Question re solo founders:
"A startup is too much work for one person" and if you can't convince even one friend to join you, that doesn't speak well for your idea! On the other hand, a bad hire/partnership can ruin the company. YC gives signal it really prefers to look at teams than individual applications.
Q: Do you have have advice or rules of thumb re how much time a solo founder should put into finding partner(s)? Or thoughts re how much to prioritise this, vs. just writing code and talking to users to finish initial version yourself?
I don't mean this to be just focused on "getting into YC" but more in general: what's the right way to think about fixing this problem (being a solo founder) vs tackling other things like actually building something initial users can be using? For software ideas surely it is occasionally sensible to make at least a prototype and actually get some users before ever buddying up? Or if I've got this far but am basically still going it alone, am I doing something wrong?
We really prefer at least two founders, but it's not a deal-breaker. We funded Drew Houston of Dropbox as a solo founder, but he got a cofounder before the batch started.
A bad cofounder is far, far worse than no cofounder.
I'd spend maybe 20% of your time looking for a cofounder, and the rest on your business. But don't force a cofounder if you don't have a good, organic option.
The more progress you make on the business, the easier it will be to get a great cofounder.
>The more progress you make on the business, the easier it will be to get a great cofounder.
I am not trying to be pedantic...but are they really a cofounder if you've hashed out the idea and made progress on the business prior to their involvement? It's an important question in my mind, because a cofounder typically receives far more equity than virtually anyone else that becomes involved with the business after it is founded, and it also carries legal ramifications.
I have personally been in a situation where I founded a company and created its technology, and when I needed money, someone volunteered to be my "cofounder". He eventually stole my IP, transferred it to a new corporate entity, sold it, and made more than $60 million. I wound up with nothing. While what he did was outright theft, I assisted him in it and made the legal battle infinitely more difficult for myself by declaring someone that clearly had nothing to do with founding the business a "cofounder" early on.
It would disqualify nearly all cofounders of famous startups if they had to form the company before one of them made progress on the idea. For example:
Steve Wozniak built the original Apple I attending Homebrew Computer Club meetings. Steve Jobs saw the prototype, realized it would be huge, and then talked Woz into founding a business around it.
Larry Page had started Google as a doctoral research project to download the web and make sense of its link structure. Sergey's original startup idea was to order pizza via fax machine, and he'd started work on it with some other friends before abandoning it to go work with Larry.
Mark Zuckerburg created FashMash and then Facebook and had some early traction among his house at Harvard before convincing his cofounders to join.
Drew Houston created DropBox as a solo founder and then convinced Arash to join after getting accepted to YC.
Apoorva Mehta started Instacart on his own and then got cofounders after YC.
The usual rule-of-thumb is to give close-to-even equity splits to cofounders here, because most of the work of building a company lies ahead of you, not behind you. You definitely do want to vet your cofounders for trustworthiness and have some idea whether they're interested in founding a company with you or whether they just want your idea. Usually the best defense to the latter is having something the former needs, either deep domain knowledge or technical skills or connections in the industry.
"Mark Zuckerburg created FashMash and then Facebook and had some early traction among his house at Harvard before convincing his cofounders to join."
I don't think it went down quite like that? I just can't let
that little dude slip into history as the brilliant, modern day Jobs, or Gates. In my mind, he capitalized on someone else's idea--with the help of a lot of people, and got very lucky. Whenever I(under a pseudonym) use his site, I wonder why there isn't more competition. I sometimes think the very act of stealing someone's idea/site is the reason for Facebook's success? "I better not question that new hire--I'm not sure I even belong here? I was wrong on mobile? Maybe I should just follow their advice?"
Ideas aren't worth much. The real idea that Steve Jobs and Bill Gates had was that personal computers and software were compelling products that would have value to ordinary people.
I suggest you read the book "Hackers" by Stephen Levy (aside from probably giving more accurate insight into the origins of Microsoft and Apple, also includes timeshare, Unix, the free software movement, and IIRC Lisp Machines in its recounting, all in a lot less space than Isaacson's complete ballsup).
