While fundraising in Silicon Valley, I found a lot of investors used language around ‘superstition’, including investors often being ‘spooked’ by one thing or another, without taking the time to get to know well positioned founders. This has included solo founders.
While I understand how rules can make things easier, I am not sure that Silicon Valley’s ‘rules’ are science based facts around what actually works in investing. I think it’s important to understand the reasons behind these ‘rules’ so everyone can make better decisions and stop missing good opportunities because of non-science based ‘rules’ or superstitions... and to be honest, my grandma, a native American, isn’t even this superstitious or rely on this many signs to make decisions in life.
Paul Graham says that solo founders are a sign of one of two things: a vote of no confidence and it being hard to start a start-up. That is it. This is the reason why it’s listed as a reason that start-ups fail… Because it can be tough and because no one believes in them. What about the things that are harder to fix, co-founder disagreements?
So before saying ‘no’ just because someone is a solo founder, ask yourself — do people believe in them? And are they willing to take care of the mentally difficult aspects of it (hire a success coach, be apart of a co-founder cohort, willing to speak honestly about emotional difficulties, etc.)? If the answer is yes to whatever solo founder you’re looking at. STOP BEING SPOOKED. Seriously. How much money would you be missing out on?
… and in actuality, one of the biggest reasons why start-ups fail is because of bad cofounder relationships. So the number of founders shouldn’t be any more of an issue or consideration at all.
… and if you’re a start-up in California, there are legal restrictions around stock options, payment, decision making power which most start-ups ignore or don’t know about and the start-ups end up violating, which to me, is a bad sign.
Here are some facts…
Percentage of companies with a successful exit by # of founders
Percentage of companies raising more than $10M by number of founders
Here are some solo founders that could have made you, investor, wealthy if you didn’t believe this to be true:
- Jeff Bezos (worth $88.2B), Amazon
- Henry Ford
- ServiceNow, $18B market cap
- eBay, Pierre Omidyar, really large market cap **
- Craigslist, Craig Newmark, $600M ARR (Craig’s a billionaire now) **
- FireEye, $2.7B current market cap
- Magic Leap, Rony Abovitz, $2.5B market cap **
- Sara Blakely (worth $1.7B), Spanx
- Tumblr ($1B acquisition)
- Amir Salihefendic, Todoist (2M users)
- Aaron Peckham, Urban Dictionary (3M + users daily)
- Drew Houston, DropBox * later asked to find a cofounder
- Markus Frind, Plenty of Fish $575M exit
- Aaron Patzer, Mint, $170M exit
So before saying no because of a ‘solo’ founder, consider the reasons behind this myth.
Edit: I removed Warren Buffet as I pulled his name from someone else’s misquoted text. and also added the note about Drew Houston
** Indicates added later edited and added into the article.
 Greenberg, Jason and Mollick, Ethan R., Sole Survivors: Solo Ventures Versus Founding Teams (January 23, 2018). Available at SSRN: https://ssrn.com/abstract=3107898 or http://dx.doi.org/10.2139/ssrn.3107898