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.
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 that can lead product development or a marketing or sales co-founder that can lead customer growth efforts.
From an investment standpoint, startups that are led by co-founders that specialize in their respective fields seem a lot less risky. It’s very difficult to execute all three well, and I have greater faith that a team will pull it off if I see that the co-founders have unique experience in marketing, sales, and engineering. 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 co-founders for at least a few months before seeking investment to make sure that your personalities or working styles don’t clash.
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 that 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 just as much committed to the company than a co-founder; in fact, they might be even more committed to reluctant co-founder. 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.
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. 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.