>You definitely do want to vet your cofounders for trustworthiness and have some idea whether they're interested in founding a company with you or whether they just want your idea.
This advice would have been handy for the Winkelvoss twins, who hired Zuckerberg to build their social network project. Instead he secretly held their project back while building his own version, including their ideas. The rest, as they say, is his story.
Convincing arguments have been made that it's usually a better idea that co-founders get equal equity than not, to prevent arguments about said split which are much more likely to doom your startup. It's like that point about arguments in a relationship: would you rather be right or be together?
Edit: I see you added that second paragraph after I wrote this out. I'm sorry for your situation, that must've been horrible. However, it sounds like in that situation the toxicity of the co-founder is more to blame than any initial attribution or equity split.
> The founders should end up with about 50% of the company, total. Each of the next five layers should end up with about 10% of the company, split equally among everyone in the layer.
This is the typical, and exploitative, arrangement in silicon valley! In today's climate, the founders often get money very early and start hiring right away. They have no real personal risk in the venture, and even if it fails completely their "founder" status will serve them well at the next go-round.
The founders had an idea and some rough prototype, but the product is built and the company direction is executed by the next 10 people, and the next 10, and so on. But while the first 10 Employees get to share 10 percent of the company, they sit side-by-side with the 3 founders who have 10-20 times as much as any one of them.
We all take it for granted that the founders' contribution should be worth so much more than mere employees. But who writes these blog posts on how to distribute equity, with 50% to founders and 10% to each "layer" after? Well, it's not the employees. It's the investors and founders themselves, who need to solidly stand behind the idea that at a company that faced failure every day and with every competitor launch and had to get every aspect right, in the end the people at the top should enjoy mega-riches and early retirement, while the lowly workers enjoy a nice bonus equivalent to a year or two salary.
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If you believe in avc.com's guide of 50% to founders and 10% to each subsequent "layer", I would counter that the founding team is itself a layer, and each layer should be compensated equally. There is no justification for the first layer (founders) owning as much as the other layers combined.
If you believe it's exploitative, why not take the other side of the trade? Go become a startup founder yourself.
Lots and lots of people in Silicon Valley do that, and ultimately, that's what's causes market correction. If there are way more startups out there than talented engineers capable of building products, then the engineers can negotiate a much better deal for themselves. Or they don't and go out of business, but if that's the case, then your initial assumption that they have no real personal risk in the venture doesn't hold.
I know a senior engineer (Boston area, not Silicon Valley) that's made multiple millions multiple times as an early employee. She comes in to startups after they've fucked up their v1 so badly that they can't bring it to market, negotiates a very sweet equity package, fixes the product, and then cashes out when they IPO or get bought.
The issue isn't me. And, I might already be a founder. That's besides the point.
I'm happy for your friend. That's excellent, to be able to negotiate well. Most people don't. And most people are TOLD, repeatedly, that 1% is an "excellent" percent even as the earliest joining a company.
The word "exploitative" is as tricky today as in centuries past. If the employee doesn't want to work for peanuts, why not go somewhere else? The market will eventually correct, compensate everyone fairly (by some definition of "fair"), etc. Well, my argument is not that the market itself is broken, because employees enter them under free will. My point is that engineers (early and otherwise) should not accept that their contribution is worth so much less than the 2-3 people on top. This is especially true for the first engineer, who joins at 1% next to the founder at 40%, but it applies to every after as well.
I've been both a founder and an early employee. As an early employee, I always received a salary, and knew I could leave any time I felt like it. My level of risk was low, and I was perfectly happy with my equity knowing I had a nice upside without much downside at all.
As a founder, I haven't paid myself in months, and have commitments to my customers such that I 100% can't just shut things down and leave to do something else without killing a lot of relationships and getting a terrible reputation.
Of course, I can only speak to my own experience, but I'm satisfied with my amount of equity in both situations.
