We have a lot more data about what happens in startups than any individual founder does. What interest would we have in mischaracterizing it?
Advantages to YC of multi-founder companies that have nothing to do with "growing really big":
1. Multi-founder companies shrink the available pool of founders.
Assume the pool of available founders is fixed at any given point in time. By requiring start ups to have 2 or more founders, YC is able to capture a larger part of that pool, harming competitive incubators and increasing the likelihood that the founders they've been able to capture will produce for YC.
2. Split ownership is much easier for YC to manipulate favorably.
By providing YC with two or more avenues to affect the actions of a company, the autonomy of a founder is reduced even below the numerical amount: a single founder in a company with two isn't just half as influential, it's probably more like 1/3. The extra influence is retained by YC, which can play the founders against each other.
3. To maintain this competitive advantage and influence, YC effectively forces successful single founder companies like Dropbox to dilute themselves and gain a founder.
The entire process is now self-reinforcing, with YC actively manipulating the inputs while claiming the outputs are unbiased. (1) and (2) above demonstrate why YC has incentives to do this.
Of course, pg is a good person and would never blah blah blah. I agree, he is a good person. That doesn't mean the above things are untrue though, even if YC is consciously telling themselves they don't matter, or even "don't want" these advantages. Humans are really good at deluding themselves, especially when they have something to gain.
#2 is utterly incorrect; YC, like any other seed stage investor, basically doubles down (in time/effort, not money, I guess) on winners and puts minimal effort into failures. Pitting founders against each other is a pretty easy way to move businesses from "winners" to "losers", so it makes no sense whatsoever. The damage to a business from founder strife outweighs the returns from almost any decision (other than "should we sell", which YC or a seed investor has essentially no influence over, or maybe "continue vs. shut down".
3. YC has accepted enough single founder companies which remain single founder companies that they don't force anyone to do this. I fail to see how an investor taking a 2-10% common equity stake could force anything except disclosure, and I don't see how a relatively small investor like YC would be able to manage the administrative overhead or psychic cost of forcing startup founders to do anything.
!2. YC tries to create splits in management opinion that it can then exploit -- I guess this is the Sonny Corleone theory? Given the importance of focus to success, don't these splits deteriorate performance more than they enhance the position of master manipulator Graham? Whose interests diverge from the founders' how exactly?
!3 really NULL 3 bc this is just a repetition.
This reads like you've made up your mind and gone looking for a reason. And no, I'm not a pg fan and haven't a prayer in hell of ever making YC. There is no questioning the man has something to say about what works for start-ups.
#2 is a good observation though:
Because multiple founders could be potentially split - it makes it less risky for VC to invest. Therefore it's easier to get VC funding for multi-founder startup.
Which is a competitive advantage over single-founder startups.
From YC perspective making access to VC capital easier (by going multi-founder) is even more important, because "deals with VCs" is one of the core services that YC provides to startups.
"Shrink the available pool of founders"?? In country of 300 million, how in the world is that even possible for a relatively tiny incubator to do??
"Split ownership to manipulate the startup" - YC takes a 5-10% equity stake!
"YC effectively forces successful single founder companies like Dropbox to dilute themselves and gain a founder" - HOW?!?!
It's not a pool of 300 million that would be included. The number of people that are considering starting venture-backed companies that are "swinging for the fences" by trying to build a 9-figure company is much much smaller than 300 million.
I wanted to point out that your advice is optimized for the success of Y Combinator (as it should be). This of course doesn't mean it's good general advice for all Startups.
Single-Founders who grow their revenue to medium size ($5-$25m) will usually be extremely happy. They don't need to be doing $100m of revenue to succeed.
Ideally you want between two and four founders. It would
be hard to start with just one. One person would find the
moral weight of starting a company hard to bear. Even Bill
Gates, who seems to be able to bear a good deal of moral
weight, had to have a co-founder.
There are thousands of single founder companies out there. Your system is biased and your predilection toward group founded companies may self-fulfill your prophecy.
In a way, you're like the coach or owner of an NFL team telling kids to stay in school and do well in sports because they may be a pro-baller some day, when really, they need to hit the books if they want a positive outcome in the average end.
Noam Wasserman wrote about plenty of reasons to be a solo-founder in his book, "The Founder's Dilemma." Some people would rather be king and your proposed path of group founded companies going on to VC fueled greatness is not the map for kings.
I'm not saying that your data doesn't support your hypothesis, but I think you need to recognize the plethora of examples of single founded companies that achieve great success and know better than to apply to ycombinator because you don't like single founder applicants.
As someone else said above, success is relative and people deserve their success even if it isn't a billion dollar IPO or 10x cash out that may, in the end, have left them with less money than they'd make over the life of a smaller achievement through some other path, be it group founded, bootstrapped, or whatever.
My point is, there is a lot of greatness to be had that doesn't meet your standard and it'd be nicer to recognize greatness that doesn't follow your rules than to knock it because it is a counterpoint.
As it turns out, it's a carsonified post. Strange.
I also remember a post where someone listed a whole bunch of awesome bootstrapped companies and you said, basically, that none of them was at the level you consider successful.
EDIT -- here's the one I remembered! Awesome, the thread from 549 days ago no less: http://news.ycombinator.com/item?id=2556959
Where someone mentioned a list of successful bootstrapped companies with million $$ exits or revenues and you say: "If you constructed a list of the top technology companies, few to zero of these would appear on it." http://news.ycombinator.com/item?id=2558576
Okay, so those companies are (edit: NOT) "Top Technology Companies" but neither are thousands, perhaps millions of group founded, vc funded companies that follow your path either.
Your attitude toward bootstrapped and single-founder companies is one of extreme negativity and I don't think it's warranted.
