Do I Really Need A Co-Founder?
AUGUST 16th, 2020
No, you do not need a co-founder.
That is the simple answer to a complicated question. In the post, I will briefly share why convention says having co-founders is useful and adds value to be investment-ready. That said, I want you to know that there is an important reason why not having co-founders at the beginning of the company-building journey might serve you better in the long term.
I’m sharing my thoughts on this topic because today, more than ever before, people are contemplating a new venue. It is a silver lining of an otherwise terrible time for most people around the world. So I dedicate this post to those about to start and entrepreneurs who are being told by prospective investors that they need co-founders to secure investment.
First, a sobering fact. Research shows that 65% of startups fail because of interpersonal issues within the founding team. I suspect the actual number is higher and it’s a shame this topic isn’t talked about more often. It’s hard enough to get a business model airborne without needing the added stress of having to ‘deal’ with your business partners.
The Benefits of Co-Founders
There are many benefits that entrepreneurs enjoy as a result of having great co-founders.
Having a tight-knit team to ride the rollercoaster of starting and scaling a business is valuable for many reasons. In my opinion, having a co-founder(s) is essential to sharing and load-balancing the stress and excitement that comes with building a new movement.
The diversity of skills can help the company think more creatively and cover more ground. The more co-founders, the more relationships you can lean on to increase momentum in product and business development. More than one founder also helps reduce the risk of momentum stalling if one partner steps away from the business through illness, death or lack of interest (I talk about the co-founder prenuptial agreement here).
Coincidently, this also checks a risk management box for investors. Unless the entrepreneur has successfully returned capital as a solo founder, investors are likely to want to see a diversity of skills and redundancy in the founding team. This is one of several factors investors look for to develop some comfort that should they invest their money is more likely to be returned.
Not all co-founder relationships end up in disarray. Many of them thrive. But, when they do start to go south and without some intervention, the results can be catastrophic. Friendships are lost. Capital is wasted. Once massive opportunities and promising products are tossed to one side, and this says nothing about the impact on the loved ones of the entrepreneurs.
If you are starting out or continuously hearing that you need co-founders to be credible or investment-ready, know this: Momentum talks.
In other words, if you have an idea or a business model that’s surviving but not yet thriving, it’s not likely that finding a co-founder is going to solve your problems.
Having customers and revenue solves most problems!
Momentum in the form of growing customer numbers and revenue can come, and often does, as a result of finding the right team members. These people are not co-founders. They could be freelancers like the folks I use on Fiverr or Upwork, suppliers who help you out or friends who you convince to buy your product or service.
And like attracts like. Customers attract more customers, and before long you’ll be in the ‘good problems to have’ category, which usually involves managing the growing pains of business.
Similarly, momentum helps tap into investors’ greatest fears. They might be missing the opportunity to invest in a company that was, at one point, sitting right in front of them. If an investor sees momentum from a solo founder, their tune might change. Because instead of thinking they need to see co-founders to feel comfortable, they might start thinking about how they can support hiring team members to critical roles to enable more growth.
All thanks to momentum.
The Critical Skill You Learn Without A Co-Founder
In next week’s post, I will walk through how and what I look for in a late-stage co-founder. In the meantime, I’d like to draw your attention to the one critical skill you learn without a co-founder.
It’s how to hire fast and fire faster.
Most people nod when you use this phrase. And that’s often because they can pinpoint an experience where they should have moved a team member on sooner than they did. While that’s a common experience, it’s very different from becoming proficient at hiring fast and firing faster.
No one likes admitting to hiring mistakes because most people (me included), like to think they are good judges of character. I make just as many (if not more) hiring mistakes as any other entrepreneur. But the difference between solo entrepreneurs and those who are members of a founding team is that those going it alone get better at hiring fast and firing faster through necessity.
They build the muscle. From hiring and firing freelancers to doing the same with team members, solo entrepreneurs often find a way to get good at this critical skill. In doing so, they build a tight-knit team that turbo-charges momentum.
And given how many founding teams split due to disagreement, going it alone is a practical and well-trodden path.
The Self-Aware Entrepreneur Wins
While I believe there is value in both the co-founder and solo entrepreneur paths, it’s essential to understand that entrepreneurs who win in either case are very self-aware.
This self-awareness drives them to identify and supplement their blind spots. This usually results in them surrounding themselves with mentors and cultivating support structures designed to help them maintain perspective and high-quality decision making.
Unfortunately, those who lack self-awareness often fail.
One Last Thing…
Being an entrepreneur and adding ‘Founder’ or ‘Co-Founder’ to your title signals that you are curious, that you will find a way. It’s a display of a state of mind. Whether you are starting your journey or keep hearing ‘you must have co-founders’, know that there is an alternative.
Know that momentum matters, and generating it can be done without co-founders. Know that developing skills to hire fast and fire faster is one of the first to be mastered, that it will serve you well in the future. Most importantly, know that how you act on self-awareness is a superpower in and of itself.