I've been a founder and an early employee as well. As a founder, you sign on for the bad times. As an early employee, I always got duped.
As an early employee, I've had to go without a paycheck on multiple occasions. I had to go without healthcare for several months even though I was told the company already had it in place.
Sure, I could leave anytime I wanted. But I would forfeit all my stock if I left. Even if I left because they stopped paying their engineers. Besides, the money was coming. Why leave now? They promise they will make it up.
I've been told that everyone in the company had to take a 20% salary reduction to keep things alive. I could have left then too. Again, forfeiting my shares. But again, I bore the downside of the business without anywhere near the potential upside.
The important part is that none of this was malicious. The founder just had no idea what he was doing, and thought they had to lie for the good of the company.
As an early employee, I hired people into both the companies I'm speaking about. I'll never do that again. I haven't ever done that again. I urge everyone to not be the first engineer.
As an employee you're limited by the quality of the C-suite.
If you swap equity for salary, it's important to understand that you're not gambling on the quality of the product or the idea, but on the quality and integrity of the people you're working for.
You probably won't have enough information to make a good decision about their quality and integrity until you've been working somewhere for a while.
But generally, if one promise doesn't work out, you have good reason to suspect others won't too.
Equity is really just a promise. So you should have a lot of evidence of reliability and integrity before you count on it.
I think you're quite right. I tend to feel that people want to do good, and make judgments based off that.
Since my early mistakes, I've started telling myself "You're not negotiating with the person across the table, you're negotiating with unknown parties and circumstances in the future".
In all situations, you really have to look after yourself. If someone ever asks you to work without pay, they're asking you to up your risk. Demand more equity. The greater the risk, the greater a return you should get, otherwise you're making a bad investment.
Founders can be assholes. So can investors. Always look after yourself (and your team, if applicable). Too many assholes and horror stories not to be wary.
I help out as a mentor at an accelerator in upstate NY. Unfortunately, we see solo founders rushing to find a co-founder just to go through accelerator programs.
I wish your reply was shared widely with anyone applying to any accelerator anywhere...
(Most) accelerators are the problem here. They stack all the incentives on adding a cofounder no matter what, and none of those that I've closely known would stand behind the idea of "A bad cofounder is far, far worse than no cofounder." E.g. if your original cofounder leaves, they'll lay big penalties on you if you don't refill that seat immediately, even if it's bad for the company.
What investors tend to leave out here is a real incentive for them, as a class. It's far easier to fire a founder if there's two. If there's two, it's often easy to make them turn on each other if they want one forced out. Forcing one of 2 out tends to be much less frowned upon, than kicking out the sole founding CEO and replacing him with outside management. Having 2 cofounders is big leverage for keeping the founders in line.
It seems like you really need to know the potential cofounder as a person, though, otherwise you won't be sure what they're like when stressed or making mistakes. Doesn't this limit it to people you already know fairly well?
In need of a cofounder? Join the club. Or rather a club, where you will get to meet new people and, if you choose the right kind of club, get to see them in a high pressure situation.
Sorry, my view is that a solo founder
can be just fine. I'm a solo founder and
believe I don't need and shouldn't want
a co-founder.
Here's why: The bottleneck in my project is just
cutting my way through bad documentation --
all the rest, especially the crucial, core,
secret sauce, original applied math,
technical part along with typing in the
code itself and getting it into good shape,
has been fast, fun, and easy.
A co-founder might be able to
get Windows Server 2012 and
SQL Server Enterprise Edition or
some such installed and running
quickly while I would have to do
all the mud
wrestling with wildly obscure
and inaccurate documentation.
Okay, but I really should,
as is commonly said, know my business
and, thus, should get SQL Server
running myself, take notes, etc.
And when I have good revenue,
I will just call for paid support
and get a tutorial, explanations
for each step, corrections when
the steps don't work, take notes
again, etc. -- still no co-founder
needed.