Also edit and bit tongue in cheek: Wal-Mart was a single founder company, so the top two retail giants in the entire world were founded by individuals rather than groups, so that data tells me that to be the BIGGEST in the entire world, maybe you should consider being a single founder.
More of us should be focusing on building simple, focused,
small-team web apps that meet everyday needs. Am I saying
we should kill our dreams of changing the world? No. But
we all need to admit that YouTube, Facebook, Bebo, Google
and Twitter just aren’t the norm.
Instead of desperately trying to create the next
phenomenon, which is highly unlikely, why not aim for
something that’s definitely achievable?
Considering that the example Merriam-Webster gives of the use of mundane is
the mundane concerns of day-to-day life
This is why I hate arguing on the Internet. All this work for nothing.
What sentence in that comment is false?
You seem to be suggesting that PG's advice is at the very least creating bad vibes or perhaps even that he is trying to reshape reality for mercenary purposes. This is frankly a bit nuts considering how much carefully considered free help and advice PG gives out in his essays alone.
PG's original point is sound. The OP's blog post could have said what it wanted to say without falsely attributing PG's or Techstars' motives to greed.
Your blog post was completely right that they don't make financial sense for Y-Combinator or VC generally but it didn't need to claim the word. Just calling the VC suitable companies 'high growth startups' or 'venture companies' rather than denying any other new business the use of the term would not have lost anything from the meaning without appearing so dismissive of other models.
Success for PG is very different than success for many others.
A lot of people assume that because we've funded some companies valued in the billions, this is the only thing that counts as success to us. But that isn't true:
YC was never about the money.
For an insight into PG's motivations, you might want to re-read his essay on cities (it's more likely to be "power", as in your influence on the world). The footnote in the Black Swan essay linked above seems to corroborate that.
Can you guys please release your empirical data about the success rates of YC companies, broken down by various things like market, year founded, location, number of founders, etc?
In a sense, I already do disclose such data in a general way, because whenever I write or say anything about startups, I wouldn't contradict trends I know about.
My post is not an attack on you or TechStars. It's just a counter-point to your data, based on my own personal experience.
But as we all know so well the "startup outcomes" follow a power law. Dropbox and AirBnB make for a great YC PR, but are certainly nothing like a statistical mean outcome (aka "expected value").
I'd say it is a pretty reasonable thing to postulate that "doing things YC way" would result in a worse expected outcome for an individual founder vs. retaining control of a profitable business. If this statement is wrong please refute it with data.
The way things are right now, YC is selling the "possibility" of becoming an outlier, while downplaying what "typical results" usually look like. If you were in a consumer product market it could likely break FTC rules on truth in advertising:
EDIT / RESPONSE 1: This is not an "accusation". I am simply stating as fact that YC's model is focused on promoting its largest outlier successes (which form the bulk of YC portfolio value) while releasing no real data on the "mean outcome". Take it for what it is worth. As far as my statement about comparing "mean outcomes" it is obviously just a subjective judgement based on anecdotal evidence because there is no publicly released data from YC.
EDIT / RESPONSE 2: Let's be realistic. Any VC firm can release % of IPOs, M&A and failures as well as IRR figures and exit bands. There is no reason to include any company-specific proprietary data. The only reason for YC to not give such estimates is because it would highlight the fact that most startups are nothing like Dropbox.
Also, his company has spent time and money to gain access to data that should help him pick emerging companies. I'm not sure why you would feel entitled to that. I'm sure they are working on some data project to help automate decisions on applicants, if not they will be eventually.
That data will give them an edge when making offers. When you are in a position where asymmetrical information is working to your advantage why would anyone give that up?
If they have to rely on "asymmetrical information" to get access to deal flow and make competitive offers and if releasing the data would hurt their attractiveness to prospective investees, why exactly are they a good deal for entrepreneurs (who can actually build a business)?
There is an old saying if you do not know who is the fool at the poker table, that's you.
That's a bit circular, if people would question the things you write or say about startups, you'd tell them they are backed by empirical data, then when someone asks for this data you tell them its implied by the things you write or say about startups.
I can totally understand why most of that data is hard or impossible to disclose, that's obvious. But you can't cite secrets as evidence, all you can do is say "trust me, I know what I'm talking about". You can't have your cake and eat it too.
Obviously no one is questioning the existence of that data, nobody's suggesting you're cooking it up, they're just wondering if they'd spot the same patterns in it as the ones you perceived to be there.
To sum it up, whenever you write or say anything about startups, the only thing you disclose about such data in a general way, is the conclusions that you drew from it, what you perceived (not "know") to be a trend, which is probably useful and very valuable, but is something entirely different than the data itself.
For example: if someone can't convince other people to join, how could he be able to convince customers/investors later on. This implies causation. I would love to hear more causation like this for the single founder startup.
There are relationships and associations everywhere. If people look at the data between skin color and success, they will find relationship. but it doesn't mean people succeed because of their skin color. The causation is more useful information than the mere association.
... many of which may be a result of your inherit selection bias. Starting a company "that gets really big" is hardly a success criteria that an average first-time entrepreneur has in mind. You might not like how Ryan expressed it, but he's right - do not let the lack of a co-founder stop you from starting a company. It's a non-issue. If you have this option - great, if not - fine, and there are several upsides to it.
As has been mentioned, either an exit of a few million or a stream of a million of profit a year for a couple of years are more than enough to many potential founders.
That's the parameter I'm missing when you say cofounders are necessary. Necessary to achieve what, exactly?
This would also allow everyone to come to their own conclusions.
Going to your quote at the beginning, I think the low points part is really true, (as a single founder, I know it's really hard). The vote of no confidence from your friends I think is way off base though. Not everyone is at the same point in life, and many if not most 20-somethings don't aren't in a good enough financial position to not have an income for a significant period of time.
