Monday, August 23, 2010

Co-founder Myth = False Prophesy of Entrepreneurship

I came across a new blog, Founders Block, covering the startup scene in NYC and which aims to be a resource for new, young entrepreneurs. Love their idea and mission.

One of their recent blog posts, "The Co-Founder Myth: Why You Might Not Need One, Especially in NYC", was well thought out and somewhat practical, but I thought it was sending the wrong message to new entrepreneurs in NYC. As discussed in their blog post, I am aware of the lack of technical talent compared with Silicon Valley, but promoting the notion of single founder startups is simply short-changing the potential and probability of success for entrepreneurs. Here is my comment on their blog post:

I believe you're seeding a destructive message here for startups and new entrepreneurs. Sort like teaching a minor league baseball player the wrong hitting stance as he's trying to make it to the bigs. Not's just about saving equity or making things easier in not looking for a co-founder, but trying to increase your chances of success.

There are various studies that have tracked the probability of success of technology startups over the past decades, such as MIT's Edward Roberts. The success rate exponentially jumps from one person to two people, and then continues to increase to three and four people. It's been a while since I read these studies, but I believe it flatlines after 4 founders. How many tech titans do you know that were started by one person? Even mid-sized tech company started by one person?

There is a reason why the recent trend of tech incubators prefer teams of at least two people and why prominent long-time VCs, such as John Doerr, focused on the "team". Some random links related to this:

John Doerr's Startup Manual

Why to Not Not Start a Startup

Ron Conway and Paul Graham startup success data

Related to this is the recent trend of social apps and games being funded versus "bigger ideas" and the growth of angel investing, so I understand in these types of startups multiple founders might not be necessary at the concept stage. This is where I agree with Michael Arrington's gripe about the new investor landscape creating a "culture of shooting too low". Investors are funding some of these one-hit wonders and since many of them are angels smaller exits less than $50 million or even $30 million are considered home runs. What would the technology landscape look like if these same entrepreneurs had bigger visions than creating a water ballon fight on Facebook? Or is this just a whole new category of tech entrepreneurship?

No comments: