How Solo Founders Beat The Odds and Get Into Top Accelerators
blogs.wsj.com
blogs.wsj.com
For a minute, let's set aside information technology startups and look at business startups: All across the US, border to border, from crossroads to the largest cities, the US is just awash in sole proprietorships. They mow grass, run 12 fast food restaurants, repair cars, run 10 gas stations with convenience stores, run Italian red sauce restaurants, are dentists, pediatricians, etc. One owner, zero to a few hundred employees. So, sole founder, one owner works fine, millions of times across the US, in business.
Now, for an information technology startup, that's just an advantage, at least through a business of similar size. If a guy running 10 pizza shops can be a solo founder, then a guy running a Web site or writing an app can also.
Technical knowledge? It takes a lot of technical knowledge to repair, correctly, efficiently any car that drives in to an auto repair shop or auto body shop or be up to date on dentistry, pediatrics, etc. Information technology is not nearly the only field that needs technical knowledge.
For an information technology startup, it stands to help if the founder, CEO actually understands the work. The best way for him to do this is to do the work. There actually doing the work may not take so much time and, instead, getting the background, say, 4000 Web pages of documentation from Microsoft's MSDN, can take more time. But if he is going to understand the work, then he needs the background. So, given the background, go ahead and do the work. Later, when there's plenty of revenue and more work to do, start hiring.
If the project grows well past a 'life style' business to a big thing, fine, but still I see no great reason to have more than one founder.
I can guess why some venture investors want more than one founder.
As a solo founder of a startup that I've been running for almost the past four years, if I had anyone in my network that wasn't scared to death of leaving the comfort of a full-time job behind to join me as a cofounder, I would have brought them on board in a heartbeat.
One reason a technology startup is significantly more stressful than a standard business is that, by definition, you are in uncharted territory. Traditional businesses have loads of successful examples; the business model and value proposition to customers are both largely consistent. With most tech startups, you have to invent a new business model, create new technology fron scratch, and convince customers that your never-before-seen product or service is something they should spend their hard-earned money on.
1. The business model: Though there are a few general patterns available for web startups to use (e.g. freemium, ad-supported), every startup has to figure out how to become profitable within its particular niche. It's unlikely you'll find success by copying someone else's model exactly, while you can do exactly that in the small business world. Startups selling physical products (such as mine) likely don't even have freemium or advertising as options for experimentation, though there are some product startups exploring variations of those options.
2. The technology: Writing code and designing user interfaces is nothing like repairing cars. There's no doubt that there are a lot of intelligent, knowledgeable mechanics (even some who are also software developers), but there's a very large difference between understanding an existing system, and creating a new system from nothing but keystrokes. The common tasks of the mechanic can be done almost by instinct and memorization, leaving sufficient mental horsepower available for the few particularly tricky problems. Most startup-worthy software projects will involve intense creative effort at every step of development, which is far more mentally taxing.
3. Value proposition: Consumers already know they need a mechanic, or food, or a dentist. As a restaurateur, for example, you mostly need to convince willing consumers to come to your restaurant instead of your competition. A tech startup has to convince customers that they need to spend money on an entirely new category of product. Most people will agonize over the smallest expenditure if it's not part of their traditional purchase sphere (purchasphere?).
In summary, the stresses of running a tech startup, especially for someone in their 20s with at most a couple tens of thousands in savings, are far beyond what most solo founders can bear, and only those who are determined beyond reason (or already rich) should dream of going it alone.
"May I ask whether you have much experience as a sole proprietor or solo founder?"
Some!
"One reason a technology startup is significantly more stressful than a standard business is that, by definition, you are in uncharted territory."
Yes, there's some "stress". My view is that making things work "in uncharted territory" is just what has to be an expected part of much of work in being successful.
Generally, for everything we have that did not exist 40,000 years ago, there was someone who did it for the first time and was "in uncharted territory".
"Uncharted territory" does not have to be just a shot in the dark or wildly risky; instead, in a good case can have some good evidence quite early on that are on a promising path. If not, then pick a new approach to a solution of the problem or pick a new problem. Problem selection is important.
You are partly right about a guy with, say, an auto repair shop but in information technology, for an important problem, market, etc., having something original, much better than anything else and difficult to duplicate or equal, can be an advantage.
"With most tech startups, you have to invent a new business model, create new technology from scratch, and convince customers that your never-before-seen product or service is something they should spend their hard-earned money on."
Look at it this way: Start with a problem it is clear the market, users, customers, etc. really have and really care about, and then give them the first good or a much better solution.
So, all are trying to "sell" the customer on is your solution for the problem he already cares about.
"Though there are a few general patterns available for web startups to use (e.g. freemium, ad-supported), every startup has to figure out how to become profitable within its particular niche."