We just got done getting huge loans to go to college, some get married, some have kids. It's not just, well he couldn't convince his friends to quit their mortgage paying jobs to do a startup with him his idea must suck.
Maybe it's a lot more likely for co-founders to make it huge, Apple, Google, etc. His post is pointing out that you don't have to be Apple to be a hugely successful startup and to be really well off personally. YC is looking for the next Apple, but Joe Schmoe startup founder is just looking to not have to worry about their mortgage.
(eql yccompany astartup)
(equal yccompany startup)
Also, it's hard to see how he's picking on a small part of the op. A significant portion of it references pg, quotes him, and speculates on his thought process. What small part, exactly, did he pick on, and how did he blow it out of proportion? If anything, it seems to me that he agreed with the gist of the post, while at the same time clarifying his own position.
Ironically, your response seems to commit the very crimes it criticizes.
Your conclusion is probably most likely to represent reality because it assumes the best in both the Ryan and pg. Assuming the best in others is usually a good approach.
In your "startup = growth" essay you laid it out very clearly. From the investor perspective, the only thing that influences success (returns) in any way is when a company gets "really big". Everything else is noise.
But he's just giving a founder perspective. It's not contradictory, and to me it makes sense. I would definitely call what he described in the post "success", i.e. using the proceeds from a previous company to start a profitable new one.
You might argue from the data that he could have grown faster with a co-founder. That could be true in aggregate, but there might be some other factor which makes it untrue for certain situations. As he points out, there are also risks involved, i.e. fights between co-founders which I think you pointed out as a huge source of failure.
Also, you only really have data from YC companies, which lately are biased towards having multiple founders.
edit: I guess the undertone is that people perceive that you've redefined the rules of the game (certainly "startup = growth" does that) and are trying to restore some balance in the dialogue. I think they perceive a misalignment of interests in terms of pushing for extremely high growth whereas you would argue there is none.
A few single founders:
Overture (Bill Gross), eBay (Pierre Omidyar), Napster (Sean Fanning), Amazon (Jeff Bezos), AOL (William von Meister), Digg (Kevin Rose), SuccessFactors (Lars Dalgaard).
And then I guess there are many examples where one of the founders is actually driving the whole thing even though he/she has co-founders.
In some ways the whole discussion of co-founder/single-founder seem to be missing a bigger point which should be; What is needed to be a successful company?
How the equity falls out and who get to call themselves co-founders seem to be less important.
This is THE confusion in my opinion. Founder + startup team is not even close to the same situation as actually having multiple founders (Google is probably the best example for actually having more than one founder).
I don't know why pg actively conflates the two, but he doesn't hide it. In his essay, he talks about how you can't trust a founder "who can't even convince his own friends". Well sure, but how does convincing a friend suddenly make the friend a co-founder? Answer: it doesn't.
Sean Parker was a cofounder of Napster.
WvM left AOL when it was nearly bankrupt in the early 80s; a team (including Steve Case) basically restarted the company. I'd either ignore this case or consider it a cofounder case.
Pierre Omidyar left eBay quite early, and raised money even earlier (including hiring Meg Whitman); it's a good example, but probably not as relevant today.
Overture/GoTo was part of Bill Gross's IdeaLab, which is a pretty unique situation. I don't think I'd call Bill Gross a solo founder there; he may have been the solo founder of IdeaLab.
Digg, probably not in the "successful" camp.
Amazon is a good example of a successful single founder. SuccessFactors too, even though I know ~nothing about their business other than it being highly successful -- it seems like a black box inside.
It's not as complex as "who founded PayPal" (merger between two companies). Or anywhere near as complex as Facebook.
No one is arguing that a single person can't create software. (and, the "invention" aspect of creating a new product is almost always solitary!)
pg's argument (and the general argument here) is that to grow to a big, successful business, cofounders are highly correlated with success. That has to do with everything after the initial idea.
Solo vs. co-founder isn't really the question here.
It's not that it's harder to be a single founder, it's that it's difficult to even get a company up and running co-founders.
I don't know the exact source, but I suspect some of this is just repeating what people have read in pg essays.
Reading pg's clarification of what he means, I think the community has taken his observation that you can't make many millions without a co-founder, and mis-read it to mean you can't build something you love and put on the table without a co-founder.
That being the context, I've seen tons of solo-founder businesses do very well and come up to that cruising altitude with hard work and dedication. And that's OK.
Also, the OP's point on young-inexperienced solo founders vs. older experienced founders resonates with me. All I've done is solo and self-funded. I've made a ton of mistakes. I've made a ton of money and lost a lot of it. If I were in your shoes I would not, in a million years, hand the keys of a startup to a young just-out-of-college kid. Business can be brutal. It is very, very easy to become your own worst enemy. If you have a small team motivated to succeed because they each own a piece of the thing they are building they'll probably help each other stay on point and get it done. Of course, they also need extensive external coaching, support, guidance, etc.
How many of your startups would have succeeded if the infrastructure you provide (beyond just the initial small funding amount) did not exist? My prediction is that most of these teams of young founders would crumble under the pressure of doing a business without the team that you put into place to make it happen.
Example: I have a friend who started a very successful courier company. He now employs north of a hundred drivers. No formal education. High-school drop out. Makes loads of money. For nearly a whole year he lived, ate and slept in his car as he service this one mid-size client who gave him a shot making deliveries. He literally slept in his car in the parking lot outside of their offices and workers would come wake him up when a delivery had to be made. No support system, no coaching, no, well, nothing. I don't know many people who would be willing to endure such torture.
My very first startup. Self-funded it with $250K I made after a heavy couple of years of consulting work. My own money on the table. Had my first kid. My wife didn't work. I then spent a year and a half in the garage working 18 hour days --seven days a week-- writing code, designing electronics and everything else needed to get my first product done. It was not fun, but it was a lot of fun. Weird statement, I know. Again, I don't know many people willing to do something like that.
