders at every stage. I
think most ventures probably fail with zero revenue and virtually zero
customers and/or users.

Kickstarter won't be representative of anything, even in their wildest dreams.

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sagebird
The effects may be due to irrelevant artifacts:

1.) Pairs or more of people working on a task may declare themselves to be an
organization and call themselves founders earlier than an individual. An
individual may be more likely to wait until they have a customer, are near
profitability, etc to make that declaration.

2.) The summary says that "investors rarely, if ever, fund startups founded by
a solo entrepreneur".

So the observations are confounded with solo founders overcoming this
prejudice. This quote also points to a survivor bias in play. IE, solo
founders must have higher performance than teams before getting funded, and
less of the weak solo founders survive to be observed by the study.

I wouldn't be surprised if the article had a correct conclusion. Though it
would be very hard to convincingly show causality short of convincing
entrepreneurs to take part in a decades long experiment where they are
randomly divided into solo founders and teams (which would be nearly
impossible to get a representative sample of founders to agree to).

~~~
tlb
Agreed. In fact, I think it's impossible to get useful evidence for any causal
relationships between the founding team and success of a company, because
there are feedback loops and confounds everywhere.

Here's an example of feedback loops. Suppose investors are biased against
young founders. When you look at outcomes, you'll see a higher success rate
from the young founders that do get funded because they had a higher bar to
overcome the bias. And, of course, investor biases are (mostly) the result of
historical outcomes. So eventually investors will become biased in favor of
young founders, and the bar for funding will be lower, and you'll have a lower
success rate. The system creates a time-delayed (by a decade or so) negative
feedback loop that maintains a rough homeostasis of success rate for every
kind of company.

Economists realized long ago that you can't predict stock market movements by
looking at fundamentals, because all the other investors are looking at the
same fundamentals, so the consensus is already priced in. This seems study has
the same problem, in addition to a data set several orders of magnitude
smaller. Don't change your plan based on any such study.

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bhouston
I think that individual founders are more likely to move fast and take more
risks. A second founder will be a mitigating factor no matter what. It may
mean that individual founders have wider distributions in terms of their
potential for success. And we notice mostly the positive tail of the
distribution because the negative tail is cut off (once you fail, it is hard
to fail more, where as success is nearly unlimited in comparison.)

~~~
BIair
If you want to go fast, go alone. If you want to go far, go together.

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hughstephens
While interesting and worthy of debate, the title makes it feel a lot more
general than reality (this is a study of Kickstarter companies, so goes with
the huge sample bias of “stuff that gets put on Kickstarter”).

As a solo founder, I think people always love the idea but don’t acknowledge
how lonely it is compared to having at least one other founder (not to mention
complementary skills etc).

Most high growth businesses go to zero as time continues, so while there are
outliers the majority (in number) case still remains a zero outcome, not more
or less revenue (let alone exit $).

~~~
kristiandupont
Agreed. I copied a sentence from the abstract and cut it down until it fit the
HN character limit. I hope it doesn't come off as too click-baity..

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jacquesm
This is mostly limited to Kickstarter, which is not exactly the dataset that I
would go looking for if I wanted to make definitive statements about
'organizations' or start-ups in general.

A better description of the findings would be 'kickstarters started by
individuals rather than by pairs of people have a higher chance of success,
but not much different than from larger teams'.

~~~
syntheticnature
It's even worse than that: this is limited to successful Kickstarters. Turns
out individuals who can pull off a solo Kickstarter might be a bit more
successful overall.

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jacknews
Startup teams need to earn more revenue to pay for everyone, compared to
individuals, and they are probably less willing to live in their cars during
any periods of hardship.

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t2riRXawYxLGGYb
I've long felt that the "common wisdom" that teams are better is wrong. I can
list as many solo-founder companies as I can team-founder companies off the
top of my head and even the team companies are usually mostly one person doing
more of the work.

Personally I know a lot of very successful solo founders but I can only think
of a few team founders that I know. The solo founders all have much stronger
willpower than the team founders too.

Just my anecdotal evidence.

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eruci
I've been a single founder since 2005 and I can relate to these findings.

Some parts of my business are on a complete auto-pilot and will continue to
function even if I'm not around. The main part of it though, won't. That's the
problem I see with my solo ventures.

I'm currently looking to automate what's left of the business processes so
that I don't lose the company due to unforeseen circumstances. Not sure if
I'll succeed.

------
jandrewrogers
Having experienced it both ways a few times, I would argue this result is a
manifestation of a tradeoff. The best way in any single case is circumstantial
but there is a natural selection bias toward different average outcomes.

Having multiple founders creates a drag on execution efficiency because it
requires active maintenance of a consistent vision across the founders and
diffuses the "moral authority" role that uniquely falls on founders. I've
never seen this implicit coordination overhead be trivial at any startup.
However, the major upside of having multiple founders is that _learning_ how
to effectively execute every aspect of a startup _also_ has an incredibly high
overhead that lends itself nicely to divide and conquer. The ability to scale
the learning part can offset the overhead of coordinating vision.

Solo founders work best if they are _experienced_ at startup execution.
They've already learned how to do it, so there is much less learning to
distribute across founders and the clarity of vision streamlines execution.
Confidence of the founders in their own abilities plays a role in choosing to
be solo.

My general observation is that people who choose to be solo founders tend to
have prior experience that gives them confidence in their ability to execute
the current startup well, require less learning to be successful, while
gaining the execution efficiency that comes with having a Benevolent Dictator.
This begets more execution efficiency and fewer mistakes, which increases
probability of success. Having multiple founders can make a lot of sense if
they have little prior experience i.e. they need to scale _learning_ at the
same time they are trying to scale the business.

tl;dr: The structural benefits of solo mostly accrue to founders that also
have substantial startup execution experience, and choosing to be solo often
reflects confidence in their ability to execute based on prior experience.

