Don’t Buy the Myth that Every Startup Needs a Co-Founder

Prevalent wisdom implies that when it arrives to launching a startup, you will need co-founders. But a new research finds that solo founders can in actuality be profitable — if they have the guidance of co-creators. Co-creators are persons or organizations that play a significant job in encouraging a founder establish their organization, but without the need of getting the management or equity of a official co-founder. Based mostly on far more than 100 interviews with solo founders, the authors describe 3 popular types of co-creators: staff, alliances, and benefactors. Of course, doing the job with a co-founder can be the correct selection in some conditions. But the research illustrates how co-creators can provide a lot of of the identical critical assets, connections, and ideas as a co-founder could supply, with a whole lot considerably less risk.

One particular of the earliest and most critical conclusions that startup founders confront is irrespective of whether to go it on your own or find a co-founder. Numerous sector veterans argue that currently being a solo founder is a recipe for catastrophe, and some enterprise cash companies and incubators even explicitly suggest towards funding solo founders. But are co-founders truly the only path to entrepreneurial good results?

There is a good deal of facts illustrating the rewards of doing the job with a founding crew. One particular report uncovered that 80% of all billion-dollar companies introduced since 2005 have had two or much more founders — but of training course, that signifies that a not-insignificant 20% of these productive firms ended up founded by just 1 founder. Google, Facebook, Airbnb, and many other well-recognized providers were being commenced by groups — but Amazon, Dell, eBay, Tumblr, and quite a few other individuals have reached massive achievements with a solo founder. In our the latest research, we explored the aspects that allow solo-started corporations like these to realize success, and we found out a vital nuance: Most thriving “solo” founders are not really solo.

Through a sequence of in-depth interviews as well as an evaluation of quantitative data from extra than 100 solo founders, we located that whilst these folks did not have co-founders with fairness and voting rights, they did have co-creators. Our examine illustrated how people today and organizations who are not formal co-founders can continue to engage in a vital job in assisting founders build their firms (without having forcing them to give up fairness or danger co-founder drama). Especially, we determined a few prevalent sorts of co-creators that can supply considerable guidance to solo founders:

Employees

For founders who now have some funding (from savings, a prior exit, and so on.), it can generally make perception for early workforce to provide as co-creators. Although these staff will ordinarily anticipate some fairness, the means to fork out a cash wage will help founders to get entry to the expertise they require to start off their company with out giving up substantial equity stake (not to mention risking the rigidity and conflict that can often come alongside with co-founders). For example, we interviewed a single solo founder who had just bought an additional corporation for a modest payout. With his earnings from that exit, he was capable to employ workforce for his future venture alternatively than relying on co-founders who would do the job for fairness devoid of income.

Similarly, even though eBay founder Pierre Omidyar is normally credited with staying a solo founder, he released the corporation with the gain of a $1 million payout just after offering a different business enterprise to Microsoft. These money enabled him to employ Chris Agarpao and Jeff Skroll early on, the two of whom played instrumental roles in the company’s achievements. Similarly, while a lot of know Eric Yuan as the solo founder of Zoom, he in simple fact established the organization alongside 40 engineers who followed him from WebEx.

Alliances

Of course, not every single founder is ready to hire personnel correct away. If paid out aid is not an selection, founders can variety win-earn alliances with current corporations. For occasion, we spoke with the founder of an EdTech startup who had a solid technical history, but zero sales experience or connections to the university districts that had been his target shoppers. He viewed as bringing on a co-founder to fill these gaps, but instead, he identified a further business that was previously advertising a portfolio of connected items to multiple college districts. He organized an alliance in which he gave the husband or wife agency a cut of the profits in exchange for their aid marketing and advertising his solution to their current purchaser foundation. This alliance gave the founder entry to the gross sales and marketing and advertising sources he lacked on his possess, without having diluting his equity.

Other illustrations abound. Think about Sara Blakely, the founder of Spanx, which sells shapewear in far more than 50 countries. Her strategy could possibly have never develop into a billion-dollar small business if Sam Kaplan, the operator of the proven manufacturing company Highland Mills, had not taken a prospect on her and agreed to manufacture her product or service. With the assist of alliances like this, Blakely was equipped to retain 100% ownership of Spanx even though primary its meteoric increase.

Benefactors

Eventually, several of the founders we talked to relied strongly on benefactors: folks or businesses who furnished these business owners with connections, cash, and/or assistance devoid of any expectation of reciprocation or compensation. For example, one particular founder we talked to had confined assets and essential a good deal of high-priced gear to commence his firm. At 1st, he assumed he would require to uncover a deep-pocketed co-founder or trader — but then he understood that a near buddy of his owned a tiny organization with the important products. This friend permit the founder use the machines, and even requested his own workforce to assistance the founder out, all cost-free of charge. The arrangement continued right until the founder acquired enough earnings to make his personal hires and obtain his have devices.

To be guaranteed, not all of us have this kind of generous buddies. But there is in fact a extended historical past of benefactors supporting the ambitions of solo founders. Henry Ford, for illustration, persuaded several pals (such as blacksmiths, engineers, and even his boss at the time, Thomas Edison) to donate their time, experience, and resources to assist him construct his first prototype styles. Likewise, Mint’s swift early development was significantly bolstered by solo founder Aaron Patzer’s capacity to persuade quite a few nicely-acknowledged personalized finance bloggers to promote his enterprise on their blogs for cost-free.

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Early workers, alliances, and benefactors could not get the exact same recognition as founders — but these co-creators can perform a central function in the early development of a enterprise. Consider the record one of the world’s most important models, Amazon.com. Sure, Jeff Bezos is the firm’s “solo” founder. But no, he did not construct the enterprise by itself. He had a number of co-creators, which include early workers this kind of as Paul Davis, who oversaw the back again-conclude advancement for Amazon.com and was “intimately included with a lot of areas of acquiring [the] organization started” Tom Schonhoff, who created Amazon’s complete buyer provider department from the ground up and Shel Kaphan, who Bezos has explained as “the most vital human being ever in the historical past of Amazon.com.”

Co-creators like these can give many of the same crucial means, connections, and thoughts as a formal co-founder may provide, devoid of requiring the founder to give up manage or offer with co-founder tensions. This can be a major edge — just after all, it is a whole lot less difficult to say goodbye to an unsatisfied co-creator with no ownership than to an unhappy co-operator with a lot of it. For instance, Mark Zuckerberg’s break up from co-founder Eduardo Saverin led to a large and messy lawsuit that finished with a multi-billion-greenback settlement for Saverin. And predicaments like these are far more widespread than a person could think, with a latest survey getting that 43% of organization founders are compelled to invest in out their co-founders thanks to rifts and electric power struggles. Of class, co-founders can increase a large amount of price, and often they’re undoubtedly the greatest choice — but they are not the only way for business people to get the aid they want. With the ideal co-creators in their corner, a “solo” founder can go a prolonged way.