I am not saying that all solo founders engage in heroic acts of self-sacrifice to bring their ventures to flight altitude. But I do think that it isn't quite fair to characterize the solo-founder equation as a formula for failure when the vantage point from which this conclusion is reached is one where there's a huge enterprise and ecosystem behind the startups to provide funding, coaching, guidance and all that might be required in order to succeed. Take all of that away and maybe we can compare apples to apples.
Semantically, pg said that it's empirically difficult for one person to start a big company on their own. This does not preclude the possibility of it happening. It's just rare. And his evidence is the fact that most large companies were started by multiple people. You may not like the implication, but his statement is factual. He was careful with his words and he's right.
You also may have misinterpreted the spirit of what pg said. He didn't say that a cofounder was the only path to human happiness. He didn't say anything disparaging about single founders. He just said that most of the successful startups that he's seen have involve multiple people, without publicly taking an opinion for or against the issue.
FWIW, pg's logic isn't entirely sound either. Saying "most of the successful startups I've seen have multiple founders" is no more valid than saying "Most of the corporate CEOs I've seen have been white males, therefore being a white male must be one of the criteria for success."
It doesn't matter how many people are involved in the founding of a company. If it's the right idea at the right time with the right execution, things will be fine.
This, IMO, is the real problem with pg's "data". For example, I'm currently doing a startup. There are over ten people who are currently participating in one way or another. We even call them "founders", thus, when we grow large, pg would count us in the multiple founder column.
But there's really only one founder, and that's me. I'm the only unreplaceable person in the company at this time, I worked for 10 years before I even got to the point of incorporating, and if I left to start something else, the company would immediately fold. I recruited every person, and could unilaterally let anyone go. It's my money and reputation on the line. I wrote the business plan, designed the product, and most importantly, identified the market and invented a way to reach it and fund the company during growth.
In five years, yeah, I'll be able to move on without killing the company. But not now, not when it's still a startup.
Dropbox was the same, and pg nevertheless counts it in the multi-founder column. Oh well, as I discussed in another comment, it's in YC's best interest to promote multi-founder companies even if it has zero effect on the outcome.
Rule #1 of startups is: don't die.
In reliability planning, 2 is 1 and 1 is none. A single founder is a SPoF. They get cancer, get an unsupportive SO, get a needy family member, lose a rich uncle, etc., they kill the company. Having 2+ founders guards against these likelihoods (over the course of the company).
It's not like you have one "founder", and then to increase the odds of success, you add a few more for redundancy.
In any "high growth" business, which is the topic of discussion, if the founder is worth anything, then the likelihood of finding another founder who is a drop-in replacement in the event they "get cancer, get an unsupportive SO, get a needy family member, lose a rich uncle, etc." is effectively zero.
The entire reason the company has high growth potential is because of that specific founder. Replace them, and everything changes.
The real problem is that we are confusing a "founder" with an early employee, possibly including an employee present at the very beginning (i.e. incorporation), and granted equity via some mechanism (options, grants, etc.).
A founder and an early employee couldn't be more different. It's rare that two founders (a) happen to be near each other, (b) are working on the same thing, and (c) agree with how to tackle said thing. Founders can't really be "hired" in the conventional sense, and they don't sign on to other people's visions like early employees do.
When the miraculous situation described above does occur, yes, you can get two founders in the same company, like what happened at Google. But...it's very rare. Single founder + small teams are the overwhelming norm, not the exception.
All of these other "multiple founder" situations that pg likes to boast are so successful are, in fact, single founders + early team, which the single founder recruited. Not the same thing at all, and they don't have any of the SPoF redundancy you conjectured helped them to succeed.
The major alternative to single- and the (rare) multi-founder companies are actually teams without any founders -- instead, they have a bunch of coders who like to work together and have developed some interesting tech that has some potential commercial value.
That can work too, especially in software/technology, but those kinds of companies only succeed, if they succeed at all, with massive outside help from something like a YC. They are more likely to be found in tech incubators, and are highly over-represented on HN and in discussions like this.
I'd argue that tech incubators exist precisely because these founder-less teams exist, and need funding and direction. That's a good area for YC to operate in, but it necessarily skews pg's view of the world.
You're redefining terms. A founder is a founder. For example, you may try to call Wozniak an 'early employee' of Apple Computers and Steve Jobs the founder, but then you'd be playing with words. Both of them are universally acknowledged as founders.
If a single individual has 90% of the equity, it doesn't matter if there are 50 other people also with equity present and working at the inception of the business. That business has, exactly, one founder along with 50 early stage employees with equity stakes.
AFAIK Steve and Woz had equal equity in Apple, and both were present at the founding of Apple (along with a third guy, who sold his stake back after a week). So, both are founders -- no word play necessary.
There's nothing wrong with being an early stage employee, and we don't need to artificially inflate their worth by acting like they are founders, when the actual ownership facts indicate otherwise.
Not really true at all, as has been pointed out by other posters.
In the book "masters of doom" they relate that even though Id software had 4 founders when it came time for them to get key man insurance the only person they got it on was John Carmack.
I'd think that most companies are like this. There may be multiple co-founders but there is usually one signifcant one, who if they quit, would sink the company very quickly.
I think, in general terms, it might be interesting to have access to data well outside of YC and similar tech incubators. I wonder what it might look like if we included all manner of businesses, from gas stations to bakeries and, yes, tech?
In that case I would suspect that success or failure might correlate to factors other than the number of founders.
Now, this is going to sound weird because I will agree with you: In tech the probability of success should increase with more founders (to a limit).
I'll qualify this by saying that it has to be the right founders. They can't be clones. They have to bring something different to the table.
In my opinion, the same could be achieved --to a point-- with a single founder and really good initial hires.
