The Royal We: Single Founder Startups
It has become a common wisdom of sorts in the startup world that if you are running your business without a co-founder or partner, the odds are stacked against you. I personally don’t believe we have enough data to say whether the odds are any worse as a single founder, but I do know it comes with its own unique challenges. More and more, though, I meet people running their businesses, quite successfully, as solo founders. It is at least partly related to the shifts we are seeing in startups as a whole. I’ve learned quite a bit over the last two years as a solo founder myself, so I thought I’d share my observations and some techniques that I’ve found useful for making it work.
But first, let me provide some background. If you happen to follow the world of startups, especially web startups, you’ll know that venture capital is undergoing a change and more startups are being run on less initial investment and that the size of each investment is getting smaller. At first glance, this may not seem like a good thing but it is for the following reasons.
First, it creates an environment that selects for do-ers and makers — people who have the ability to create entirely new businesses literally with their own hands. In many sectors, the startup world consisted of all-star executive teams and millions of dollars in venture capital. We are now discovering that this is a dangerous model for many reasons (which I won’t discuss here.) But now, as companies raise less money early on, this forces them to spend more time discovering what works as a business model before they build out their product.
Second, the earlier a startup raises money, the more risk they are asking investors to shoulder. As a reward for bearing this risk, investors generally get more control of the company. By being able to build an initial product and discover a working business model with less investment, this shifts the balance of power (and the risk, of course) back to startup founders.
One of the key enablers for this shift is the dropping cost of building businesses in the first place. Paul Graham is well-known for articulating this as being due to open source software and the cloud. I also think it’s fair to say that the tumultuous economy we’ve experienced over the last 10 years has contributed to the creation of a generation of frugal, scrappy entrepreneurs.
If we take everything above into consideration and look honestly at the difference between single founder startups and startups run by cofounders, we can see that these forces are relevant to anyone building a new company, regardless of team size. In fact, one could probably argue that if startups are going to keep getting cheaper to build, then it only makes sense that the minimum size of a team necessary to build a new startup should continue to approach zero. One is closer to zero than two or three.
Kidding aside, if we can agree that these factors apply for any company, then there must be a different set of reasons why people think the odds are better for startups with co-founders.
The three that I think are most relevant are 1) emotional fortitude, 2) having more hands to do the work and 3) a richer source of new ideas. Working as a solo founder means that you need to get creative about how to make these three factors work for you, despite your status. It may be more difficult to do so, but if you can learn to do this on your own, then you will probably emerge stronger and better than many other startups, even if they are bigger than you.
For #1, there is no getting around the fact that running a startup is hard. It will test everything you know and believe about yourself. You will feel stupid, under-appreciated, underpaid and both emotionally and physically drained. And that’s just what happens when things are going well. (If you’re not feeling those things at least some of the time, you’re probably not to the stage of validating your business model.) So, perhaps the best reason for having a co-founder is for moral support, someone to help you get through those dark nights of the soul.
As a single founder, I can’t argue that having the right co-founder would not make this much easier. But there are ways of making it work, even if you are alone. The key is to not be alone in other, even more important areas of your life. In my case, my wife helps me get through. In many ways, although she is not technically a co-founder, she helps with a ton of admin work and, more importantly, has helped me stay positive. She has been as much a part of this startup as I have, and has suffered through the same things. If you’re not with somebody, it might be harder or easier, depending on where you are in life. I know lots of single people in their 20s building successful companies on their own.
At the end of the day, it comes down to how you answer two questions: are you ever going to quit and can you adapt? You may not know this before starting, but if you do it long enough, you will have to figure out the answer. I’ve had to do this over the last year myself, and I’ve found the answer. (Hint: I’m still here.)
I could probably simplify this even further. The degree to which you are successful is a function of your ability to mold reality to your needs. This is something I learn a little more about the longer I’m in the game, because the work involved in developing that ability is significant.
In my opinion, #2 (having more hands to do the work) is the least important, although it is probably the one that most people think of as being hardest when they hear about people doing startups on their own. You could have 20 people on your team and there will always be more work than you can handle at any time. In many early stage startups, having too many people can be a kiss of death (not that 2-4 is too many, necessarily.)
Any capable person on a small team wants to contribute to its success and it’s very easy for people to create busy work (or worse, spend money) far too early. When a company is trying to figure out what customers will pay for, it can be a handicap to build too much without knowing the answer to that question. We’ve learned from people like DHH the value of constraints and, from this perspective, there are few more constrained environments than a single person team trying to bootstrap a company into profitability.
Finally, #3 (a richer source of new ideas) may be even more important than #1 (emotional support). It is possible to engage in a variety of human relationship in order to get the support you need. But ideas (aside from leads) are the lifeblood of the entrepreneur. I know that it is fashionable these days to say that ideas are worth nothing and that it’s all about the execution. I don’t agree with that statement because it puts the focus on the wrong part of the idea. It may be true that each individual idea is worth less than the execution of that idea (although they are never worthless), what is really valuable is the ability to generate ideas. A surprising number of people just draw blanks when faced with challenges and those people who can deliver creative, new ideas about any given situation are pure gold.
In general, as the saying goes, two (or more) heads are better than one. So how does a solo founder get better at coming up with new ideas? I personally do it by trying learn about as many businesses as I can. I am fascinated by business models. I’ve done quite a bit of B2B sales over the last few years, selling the earliest versions of Ginzametrics. In my sales meetings, I always try to understand the intricacies of the customer’s business, down to the small details of what makes it tick. Almost always, I walk out of those meetings with more ideas of my own than I ever would have otherwise (and the sales process tends to go better to the degree that I understand their businesses.) There are many ways of getting new ideas. Talk to other startups. Read more books. Do little side projects that are completely unrelated to your product. I personally never feel at a loss for ideas (and have more than I know what to do with).
The last thing I want to write about is an observation I’ve made. Think about all of the successful companies we know. Isn’t it true in many cases (though not all, of course) that even in companies that were started by co-founders, there is usually The One?
The One is that person who really makes the company work. The other founders no doubt contribute a great deal, but if it really came down to it, the company would survive and flourish in much the same way as long as The One was running it. In some cases, this actually happens. Evan Williams, when he was working on Blogger, was reduced to being a single founder for awhile when his co-founders split. He is the reason that company worked. In the case of Mint.com, I believe Aaron Patzer actually was a solo founder and he is certainly the person that everyone in the Valley talks about as the one who made Mint.com work. Whenever I meet other startups, I’m always trying to figure out how they work. Is there one person in the company who really makes it work, or are they really a symbiotic team? In my own experience, it turns out to be half and half. Many of the startups I meet would work just fine with just The One, because they have that right mixture of charisma, determination and product vision.
This is important to note because, even if you start out on your own, it doesn’t mean you won’t someday be able to hire employees and recruit strong players for your executive team. Being a single founder is just a starting place. If you decide to raise money or achieve profitability on your own, you can hire the people you need to come up with new ideas and do more work. You’ve already demonstrated to yourself that you have or can find the emotional fortitude to survive. So what else do you need? It’s not for everyone, but if you have an idea and want to do a startup but find yourself alone, just start doing it. You’ll know soon enough if you’re cut out for it, and if you are, it won’t matter how many people you have on your team.