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rgrieselhuber
This is basically a religious argument. Just figure out what works for you
and, if a company is something you want to build, go build it.

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leepowers
Just from the abstract I can't tell if the study differentiates between sole
proprietorship and solo founders. The former is a business built around a
person's individual skill set. The latter is built around an idea, a product,
or a service that just happened to be started by a single person. The death
test can differentiate: a sole proprietorship goes out of business if the
founder dies. A company created by a solo entrepreneur will continue to
operate and serve customers even if the founder passes away.

Investors may favor partnerships over solo ventures due to the proprietorship
effect. A skills-based solo founder is usually too idiomatic to be an
investable business. The catch here is when starting out a solo founder must
be a sole proprietor; it's his particular skillset and drive that creates the
company. The trap is it's natural for the business to evolve and grow around
that particular skillset.

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tim333
A lot must depend on the type of business. For example the solo founders could
be launching KFC franchises while the teams are trying to reinvent air travel
or some such.

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angel_j
It seems silly that a technical founder with obvious entrepreneurial verve
needs to go out and find some other person, it's not clear whom, to get a fair
look.

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owens99
Earning more revenue =/= maximizing company value

The benefit of cofounders has a doing more with fewer resources and having
more diversity of opinion (making fewer long-term mistakes).

------
idlewords
Pretty nice to see actual research on this, especially in the teeth of the
selection effects that make it harder for people working on their own to get
funding.

------
_hyn3
> A widespread scholarly and popular consensus suggests that new ventures
> perform better when launched by teams, rather than individuals. This view
> has become so pervasive that many of the foremost investors rarely, if ever,
> fund startups founded by a solo entrepreneur. Despite this belief in the
> superiority of teams in the startup process, little empirical evidence has
> been used to examine this key question.

There's obviously _selection bias_ if only teams get funded. That skews the
data that VCs evaluate, because what's _worked_ in the past is colored by what
was _funded_ in the past. (Similar to what we see with seemingly ageist or
sexist VCs that are simply following a pattern of what has worked.)

So, the reason why little empirical evidence has been used to evaluate these
biases is because there's a paucity of data that doesn't already have inherent
conflicts.

If we look at the larger software companies, most of them (Gates & Ballmer,
Jobs and Woz, Larry Ellison at Oracle, who was the third richest man in the
world for a while, Marc Benioff at Salesforce, etc), they were all launched
with a single dominant founder who opportunistically attracted people _as they
went_. Jobs would have found someone else to do the work he didn't want to do,
for example, or he would have figured out how to do it himself. (He did know
quite a lot about motherboards and circuits, and definitely enough to see the
potential in microcomputing's future, although he lacked Woz's technical
genius.)

None of them started out with a plan to build a huge company, although they
clearly had a strong desire.

According to _The Facebook Effect_ , Zuckerberg was so unsure about The
Facebook that he was working on Wirehog with DeAngelo almost full time even
while the Facebook had millions of users.

According to numerous Jobs bios, Woz tried to stay at HP and even offered the
Apple I to HP.

According to his autobio _Softwar_ , Oracle founder Ellison just wanted to
hire people to do his consulting for him so he could surf more. He had no
intention of building a huge company until he realized that he could build
software and it would be less work than consulting.

According to _Hard Drive_ , Gates originally flew to Albuquerque to write
programs for the Altair, which was the definition of a tiny, niche industry,
and Ballmer really was no help at all.

In many cases, the co-founders/teammates may have actually slowed down the
dominant founders.

It's pretty clear that Zuckerberg would probably have been successful whether
he had access to a team (his dorm room roommates) or not.

So, this idea that teams will automatically and rapidly coalesce around a
charismatic founder is another bit of selection bias.

Speaking as a solo founder: the obvious selection bias, and the fact that I
was in my late 30's and far from a startup hub where I might find equally
qualified co-founders, forced me to launch on my own.

We've now achieved product-market fit and are growing,and I'm now attracting
people who want to join my startup. But, _they all want to be paid_. Not in
equity. Outside of the valley and startup hubs, people haven't _seen_ that
stock can bring huge success, so they want at least meager salaries, but
they're still attracted to join a startup that's clearly happening and to work
with a founder who is becoming successful. (On the plus side, this means that
I retain _control_ and board seats, which are more important to me right now,
so sharing profits is just fine with me!)

Any founder who has tasted success _without VC_ will tend to be more wary of
accepting VC, especially because one benefit of starting a company and growing
it to be successful is that you are succeeding on _your own_ terms, and not
because you "pass" some arbitrary checklist set forth by a VC that may have
never even been an operator themselves. Why put that much trust in another
person if they weren't there for you at the beginning?

So, you could plausibly argue that founders end up engaging in _their own_
selection bias. What's clear is that founders who seek out funding at that
stage generally prefer to wait until they can control their own destiny; they
don't want to negotiate out a loss of control (over the board, restricted
shares, etc) since they didn't start that way. So, any later successful rounds
will have to be on the founder's terms:

1\. big enough to be worthwhile

2\. no significant loss of control (unless they're naive, but they're probably
not if they got this far)

3\. doesn't involve moving their growing company (and lives) somewhere else.

There's a whole 'nother world there of companies that eschew funding because
they started out having to and later realized that they might as well keep
going.

The companies grow slower because they don't have those continuous cash
infusions.

But, then, _magically, overnight_ they hit the Inc 5000 in some out of the way
geographic location, but most VC's will never even know they exist. There's
some irony in all of this!