But, again as founder and 100% owner,
I need to "know my business". So, no matter
how obscure the Microsoft documentation is
for, e.g., how to get a connection string
for SQL Server (took a week of mud
wrestling, in the dark -- with
clear and correct documentation
I could easily have done it in
10 minutes), it's just work --
mud wrestling in the dark with
alligators and poisonous snakes
while being treated to
a barbed wire
enema and an unanesthesized
upper molar root canal procedure
while being poked two dozen times
with a red hot branding iron --
I have to do.
For a prototype or using lean
development methodology, no thanks:
I just wrote the darned code,
wrote it as fully solid, production
quality code, at least according
to common standards for such code.
I tested it, timed it, documented
it. I was in a team at IBM that
shipped IBM Program Product
code (IBM's highest quality
software category), and the code
I've written for my startup
looks as good as Program Product
code to me. And I documented the
heck out of the code because I know that
if my startup works and becomes
a big thing, then I will have to
return to some parts of the code
to put in tweaks for high
scalability, e.g., for Web user
session state, for a positive
integer n, partition all the
possible session state keys,
each a GUID, into n partitions,
have one session state server
for each partition, and, then,
in the server side code of
a Web page, given a key,
do a fast lookup to find the
IP address of the session state
server for that key -- simple
code tweak, but, still, I want
the code to be tweaked
very well documented.
Net, for the crucial, core work,
I don't want to delegate it.
So, no need for a co-founder.
So, no risk of any co-founder
disputes. So, get rid of one
of the worst risks for a startup.
If my startup works, then I will
start to hire but not any co-founders.
Instead, the first hire will be
an office manager! She, likely
a woman with a lot of social
maturity and general business
experience, will do the first
interface to the phones, mail,
e-mail, bookkeepers, accountants,
lawyers, landlords, bank account,
credit cards, expense accounts,
the advertisers,
billing, depositing checks,
paying bills, record keeping,
etc.
As that job grows, she
can hire assistants. Eventually
her work will be that of the
COO, CFO, and HR. She would
be a candidate for one of
those slots or just remain
as my assistant or something
else.
Some of my work will become that
of the CTO, e.g., run the server
farm.
And in time I will want a
staff, e.g., to come up with
ideas, study issues, propose
solutions, present their
work in papers and talks, etc.
During the initial growth, I
will be able to manage all that
work because early on I will have done
the first, small, beginning
cases of all of it so know
at least the first parts.
But, during the growth, no one
hire, if they left, could sink
the company. The only key
person in the company will be
me.
So, grow? Yes. Hire? Yes.
Co-founder? No. E.g.,
I helped start FedEx, was
right there, my office next
to COB, CEO Fred Smith's.
I saw a lot of how he did it
and saved his company twice.
He had no co-founder.
This stuff about co-founders
looks like something equity
investors want: It appears
that they want
(1) a ready source of a new
CEO if they don't like the
current CEO, (2) want the
power of a solo founder as the
unique, key player
diluted, and (3) want to
be able to have more control
over the company via divide and
conquer among the co-founders.
No thanks.
The whole startup equity funding
situation looks like very fishy
business to me: So, clearly the
way it works, nearly always, is,
I do all the work to go from
nothing to a product or service,
with users or customers
and revenue, and then someone
with a term sheet and a checkbook
might write me an equity check.
But, as a solo founder, it won't
take much revenue to make my
little sole proprietorship
profitable, a life style business.
E.g., at current ad rates, keeping
a $2000 server at my left knee busy
sending Web pages can get me
by far the nicest income of my life.
Then, if the business is good,
that is, lots of people on the
Internet like my work,
I'll have plenty of cash for
organic growth without equity
funding. If my business is not good,
then I don't deserve
equity funding anyway.
Basically as a solo founder,
I can't get equity funding until
after I don't need it.
But, I shouldn't much complain:
US Main Street businesses,
e.g., auto repair, restaurants,
convenience stores, print shops,
plumbers, electricians,
HVAC companies, etc. don't
get equity funding, and
my information technology
startup needs much less
capex to start and opex
to run than any of those
Main Street businesses.