The reason I say this is that a tech startup, particularly today, might have to cover so many disciplines that it is nearly impossible to find all of this in one person. And you probably wouldn't want to, even if you did find this person, at least not for the long haul. So, a good founding team or a good single founder and a solid hired-in team is almost mandatory.
My own experience has been, well, maybe "unique" is the word. While my training was in electrical engineering over the years I've had to learn a number of engineering disciplines on my own due to the various directions that life (and my own curiosity) led me through. I became a mechanical engineer, software engineer, embedded engineer, learned FPGA's (they didn't exist when I went to school), learned metal and plastics manufacturing and even became a decent salesman. All the while, when it was possible, I'd find people to replace me in certain functions. Finding good people wasn't the easiest part of my job.
This is where finding good teams fresh out of school makes a lot of sense. And this is probably why the success rate falls off quickly as you get farther away from places like Stanford.
We probably agree.
I think what touches people the wrong way might be that your data seems to be used to create bias against single-founder ventures and this has to some extent permeated the industry.
It is probably 100x harder to get funded as a single founder. Perhaps single-founders have to settle for lower levels of funding, lower quality deals and less support (I am not talking about YC here, just a general statement) and, with lower funding comes a far greater probability of failure.
In my prior post I mentioned self-funding my first startup to the tune of $250K. What I did not mention is that I was grossly under-funded and just did not know it at the time due to my lack of experience in the segment. This was a hardware/software/manufacturing startup and $250K was nowhere near what I needed. I probably needed two million to do it right. I would end-up having to go and hustle for more money during the first year by consulting and doing projects just to be able to keep going. I burned through that cash very quickly, almost before I left my garage. And it was just me! I never had enough money. It was a real struggle. At some level, the only reason I did not fail was because --cliche alarm-- failure was not really an option.
So, yes, I think that for the most part I am in agreement with your position. I have the scars to prove just how tough it can be. It probably would have been far smarter to go find outside money and build a team. I just wasn't wired that way and, frankly, the option wasn't even on my radar.
At least from my experience and observation over many years your experience is not unique at all (and I say that in a positive sense by the way). One thing that successful entrepreneurs (and I am referring to the type that build small successful businesses that provide a great lifestyle not large "hit a home run businesses") is that they are able to get up to speed fairly quickly on a wide range of things that they have no experience or knack for at all (as you say "became a decent salesman"). Because for one thing if they are self funded and what they are doing is of no interest to "investors" they could never afford to pay people to do things that needed to be done. So they cut corners and make it work. And they figure it out. On their own. (And I speak from experience here starting three businesses without any co founders.)
PG's "bias" if you want to call it that comes from the fact that (from what I can tell correct me if I'm wrong) his entire experience in the business world started in the mid 90's and specifically with tech and the internet. At a time of "rising tide floating all boats". (Not taking away from the success of viaweb but w/o that rising tide (which he did interpret correctly) and Yahoo (they also helped Mark Cuban quite a bit) nothing else (timing is always important) would have mattered. Before that PG was an accomplished programmer I believe. As a result he would tend to frame things from what he has observed during that time period in which he was "born" into business like anyone would. Even to the extent that he wouldn't ever think to qualify the use of the world "startup" to be "tech startup" as only one example. Entrepreneurship and startups of course are very broad. Some of PG's (and others) statements seem to want to confine it to a particular area of the business world.
"that your data seems to be used to create bias against single-founder ventures and this has to some extent permeated the industry."
It seems that you are feeling the same way I do sometimes when I read HN. That there is this great injustice in that young readers are somehow being brainwashed into believing there is only one way to be in business. And to have "success". Similar to how certain people believe that "Wall Street" is business or that somehow it is more impressive and acceptable to suffer as a wannabe actor in Los Angeles than to be running an actual successful wedding entertainment business.
I also think that it is very important to understand that this data set is about investors risking their money on complete strangers with ideas. That's an important distinction when compared with, say, you risking your own money (or family money) on a venture. I have navigated business long enough to know that most people have absolutely no problem burning through someone else's money and delivering absolutely nothing in the process.
So, yes, I think that if I were in their shoes I would probably want to increase my odds of getting a return on my investment. And, if the data showed that single founders of the kinds usually populating these young-founder tech startups tend to fail I'd be just as biased against the whole concept as they might be.
What I have attempted to argue to some degree is that the solo founder experience might be very different when the company is not the result of a relationship between people who might have nothing to loose (young college-age founders) and an investment group.
I would be curious to see if a larger data set exists somewhere that might cover all types of startups --not just tech-- and have enough information to be able to see what factors might influence success and failure. I would suspect that the number of founders is less of a driver than one might think.
> It seems that you are feeling the same way I do sometimes when I read HN. That there is this great injustice in that young readers are somehow being brainwashed into believing there is only one way to be in business.
I don't think in terms of injustice. HN is a forum. In the end it matters not. People tend to learn when life and reality touches them. Reality is hard to argue with.
One of the best examples I have of this is the son of a good friend of mine. As he went through college he bought into an extreme liberal point of view that even his moderate liberal father was uncomfortable with. He did absolutely nothing about it. The kid graduated, got his very first job and was elated. A couple of weeks later he is over at his dad's house irate about the amount of money the government took out of his paycheck for "all kinds of crap that makes no sense; and they waste most of it" --as he put it. Needless to say, Dad had a conversation with him. The kid's political and social views changed almost 180 degrees when he actually experienced real-life.
On HN I can always tell when someone is voicing opinion without ever having started and run a business. It is obvious to anyone who has been in the trenches. People say really stupid shit about business and business owners when they don't have a clue. On sites like HN, Techcrunch or Mixergy it is easy to feel like you setup shop on Friday and by the next Friday you should be funded and at a run rate of $1MM per year. The reality is that you are far more likely to fail ten or twenty times before you succeed. This, to get back on topic, is where a multiple founder team might --huge emphasis on "might"-- do better than a single founder. A lot of people are not wired to endure the extreme pain and agony of a business that is failing or not doing well. A small group of people who mesh very well and have common goals could help each other endure these events.
