Challenging the Conventional Wisdom
A TechCrunch article published in 2016 argued that startups that have more than one founder aren’t necessarily more successful. The author pointed out that at the time of writing, 52.3% of startups that exited (were acquired or IPO’d) had only one founder. This analysis flew in the face of conventional wisdom: that teams needed two or three co-founders to make it. While I don’t dispute the findings, I do think that summary statistics miss a number of nuances that are critical when deciding whether or not to bring on a co-founder. In this article, we’ll dive deeper into the dynamics that are likely to drive this decision.
Let’s face it, building a tech company is comparable to the Navy Seals’ Hell Week except that it lasts years if you don’t give up early. It’s a grueling journey that pushes your mental and emotional endurance to the limits with many highs and lows. A co-founder is the closest team member that you’ll likely have, and she is the one in whom you can confide since the rest of your team is looking to you for stability and leadership. Your co-founder will both cheer you on when you hang your head and will pick up the slack when you are simply overwhelmed with work.
Beyond helping you through the valleys along your journey, co-founders can help with the neverending work as well as let you focus on leading the entire team, setting the vision, fundraising, and hiring—the main founder's key responsibilities. Even if you have an engineering or marketing background, it's incredibly difficult to perform your key duties well while also leading other functions.
The Triple Challenge of Early-Stage Startups
In the earliest stages of a startup, you have three key goals to accomplish:
- Build a product that meets your customers' needs much better than anything else;
- Find an effective and efficient distribution strategy enabling rapid customer growth;
- Perfect your pitch and raise capital for the next part of your journey.
As the lead founder, you are uniquely qualified to develop your vision, assemble a team, and convince venture capitalists and angels to invest in your startup. Beyond the fact that leading all three efforts is an overwhelming amount of work, it's very rare for one individual to specialize in all three areas.
Single founders will most often bring on a technical co-founder who can lead product development or a marketing or sales co-founder who can lead customer growth efforts. From an investment standpoint, startups that are led by co-founders who specialize in their respective fields seem a lot less risky. It's very difficult to execute all three well, and investors have greater faith that a team will succeed if they see that the co-founders have unique experience in marketing, sales, and engineering.
The Specialization Advantage
The complementary skills that co-founders bring can be invaluable. Consider a visionary founder with a background in business development. This founder might have exceptional abilities to identify market opportunities and build relationships with customers and investors, but may lack the technical expertise to build a robust product. Bringing on a technical co-founder with deep engineering experience creates a powerful combination.
This specialization allows each co-founder to focus on their areas of strength. The technical co-founder can concentrate on product development, technical hiring, and ensuring the technology scales appropriately. Meanwhile, the business-focused founder can devote full attention to customer acquisition, fundraising, and strategic partnerships.
Additionally, specialized co-founders can also provide critical checks and balances for each other. A technical co-founder might rein in unrealistic product promises, while a business-focused co-founder might push for pragmatic solutions that can reach the market quickly.
The Potential Drawbacks of Co-Founder Relationships
Having stated the benefits, there are also drawbacks, however.
One counteracting risk that investors also evaluate is team cohesion. Some co-founder teams have explosive breakups, which can spell the end of the startup as conflict detracts from critical work and poisons company morale. You'd be well-served to work with your potential co-founders for at least a few months before seeking investment to make sure that your personalities or working styles don't clash.
Co-founder relationships require substantial alignment on vision, values, work ethic, and decision-making styles. Misalignment in any of these areas can lead to debilitating conflict. Even minor differences that seem manageable in the beginning can amplify under the extreme pressure of startup life, leading to communication breakdowns and paralyzing disagreements.
Additionally, equity splits among co-founders can become a source of tension, especially if contributions start to feel uneven over time. These conversations are often emotionally charged since they involve both practical considerations about value creation and deeply personal feelings about recognition and fairness.
The Executive Alternative: Hiring Instead of Partnering
Another important point to consider is that you don't necessarily have to bring in co-founders to help you with product development and marketing. It's also possible to fill those roles with experienced executives who can lead strategy, execution, and team building in their respective functions.
The main reason to bring someone on as a co-founder is to ensure their commitment by offering them a substantial stake in the company (usually more than 10% of founder stock). However, if you are able to deeply convince an executive-level leader of your mission and compensate them with a substantial equity option (usually 5-10%), they might be just as committed to the company as a co-founder; in fact, they might be even more committed than a reluctant co-founder.
This approach offers several advantages. First, the hiring process allows for a more rigorous evaluation of fit and capabilities than might occur in co-founder relationships, which often form through existing personal connections. Second, the founder maintains clearer decision-making authority, potentially allowing for faster execution. Finally, if the relationship doesn't work out, replacing an executive is generally less disruptive than a co-founder departure.
However, if you go the hiring route, the main thing that you'll be missing, of course, is the camaraderie and the empathy that a co-founder can bring.
Support Systems for Solo Founders
If you decide that a co-founder is not right for you, I recommend that you surround yourself with resources that will hold you accountable, in whom you can confide, and that will coach you through the many valleys in your journey.
One such supporter can be a mentor with whom you have a strong rapport and who is reliably available to guide you through the tougher parts of your journey. Look for mentors who have successfully navigated similar challenges and who can provide both tactical advice and emotional support. The ideal mentor will be candid enough to tell you hard truths when needed, yet supportive enough to help you work through difficult situations.
Another great resource is an executive coach who is trained to work with entrepreneurs. Top-notch executive coaches can be expensive to engage, but many founders feel more at ease sharing their insecurities and the truly messy situations that they have to overcome. Executive coaches bring objectivity and structured approaches to problem-solving that can be particularly valuable when you're deep in the weeds of running your company.
Additionally, peer groups like Entrepreneurs' Organization (EO) or Young Presidents' Organization (YPO) can provide structured forums where solo founders can connect with others facing similar challenges. These organizations typically organize members into small, confidential groups that meet regularly to discuss business challenges and share experiences.
Making the Decision: Personal and Strategic Considerations
Ultimately, the decision to bring on a co-founder should be based on a careful assessment of both personal and strategic factors. Consider your own strengths and weaknesses honestly. Where are the gaps in your skill set, and how critical are they to your company's success? Can these gaps be filled effectively through hiring, or do you need the deeper commitment that comes with a co-founder relationship?
Also consider your personal working style and preferences. Some founders thrive on collaboration and the shared emotional journey of building a company together. Others prefer to maintain clear decision-making authority and may find co-founder dynamics challenging to navigate.
Finally, consider the specific demands of your business model and industry. Some businesses, particularly those requiring deep expertise in multiple domains, may benefit more from a co-founder arrangement than others.
Conclusion: No Universal Answer
There's no universal right answer to the co-founder question. While statistics may suggest that solo founders can be just as successful as founding teams, the right choice depends on your unique circumstances, capabilities, and the specific challenges of your business. Whether you choose to bring on a co-founder or build a support system through other means, being thoughtful about how you'll address both the practical challenges and emotional demands of the founder's journey is essential to your startup's success.
