Does Your Young Startup Need a Co-founder to Succeed?
I recently re-discovered Aileen Lee’s fantastic 2015 post, titled Welcome to the Unicorn Club: Learning from Billion-Dollar Companies. In this report on newly minted “Unicorns”- companies with a 1 Billion+ valuation- Lee reaches a seemingly bold conclusion based on a small dataset:
Teams Win: A supermajority (86%) of new unicorns have co-founders.
The nerd in me wondered, “Does correlation imply causation in this case?”. Meaning, is having a multi-founder team a pre-requisite to scaling your company to unicorn status? To the data! Here is a random sampling of 4,400 companies from around the world, which were founded post- 2000 and for which I was able to extract reliable launch dates and founding team data.
Nearly 70% of companies founded between 2000 and 2014 were started by a solo founder. If having a co-founder is an important ingredient for success, most companies clearly haven’t received the memo yet.
It turns out that upon splitting these companies into cohorts of solo versus multiple founders, one sees virtually no difference in the likelihood of a company reaching “success”, as defined by the now-ubiquitous (and sad) measure of the amount of capital raised.
Stated differently, your likelihood as a nascent startup of reaching a scale warranting $50M or more in capital raise is the same (~5%), regardless of whether you are a solo or multi-founder team.
Why then do leaders of the tech investing world like Lee, and top accelerator programs like Techstars and YC vastly prefer backing multi-founder teams? I present two additional startup metrics as hypotheses:
While the likelihood of achieving capital milestones shows no difference between the cohorts of solo versus multi-founder startups, might the data suggest a difference in how quickly the two cohorts reach these milestones? It sure does.
Multi-founder startups seem to reach key funding milestones faster- on average a year faster- than solo-founder startups.
One year is an eternity in the startup world. In the early days, shipping product faster, closing deals quicker and raising capital sooner are all things that stand between startup life or death. A team that is able to share the load and execute faster towards success/ failure is far superior to one that takes longer to do so.
Startups suck. Everyday. In between the moments of sheer greatness and incredible joy, customers are always complaining, the product is always broken, employees are always quitting, the company is always running out of money, and there is more work to be done than there are hours in the day. Put this all together, and I believe the level of founder “suckage” looks like the graph below (left) on any day/ week. Add in a second founder with skills and temperament to balance out the other, and your overall suckage drops significantly.
The ability for a founding team member to counteract the other’s emotional highs and lows, and to step in to help when the other is struggling adds incredible resilience and longevity to a startup.
Scaling a startup can be an incredibly lonely and long process for a founder. While the numbers suggest that you can eventually “make it” alone just fine, having a partner that complements your abilities and supports you emotionally can make the climb a little bit shorter and a lot more enjoyable.