The Single Founder Myth
I’m in the process of reading The Single Founder Myth, by Mike Taber. He is politely disagreeing with Paul Graham about the value of one vs. more than one founder.
For myself, Mike seems to be using anectodal evidence to support his claim that it is possible to succeed with a single founder. Yes, it is possible, but it isn’t particularly likely
Why?
Strengths of Single Founder
- Single focus, single vision. Breakout successes will more often come from one person, and be diluted by others who seek compromise.
- Easier dilution - a single founder can give away more of the stock, and still retain a huge chunk or even control. That’s more difficult with more founders
- Less costs to cover - assuming that the founder(s) represent a drain on cash, the fewer the better.
Weaknesses of Single Founder
- No one to bounce ideas off of
- No one to help improve - this is the antithesis of “undiluted vision” above, but often tweaks and conversations will make a solution better, not worse
- No ability to play to strengths - if one founder is better at sales, and the other is better at, say, operations, there’s a natural benefit to letting them both do what they’re best at.
I’ve founded two companies, both times with friends. I may start one on my own in the future, but I would much rather start with a partner who can cover some of my weak spots if I can.
Your list of weaknesses of a single founder company hold true for the most part.
However, I challenge the notion that the void created by any of those weaknesses can only be filled by a cofounder and that without that cofounder, your business will ultimately fail.
If a founder interacts with potential customers, doesn’t that offer a sounding board (one of many in fact) to bounce ideas off of? Couldn’t the founders’ friends (who might be single founders in their own right) help one another by having conversations about their respective businesses? Is there something mystical or magical that a cofounder can offer the business that an employee cannot?
Just as there exists a list of pros and cons for being a single founder, there exists a similar list for having a cofounder. But people shouldn’t be misled into thinking that there is only one path to success and that the path requires they have a cofounder.
I humbly suggest that there exists a path to success that does not include a cofounder. It is up the the entrepreneur whether they wish to take that path or if they feel it would be easier to have a cofounder to accompany them down it.
Comment by Mike Taber — October 25, 2006 @ 10:36 pm
Mike,
I definitely agree that it is possible to succeed without a cofounder. Clearly. But I do think it is less likely that you will suceed. As to your comment “Is there something mystical that a cofounder can offer…” - yes, there is, and that’s a sense of shared ownership.
Customers, friends and employees are all valuable, but like the difference between the Pig and the Chicken in the “Ham and Eggs” business, they are just involved. The owner(s) are committed.
Thanks for taking the time to stop by and give me your feedback!
Comment by jb — October 26, 2006 @ 5:22 am
I wasted 4 years working with a partner who wasn’t committed, yet he was a 50/50 owner. Shared ownership does not guarantee the commitment of anyone.
As for being less likely to succeed, I’m not sure I buy that either. It may be true, but for now I don’t buy it. Many people who make this argument base it on the fact that there exists a lopsided statistic that shows more companies with cofounders who succeed than successful companies with one cofounder. This is an indisputable fact. The real question which is more difficult to answer is, why does that lopsided statistic exist?
Most people draw the conclusion that it’s because single founder companies are more likely to fail. Couldn’t the answer be that less single founder companies are started? Single founder companies seem to be the exception, rather than the rule.
You have to be the right type of person to run a one founder company. Many people are not. Why do you believe it is less likely for the right ’single founder’ to succeed than it would be for the right set of cofounders?
There are probably far more cofounded companies started than there are single founder companies started, which is part of where this statistic is skewed. This is in part, supported by the high percentage of angel/vc funded companies who require multiple cofounders.
Unfortunately, we have no statistics on failed companies overall. This means that we can’t find out if the number of failed companies with cofounders statistically matches the number of failed single founder companies. My suspicion is that the numbers are probably similar, but we don’t have any way of proving it one way or the other.
I don’t think we can get anywhere in this discussion without having supporting facts about failed companies. It’s important to know both sides of the story to figure out why the lopsided statistic of multiple vs single founder successful companies exists. Too many ‘this is a fact’ conclusions are drawn without knowing the whole story.
We both agree that it’s possible to succeed as either a single or multi-founder company. We can likely agree that there are far more successful multifounder companies than there are single founder companies.
My question to you is, what evidence is there that shows why that lopsided statistic exists?
Comment by Mike Taber — October 26, 2006 @ 9:33 am
That’s a fair question, Mike, and I don’t know that I have an answer.
Obviously there are a lot of single proprietorships out there, especially in “traditional” businesses. I’ve googled and googled, and all I can find is that a small number of founders (5 or less) seems to be more likely to succeed, but I can’t find any stats to break that down to the 1 vs 2 vs 3+ discussion that we are having.
All I can find are more anecdotal linkslike this one that says “Don’t fly solo.” and cites a bunch of other people in the process.
But I doubt you will find that convincing
My gut says that if you have already succeeded to some degree with a startup, then you are more likely to succeed as a sole-founder in your next startup.
In any case, thanks for the discussion.
Comment by jb — October 26, 2006 @ 12:56 pm
I followed that link, and I can see why most people would find that a compelling argument. When you start citing people like Thomas Edison and envisioning people who are generally regarded as outright geniuses, it’s no wonder it’s a compelling argument. I mean first of all, how many geniuses are there in the world? They’re just not that common.
So the author points at you and says: “You’re not a genius! What makes you think you can do this alone?”
Well, I’d bet money that Thomas Edison’s buddies all thought he was a quack for a very long time. Put yourself in their shoes.
Question: What kind of idiot does 4,000 experiments trying to build something that does the same thing as a lantern or a torch and continues when none of them worked?
Answer: A determined one who will only turn out to be a genius if he succeeds.
People like that are not geniuses until after they succeed. It’s all a matter of perception. Who is to say that you’re not a genius? Nobody can even make the claim for or against until you’re either dead or have done something truly outstanding.
The argument is also based on the concept that in order to succeed as a single founder, you must be a genius. I disagree with that. I’m very good at a lot of things, but I’m by no means the smartest person I know. I know a lot of people who are much smarter than I am, but they don’t own their own businesses. Heck, they aren’t even trying.
What separates me from them is determination. If you have the same level of determination as Thomas Edison, you can succeed at whatever you attempt.
I agree with you about the experience being a factor, but I look at it from the opposite point of view. Moon River Software is the third company I’ve started. The first one lasted 2-3 years and didn’t do very well. The second one had probably about 10 times as much revenue as the first over the course of 4 years, so it was financially about 5 times as successful.
Moon River has been in operating with me as a full time employee for 12 months now. I checked the numbers a few days ago and it has done approximately 20 times as much revenue as my second business did in 4 years, giving me an 80 fold increase.
With each new business, I’ve increased revenue by significant margins. But I attribute that success with my past failures, not with my past successes. I think that you learn more from failure than you do from success.
Thanks for the link, and thanks for the discussion.
Comment by Mike Taber — October 28, 2006 @ 7:06 pm
With each new business, I’ve increased revenue by significant margins. But I attribute that success with my past failures, not with my past successes. I think that you learn more from failure than you do from success.
Comment by Victor — May 19, 2007 @ 2:24 am