One of my favorite quotes:
"Someone holding a cat by the tail learns something he can learn in no other way" --Mark Twain.
My guess is that the true reason is psychological and social; decisions are made better when discussed from 2 or more points of view. Ideas are hashed out. That, and mutual accountability is a powerful motivational force.
There are reasons, I think, but they're not being elucidated very well here.
I'm a solo founder, and have 10+ people who have equity in my company, that I can talk to about any of the things you described above (and do).
I'm still just the one founder though.
Do people not talk to employees? I don't get it. Apparently, there's a belief that you can only bounce ideas off of other "founders" around here. In my experience, that's completely false.
I also, BTW, bounce ideas off of other business owners, friends, relatives, people on the Internet I've never met, etc. Being a "solo founder" hasn't prevented any of that.
And I'm an introvert!
Does anyone here think that Dropbox would have been successful by firing Drew Houston and replacing him with Arash Ferdowsi and some other "founder", as if having 'two' founders is what made it work -- and not what actually made Dropbox possible, which was Drew Houston?
Drew was doing Dropbox regardless, had already written most of the code, and could have cared less if YC chose him or not. And pg wanted him to have a co-founder, so he got paired up with Arash Ferdowsi, and the rest is history.
Note: none of this is meant to disparage Arash Ferdowsi or his contribution in any way. But I would strongly argue that Ferdowsi, without Houston, isn't a name any of us knows today, at least for a Dropbox-like product. And I would strongly argue that we'd still know Houston's name, and that Dropbox's success would be in the same order-of-magnitude that it is today.
2. I think there is a survivor bias here. Most of the biggest companies reach scale very quickly. The scale creates an incentive for the other co-founder to stick on. There is some anecdotal evidence to believe that if scale does not come early on - most likely there won't be a 'really big' company. If the co-founder quits and the founder soldiers on - it just adds another data point to pg's co-founder theory.
Still it's does a lot better than 90% of YC companies.
Why compare it to Amazon-size businesses? With or without a co-founder, those are few and far-between anyway.
Ryan has also been a master of bootstrapping businesses upon business. He built Carsonified on the foundation of simple workshops he ran, he built ThinkVitamin on the foundation of Carsonified and he built Treehouse on the combination of both of them.
I say that not as a critic but as an admirer. I think he's done a first class job of building his reputation, wealth, influence and expertise through all of these.
However I think it's somewhat disingenuous for Ryan to state that because he has done Treehouse on his own, "so too can you". It's what the people want to hear and it will bring the enthusiasm of the bulk of HN readers who are going it alone.
However the risk for most startups is not that they will exit for millions and the CEO will only own a paltry 20% of the company rather than 70%. It's that they will die. It has taken me many years to realise it but the presence of a true co-founder dramatically reduces this likelihood.
It feels odd writing this all these years later because I knew Ryan at the very start of my career and almost the start of his. I then was a single-founder, he was working with Gill. I feel like we've passed each other going the opposite direction.
I gave only a small fraction of equity to my first co-founder and paid a high price for that. I have now come full circle and realise the importance of a good co-founder and of an even split between you.
Ryan is right in that he can do it without a co-founder. However if you fit that mold you probably already know that and are running a business quite possibly as the sole influencer already. If you don't then I think there is good reason for the astonishing faith of the valley in the co-founder. There is a degree of group-thought, sure but there are a lot of very, very sound reasons not to go it alone.
Yes, Gill has played a huge role in running our earlier businesses. She has also supported me hugely during the running of Treehouse. But I've shouldered the weight of making all of the big decisions at Treehouse. The buck still stops with me.
I wrote this post not as a "anyone can do what I did" post but rather a counter point to the rhetoric that is coming out of The Valley.
It's important for new Founders to hear both sides of the argument.
But hopefully people also realize that the existence of a co-founder doesn't mean that there is no clear leadership. YourMechanic would not be feasible without my incredibly talented co-founder, but the buck still stops with me. I talk to my co-founder & team about big decisions, but I make and take responsibility for all the decisions.
Having run different businesses for 5 years as a single co-founder, I have found that there is something magical about having the 'right partner' (in my case, brilliant + 100% dependable).
Wow, pg is so wrong. Whenever I get an idea I want to execute it myself. Bringing in friends is not something I even consider.
PG also has an age bias in that statement as it would practically be true only for a certain age group (young, in or recently out of college, without kids) anyway.
Someone who is, say, 33 years old, married with two kids and with friends who are in a similar situation (and assuming those friends even live in the same town at the time) would find it quite difficult to pull those people from their possibly established careers (say as an attorney, doctor, or rising manager) to leave on a "startup". Additionally not everybody has a large group of friends who share the same goals and interests. Obviously.
"I funded the business with cash from my previous business"
Ryan has thoroughly convinced me that if you've run some successful businesses in the past, it's probably better to go it alone your new one.
However, I don't think he convinced me that PG was wrong (and I'm not sure he was trying to), just that PG's advice doesn't necessarily apply to serially successful entrepreneurs. All of PG's cautions about the dangers of going it alone still seem completely valid. However, it's not like there aren't dangers to having a co-founder (the marriage analogy, though a little cliche, is cliche because it rings true).
I suppose, as with all things, the thing to do is take stock of your own particular situation and weigh the risks. But if you don't have direct experience overcoming at least some of challenges PG refers to, a co-founder still seems like the more sensible route.
