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Are Single Founder Startups that Bad?

6 points by DJN ↗ HN
A lot has been written about the "merits" and "demerits" of single founder startups.

Many of the arguments against it are perfectly legitimate. The common theme is that it is more risky.

My question is:

If against the odds, the single founder can 1) implement a working, post-beta product and 2) gains some market traction (i.e. can demonstrate some actual dollar sales, even if they are just a handful)

At this point,the company and its business model have been derisked to a large degree.

Should we still discriminate against that startup in comparison to 3 founders with no product (or an alpha stage product) and no sales?

9 comments

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mrduncan
Are single startups that bad? Not necessarily.

Single founder startups are inherently riskier than startups with multiple founders. That isn't to say that risks can't be overcome though - there are plenty of of single founder startups doing very well.

Odds are though, if you can't find a cofounder who believes in you and your idea, you are going to have a tough time finding customers to do the same.

The comparison of 3 founders with no product to a single founder with a successful product sounds a lot like comparing Tiger Woods to a team of golfers. Sure the team has some advantages, but winning is what counts and I'd put my money on Tiger in that case.

_pius
Single founder startups are inherently riskier than startups with multiple founders.

That's stated without proof, but it sounds pretty controversial. What's your argument for why that's true?

In my opinion, it's hard for a startup to die when it consists of one determined founder working without salary and with practically zero startup costs or commitments to payroll. As a matter of fact, it's practically impossible to kill such a business without literally killing the single founder. :)

mrduncan
Right you are. I should have used a different word than "riskier" there as it doesn't really fit my intention. More precisely, I would say that single founder startups are less likely to succeed (therefore riskier to fund if you are funding them). I don't think that there is a coincidence that YC looks at single founder companies more carefully, or that pg listed being a single founder as the #1 mistake that kills startups [1].

Again though, there are plenty of success stories for single founders. I would posture that the ratio of companies which are ramen-profitible to those which aren't is higher for multiple founder startups however.

1. http://www.paulgraham.com/startupmistakes.html

_pius
More precisely, I would say that single founder startups are less likely to succeed (therefore riskier to fund if you are funding them).

I'd agree with that.

flybrand
"without literally killing the single founder." is the proof that you note in the opening line.

It's true based on your hit-by-the-bus risk alone. The catastrophic risk (something goes wrong with a founder, their family, etc.) is diffused by having a portfolio of founders.

The business is a function of the people; lose a person lose the whole entity.

evgen
When you are talking about an early startup I think it is a reasonable assumption to say that loss of anyone on the core team is going to kill the startup. It might not die as quickly as a shop run by a solo founder, but it is on deaths door and knocking loudly. The only real benefit I perceive in a team over a sole founder is psychological; with co-founders you have people to challenge you (challenging both your assumptions/decisions and challenging you to constantly perform at a high level of productivity.) The biggest killer of solo startups is not accidents but rather frustration and fatigue, with a team you can have someone to pick up the slack if a founder starts getting burned out and you have someone to vent with when frustration levels start to rise.
cullenking
I would have a hard time imagining your chances of success would be even close to equal as having two founders. From what Zack and I have found when working on our site, we have peaks and valleys of output. Both of us have other responsibilities (meaning we are not funded and have other income we have to bring in), and life just happens: when I am in a lull, usually Zack is pushing stuff out and vice-versa. Very occasionally we both lull at the same time and user interaction suffers, traffic drops and we get a swift kick in the ass to get moving again :)

Not to be saying it can't be done, but, be prepared to do nothing but the startup (get some funding, live off savings etc).

DJN
Good comments all round.

Consider this scenario:

Against all odds, a working, stable product has been built, the business has modest traction but yet to really hit the ball out of the park, the business needs external funding.

How does the single founder overcome the "one founder is too risky" stigma?

Mz
I would say if you want to go it alone, do so. Just plan on funding it some way other than venture capital. If you can get venture capital, great! But I don't see why that should be a central concern. If it is a concern for you, then do a comparison of the type of business that VC works for and the type (model) of business you are trying to create. See how closely they line up. If they don't line up at all, then it's a moot point anyway and you are free to do as you please because they don't want you anyway.