So, what startups get offered
and take equity funding?
Maybe a promising startup
with four founders,
each with a maxed out
credit card and a pregnant
wife? I only have a debit
card, no credit cards.
I don't have a pregnant
wife, don't even have a wife.
So, maybe I'm seeing more
reason to be a solo founder.
> The more progress you make on the business, the easier it will be to get a great cofounder.
Very helpful, cheers. "The more progress you make on the business, the easier it will be to get a great cofounder" -- agreed -- and being accepted to YC would itself more than help convince people to join the team also :) I hope there are more Drew Houstons out there with confidence to apply.
Parker Conrad of Zenefits was also still a solo founder in his application video. If a founder intends to add a co-founder before the batch starts, how much does that impact your view on them as a solo founder during the application process?
Please don't let the lack of a cofounder discourage you from applying. It's definitely a huge help to have a good cofounder, but we accept great founders regardless. There's a tendency for people to want to reduce the world to black-and-white rules like, "yc doesn't accept single founders", but it simply isn't true. We are specifically looking for outliers, so any such rule would be a huge mistake (because the big hits are, by definition, exceptions).
Thank you for that! What makes you believe that someone or something is an outlier? How much of it is a gut feeling versus observable data, for example?
No two are the same, but generally a good sign is if they have outlier behavior in their past. For example, if you won a gold medal in the Olympics, there's a good chance that you would at least get an interview -- the level of determination and persistence required to accomplish something like that would definitely be helpful in founding a startup. (that said, I don't know that we've ever actually funded an Olympian) A more common example would be creating a popular open source project (e.g. the creator of Sails.js is in the current batch).
Hi Paul. I applied last time with a video with the team, however with updated rules (they own less than 10% each) then they're not supposed to be in application video; I started my company many years ago and small team relatively recently joined as relating to the equity. I don't have time to redo an application video, and with a comment on HN from someone at YC during last application process - applying early increased chances of being selected, meaning once startups selected for interview that the application process still remains open - the odds feel negligible. Any thoughts?
... seem to show that very successful sole founder stories do exist. But nearly everything from the YC orbit says "find a partner or you'll fail," etc.
I find it even in the case when two or more founders were involved in starting some of these most successful companies only one of the founders took the initiative in the very early days.
The truth is it only takes one person to start something. And once you build something that has or can have tremendous value people will just join you naturally.
There is no such thing as the perfect moment to start something. You just have to do it and keep doing it and things will happen.
I came here to ask the same question. I started working on an idea of my own and I have many friends who are very talented but none that really seem to want to commit to something risky and obviously I don't want to force someone to come if they are not interested in taking the risk with me.
This is the main reason my next application to YC will be solo but I am certainly open (and would prefer) a partner.
I think you're still missing the importance of the cofounder. It's to demonstrate that you are able to convince at least one single person to join you on the journey. Running a startup is basically one continuous stream of persuasion. Persuading customers. Persuading recruits. Persuading investors. Persuading employees. Persuading investors. Persuading the media. Etc. Etc. Building product, while fun, is easy (in most cases). Being able to persuade lots of people to row your boat in the direction you want is singularly difficult. Until you persuade that one person to join your pursuit, it's extremely difficult to think you have the skills of persuasion necessary to carry out the nearly impossible task of starting a startup.
in my opinion, after starting multiple failed companies and one that seems to be working so far, individual founders are the exception that prove the rule.
at the end of the day, it's just a ton of work. even very very hard working and smart people are not physically capable doing this much work on their own - in terms of actual output founding a company is like 6 or 7 fulltime jobs' worth of deliverables, shared by 2 or 3 founders.
if you're a single founder, i think you'd have to raise money very early and make some key hires quickly in order to succesfully do it. from what i can, that's usually the case with single founders who were previously part of an all-star founding team that had a good exit.