Being a single founder is bloody hard. Mostly though it is lonely. Nobody to talk with, nobody to bounce ideas around and debate features or implementation with. Should we use MongoDB or Riak? Being a single founder you make all the decisions. Also investors believe if you can't convince anybody else to join your company, than its probably a bad idea. I don't necessarily believe this, since I am myself a single founder.
So, why is finding a co-founder hard. I moved up to San Francisco over a year ago, left my pool of friends, and drove up in my car with everything I owned. Finding people in San Francisco that are either not already doing their own startup, or already working at a badass company is extremely difficult. Even more, there is the catch-22, I don't have any capital to pay you, but I have equity. Again, not a really convincing proposition for a rockstar developer or designer.
Startups are hard, the hardest thing you will probably ever do. So being a single founder is just not mentally healthy and as productive as having co-founders.
You speak this highly of TechStars, and yet you're still running an LLC?
If your technical "circle" already includes people that you want to be co-founders with and you guys agree to start something because the chances look good, then this is a powerful situation to start from -- better than being a single founder. But if you don't have that "social infrastructure" established (and you have not been hanging out with that type of crowd), then just adding a co-founder may cause more problems than helping.
In other words, sometimes, it's not your choice to be a solo co-founder. Many people have compared finding a co-founder to finding a spouse. In both life decisions, I don't think anyone seriously advocates for "sucking it up, and going with the least bad option."
Sometimes, you're poorly geographically positioned, or in a "strange" market, or later in life (friends are already "matched up" or in secure jobs), etc
For myriad reasons, you could sincerely try to recruit a co-founder and come up short.
The question then becomes ... do you make the best of it and go for it anyway?
Or, is the lack of a co-founder a signal (to yourself and others) that your idea / plan is unworthy?
I hope the answer is the former because that is what I am doing. Someone remind me to write this article when I figure it out.
If you have no choice but to be a Single-Founder, then it's probably down to whether or not you could survive your startup failing. If you can, then it's down to whether or not you feel happy taking the risk.
PG's YC (using YC since that's the case being used) are tend to be populated with fresh/younger people, who probably never ran a business prior to YC.
Not really fair to try and compare the two and draw conclusions that will blanket the other side of the argument.
Are you going to succeed right out of college as a single founder with your very first business? Probably not.
Would you succeed if you had decade of experience under your belt, built previous successful businesses, know the industry, know the players, and etc? Most likely.
Of course, pg's stacking the deck by disallowing early employees for solo founders (which he does by claiming that early employees are "founders", and thus, support his multi-founder hypothesis).
I do think it's correct to say that companies without employees are rarely very large, but this doesn't seem all that insightful.
The more interesting question is why pg disallows solo founders with early employees? The vast majority of large, successful companies actually fall into that camp, and not the multi-founder camp, of which Google is a large, successful example.
To pg, a "founder" is apparently an early employee who (a) wants the company to succeed, (b) plays some kind of "important" role (e.g. is not a janitor), and (c) has some skin in the game to benefit from "success".
I think that's far too broad, and that we should call them early employees with equity (i.e. what they are), not "founders" (what pg apparently wishes them to be).
> We’ve grown from three people to 54, and $0 revenue to $3.4m+, all in just two years.
I'm completely naive about these things and I'm not involved in business, but isn't this very risky? That equals to only 63k/head revenue. I guess this is banking on future growth but is this a standard pattern for a growing startup?
Have you guys thought of this or are you totally committed to monthly SaaS model?
I think either way is cool, I'm happy to share 50% with my co-founder because money isn't my primary goal and he's a fun and clever guy to work with which makes the journey even more enjoyable
I'm sure you can do it alone, but I wouldn't want to.
This "everyone should do it this way" attitude is stupid. For some people having a co-founder is necessary and for some it isn't.
Such a smug attitude, and so unnecessary. There's not one spot where I said 'everyone should do it my way,' and your first paragraph is a rather astonishing ad hominem attack
EDIT: I've done some more thinking about this, looking to the times when I wished I was a solo founder, and I've come to the realization that the entire thing is situational.
My co-founder and I are co-founders because that's the way things worked out. For others, it might happen the opposite way.
We've already identified our differences and understand that eventually we'll have to make new decisions based on our dissimilar visions for our own personal futures. I completely recognize the desire and drive to be the captain of your own ship.
But Treehouse has raised $5M. How did that work? What outcome are those investors looking for?
If you didn't want to go public, then what did you sell the investors on? Seems to me that you are weakening your hand - because any potential acquirer knows that your options are limited because you don't want to go public.
What's the point of publicly disclosing something like that?
Given that VC investing is a hits driven business, I can't see any rational investor being satisfied with you not swinging for a large outcome for them.
Given that you own 70% of your company, if we make the simplistic assumption that you sold 30% for $5M - which would give you a $16M post-money valuation...you would have to sell to Google or some other deep pocket for almost $40M just for them to double their money. Assuming this doesn't happen for 5 years, those returns look paltry.
What is the end game for them?
P.S. If you never told them that you didn't want to swing for the fences, then this must be a sucky way for them to find out.
Wouldn't there have to be a fair amount of upfront and unique legal legwork to put something like this in place? Would the investors be guaranteed a certain percentage of any money Carson takes out of Treehouse?
I'm pretty much allergic to the idea of answering to a board, shareholders, and and analysts myself. 37 Signals seems to have an interesting idea about how to compensate employees in the unlikely case of a liquidity event, but some sort of structure that would allow profit sharing, without requiring a path to IPO or acquisition would be great:
Private Equity firms, on the other hand, do this. They buy into companies, so they can share in the cash spoils. That's why they tend to buy companies that have strong cash flows - like GoDaddy, or Utility Companies, etc.
But VCs - especially tech VCs - usually only invest with on the premise that there will be a liquidity event. In fact, it is built into most term sheets - the liquidity terms.
