You Don’t Need A Co-founder
The under-appreciated risks of founder marriage
The best venture capitalists and accelerators all insist that entrepreneurs need a co-founder to succeed. We think that is demonstrably and obviously false.
According to Reboot, roughly 65% of companies fail because of co-founder conflict. A study by The University of Southern California Marshall School showed that 10% of co-founders break-up within the first year and a whopping 45% end by year four.
To learn why the ecosystem places so much emphasis on co-foundership, we surveyed top VCs in New York. Here are the top three reasons we found that investors prefer backing companies with two people at the top:
- Building a company is lonely, and founders need personal support
- Team building is “the” critical skill of any good entrepreneur
- There needs to be one technical person at the helm
We completely agree with all three reasons. Where we differ is on the solution. The emphasis VCs place on co-founding teams is outdated, over-generalized, and dismisses entrepreneurs who would be better served choosing a different path. Specifically, we see three big under-appreciated risks that the emphasis on co-foundership puts on startups.
The under-appreciated risks of finding a co-founder
Time wasted
Lacking a co-founder, accelerator programs like Y-Combinator and Techstars are near impossible to get into. Several VCs we surveyed suggested they would *never* invest in a first-time solo founder. In response, founders stack investor decks with photos and bios of people who aren’t actually working on the business. They choose partners who aren’t yet committed and might never be. The tragedy is that founders waste precious time and energy recruiting people who aren’t dedicated, rather than shipping products, talking to customers, and building a business.
Shotgun co-founder weddings
The second risk is shotgun co-founder weddings. A business partnership is arguably more involved and time-intensive than marriage. The co-founder divorce rates above speak for themselves. A proper pre-engagement dating period is needed to determine alignment and compatibility.
Competing vision
Building a startup is about sparking and maintaining momentum. Introducing a second founder presents a competing vision, even if not immediately apparent. It’s incredibly rare that two people share the same vision and strategy. Staying solo can allow you to quickly explore different directions, validating or invalidating ideas on a hunch without needing buy-in from anyone else. Divergent thinking is great, but only when communication allows for healthy conflict. Turning initial chemistry into a compatible partnership takes time. The best co-founding teams are the ones who have worked together at length and know how to cooperate.
Co-founders are ONE way — not THE way
There is an abundance of resources available to entrepreneurs today. Finding a co-founder is only one of the possible routes to building a successful startup team and it’s not right for everyone.
Here are some other paths and resources we’ve seen work:
Utilize flexible talent to validate your idea
There are new platforms that allow founders to find cost-effective designers, marketers, engineers, accountants, and more. There are also agencies that build great prototypes, produce high-quality investor decks, and launch products quickly. Most will work for a mix of cash and equity just like full-time employees. As a word of caution, be wary of agencies that offer free or heavily discounted work for large (5%+) upfront equity stakes without vesting. You get the quality of work that you pay for. The average agency has two months of cash in the bank at any given time. Thus, agencies do not typically have the time or bandwidth to service your startup effectively because their best people are working on their larger, high-paying clients.
It’s typically easier for founders to attract top talent with a little momentum.
Using flexible resources early on can help you get to market faster and cost-effectively test your product idea on real potential customers. It can bring you the technical insight you’re wanting and help you uncover what traits you are actually seeking in a potential co-founder or full-time hire. Having a working prototype and early customer data also helps attract investors. It’s typically easier for founders to attract top talent with a little momentum.
Create an advisory board
Advisory boards are typically composed of experienced entrepreneurs or industry experts who work for small amounts of vested equity (0.10% — 0.25%, two-year vesting, 3-month cliff). They are a great way to utilize senior people for guidance and advice. It’s like leveraging 80% of somebody’s wisdom at 10% of the cost it’d take to bring them on full-time. When hiring advisors, use a contract that ties equity amounts to a level of expertise and a time commitment. Hold your advisors accountable to the agreement. Do not bring on advisors for names alone. As a rule of thumb, reserve equity stakes for people who are helping you build over the long run.
Combat loneliness with leadership coaching
Building a startup can be a lonely road. This is the top reason VCs advocate for co-founders. We’ve seen great success in founders combatting loneliness both by composing an advisory board and hiring a leadership coach. While good leadership coaches cost money, finding the right one can be a game-changer. They can point out your blind spots, help you maintain high energy, and solidify the “why” behind your founder journey. While the last piece might seem trivial, our experience has been quite the opposite. Becoming a founder means giving up some piece of — if not all — your financial safety. It also means having to create the support system a steady job provides. There will inevitably be challenges, so you want to make sure what you’re building is important enough to you to push through when things get tough. Lastly, leadership coaches can help you get good at… leadership! A skill that will come in handy no matter which road you take in building your team.
If team building is “the” critical skill of any good entrepreneur, the first step is knowing that there’s more than one way to do it.
Choose A Path That Works For YOU
There are multiple ways to be a founder and endless ways to build a team. Co-founders are just one of those ways. Once your idea gets traction, it’s easier to attract talented full-time people. You might just find that perfect co-founder after all. Or you might find that having a co-founder isn’t the path for you. Instead of getting attached to finding that perfect person, why not view the earliest phases of building your company through the lens of dating and learning? Understand what you’re really looking for in a team. Utilize advisors and leadership coaches to your advantage. Hire flexible talent to validate that your product or service is something people really want. Focus on building a support system based on mutual respect and trust.
If team building is “the” critical skill of any good entrepreneur, the first step is knowing that there’s more than one way to do it.