Paying a VC out of the cash generated by a company goes against the notion of a high-tech, high growth company. Companies take outside cash so they can invest in the company and keep growing - because that's how you get the best bang for your buck. It usually doesn't happen the other way around.
The technology has improved drastically. 10 years ago, it requires millions of funding to start a web business. Today, a team of talented developers can build an impressive app in a weekend.
Even marketing has become easier. With App Store, it's now possible to have apps distributed to millions of users over night.
Yet, our assumption about startups stayed the same disregarding the change of context.
Sure, even Steve Jobs had a cofounder. But then what would be the equivalent of building a PC in today’s age? And have that distributed to millions of users in that age?
Take into account now it takes a beginner Rails developer 15 minutes to build a blogging app. If the cost of running a startup is going down as technology matures, then it really shouldn’t take a team to build a startup. It should take one guy with a vision, a few freelancers and/or interns.
Solo founders are being discriminated against for all the bullshit reasons. Time has changed, technology has matured. It’s time to end it!
Kinda how many succesful dyslexics (like Ari Emmanuel) credit dyslexia for their success.
The fact is that many of the extraordinary people YC looks for are often written off by YC's own bias against single founders. That's silly, but in the end it hurts YC more than the founder, because of all the other Dropboxes they miss out on. So forgive them for knowing not what they do.
An investor usually has only one chance to pass or invest, whereas the entrepreneur has many chances to succeed. Single founder or not, if you are tenacious you will keep having chances for as long as you are willing to fight. Many more chances than any one investor does.
I'd love to see data to the contrary versus an (admittedly inspiring) anecdote... All of the data that I've ever heard about (from PG and other sources) seems to support that ideas that people who find a co-founder have a better shot.
I think both paths can be successful, but each entrepreneur should evaluate their goals and make decisions from there. A single person who has a great idea will probably be better off building that idea into a business fueled by their own passion than they will be by hunting around for someone who will join them in the quest.
If you come up with an idea in a group or with someone and it's a shared vision, that's one thing. If you're an individual with a vision that no one around you understands, don't throw it in the trash because you can't find a co-founder. Go build it, make money, and then hire people to fill in the gaps.
Regardless of one's opinion of solo vs team, statistically it is easier with co-founders. That doesn't mean it can't be done solo, but you have better odds. And YC makes investments so why wouldn't you play the odds?
When you add a co-founder, you might have increased your chances of success but you certainly have increased your chances of failure.
I thoroughly believe doing it alone (even if you're REALLY good) is a .01% chance, and doing it with complementary talents that have skin, heart, reputation in the game brings that up a ton.
That being said, congrats on being in the 0.01% of that equation.
I haven't hit a success yet, but I've tried to put the puzzle together alone and with others. I think it'd be a lot harder to do alone. We disagree there, and as of today, you have a lot more credibility than I do -- and it's ok to disagree.
We've all got 100 different factors in the equation, not just 1 control to tweak. That's why different shoes for different feet are a-ok :)
Best part is focus, clarity, and instant decision making. If you feel you have a great idea, just go for it. Don't waste time convincing others.
Solo, first-time founders will undoubtedly lack the emotional support systems necessary to give them even a baseline sense of sanity and the mental clarity to persevere. They are far more likely to make stupid and irrational decisions. It was not until I found a cofounder, long after YC, that our company began to behave even remotely like a normal company.
Having a cofounder to share the load with has unforeseen compounding value that one does not have the awareness of to offset in their first company. Maybe in a second or third company you can pull it off by planning around the repercussions of being a solo founder. Unfortunately, without previous experience, you will have no idea how to do that.
That said, upvoted!
Doesn't mean you're an idiot to the facts. Just means that you're willing to temporarily overlook short-term problems / obstacles to pursue a long-term goal.
I'm with you on this one
That is something that always impresses me about teams with a solid level of trust, they can talk about anything. They trust that everyone wants the same thing, success for the endeavor and nobody worries that someone is trying to make them look bad in front of someone else or to the team.
From the point of view of any investor, investing in a single-founder is a much higher risk. In case of any accident the second founder could be of some use, where in a single-hero case it would be a guaranteed lose.
Another issue is that smart investor would try everything in his power to engage all co-founders in a competition, a standard manipulation about position and respect. Very useful technique.
So, it seems possible to do things alone, and a lot of people do, but investing in a single-founder startup is too risky - there is a single point of failure.)
First hand experience tells me too, that starting up a company alone is not only really hard, but slower as well, which these days speed is more crucial than ever.
I have to agree on common wisdom and recommendation here that if you want to start a company and create something with impact try to partner up. Finding the right partners is another whole chapter by itself.
1) A single founder must have already had an exit;
2) A single founder must be able to speak to their own weaknesses and address how to balance those to potential investors;
3) A single founder must have domain experience.
Finally, although most people anticipate a single founder as a CEO with technical skills, I believe that a better single founder is a CTO with business skills.
But I guess we'll see where I end up... ;-)
I would of have be much leaner/faster going solo and not worrying who number 2 was, and did the vast majority of work early on anyway of which those co-founders left. If you know the task you need a co-founder to do, find a co-founder... otherwise keep moving and find a co-founder/employee later...
Besides that there are some good points in the article, it's fairly well written, and being a solo founder has put its author in a good position.
As I am learning daily, techpreneurship has so many facets from the core technical, to biz dev, sales and day to day activities. Can be overwhelming to go solo (assuming one has all the various abilities). Though I am not personally sold no the idea of having a co-founder, I think it helps to bring in folks to augment as needed.
Also, I think a lot of people look for funding, while they don't even need it, but that's another issue..
It would be great to have a group where we can share experiences and motivate one another. Remember, just because you are a solo founder doesn't mean you have to work by yourself.
Would appreciate if you up vote tomorrow around 2pm EST. Thanks!