For Web sites, sell ads. From the Meeker data at KPCB, the average 'charge per 1000 ads displayed' (CPM) of mobile and desktop is $2.125. Then if can send, on average 24 x 7, 2 Web pages a second with 4 ads per page, should be able to get monthly revenue of
2.125 * 4 * 2 * 3600 * 24 * 30 / 1000 =
44,064
Then, for a solo founder, $44,064 a month is a nice start.
The key is to have the site deliver a 'solution' to a problem where the solution is good enough to have users request the 2 pages a second. For that, need to have something some people want.
How many people? Well, at least how many pages per month? That's
2 * 3600 * 24 * 30 = 5,184,000
For sending 2 pages a second, the 'operating costs' of the business might be just one or two servers worth less than $2000 each and an Internet connection that, with TV and phone, costs about $150 a month, that is, next to trivial.
If more users like the Web site, then the revenue can grow. So, be sure have built a 'scalable' site, and then add servers and Internet upload bandwidth.
"Writing code and designing user interfaces is nothing like repairing cars. There's no doubt that there are a lot of intelligent, knowledgeable mechanics (even some who are also software developers), but there's a very large difference between understanding an existing system, and creating a new system from nothing but keystrokes."
I don't know! As a teenager, I repaired some cars. And I've written software, e.g., created "a new system from nothing but keystrokes". For me, in most respects, the keystrokes are easier.
When I've created "a new system from nothing but keystrokes". the challenging part was not the keystrokes and not the programming but figuring out what to program. In my case, that's been mostly applied math.
E.g., once I was working for a software house near DC. Our customer was a major Navy lab. I had a week with nothing else to do, and a project was in trouble, so I was sent to the project for the week. In about an hour I saw that there was nothing I could do for the project in a week.
But we were also in some competitive bidding on some software for that lab. I saw a problem with what the lab had requested and decided to spend the week on something risky: I got 'smart' on the statistics of the measurement of power spectra, wrote some illustrative software, and at the end of the week showed a guy from the Navy. The Navy was pleased, and our company got essentially 'sole source' and won the competitive bid. If my work that week had failed, then I might have been fired. I got a solution; I thought that it was fun.
"Most startup-worthy software projects will involve intense creative effort at every step of development, which is far more mentally taxing."
A lot of work in school involves "intense creative effort at every step"; e.g., one exercise was show that there are no countably infinite sigma algebras, and the solution takes some "intense creative effort at every step". I was the only one in the class who got it, but it was fun work.
"A tech startup has to convince customers that they need to spend money on an entirely new category of product."
Well, can take my approach, "convince" users/customers that, for a problem they already have and really know they have but are not really solving now, they need to use "an entirely new category of" solution.
"only those who are determined beyond reason (or already rich) should dream of going it alone".
"Rich"? Need routine cost of living. But for the software, I paid Microsoft for Windows 2000 and then for the upgrade from Windows 2000 to Windows XP, but all the rest of the Microsoft I've been using -- Visual Basic .NET, C/C++, .NET Framework, SQL Server Express, IIS, etc. -- has been for free. The 4000 pages of documentation from MSDN, also free.
When I go live I will need serious copies of Windows Server and SQL Server, but those are available via the Microsoft BizSpark initially for free. Now can plug together one heck of a computer for $2000, and can get some really good Internet access, with TV and phone, for about $150 a month. Don't have to be "rich" to fund that.
"Alone"? I'm failing to see that involving others would speed the work or lower the costs. For speeding the work, nearly all the time has gone to my learning enough about the relevant Microsoft software and working around various issues, and as the CEO I should know that material. The work really unique to my project has been fast, fun, and easy.
In a sense, either the solo founder really knows what the heck he is doing and is on a good path, or he doesn't and isn't. In the first case, involving others will likely dilute the quality of the work and increase the costs, and otherwise not much can save the project.
I don't know why you are eager to hire others instead of just doing the work.
That's quite an audience to build, and I think that's where a lot of effort goes. It can take a long to time to create and establish a brand and experience that people rely on and trust.
For how difficult it is to "build" such an audience, my guess is don't much try to 'build' it. Instead, if the project is good, then fairly routine publicity, virality, etc. will be sufficient. Otherwise, the project is not very good and need another project.
Generally project selection is really important. For a Web site or app, my guess is that should concentrate on projects that should be of significantly high interest to a major fraction of all Internet users at least in the US and maybe the world. Examples were Plenty of Fish, Hot Mail, YouTube, Yahoo, Google, Apple's iPhone, Google's Android. Sometimes can get a good start with an entering wedge into a niche, but if early on want to get the half million unique users a month, then it should help to be casting the net in an ocean of millions or billions of Internet users.
It's because there's enough work piled up on the TODO list to occupy three developers, a designer, and a business major. That's a lot for one person to handle.
"Three developers"? That's you! To do the work of three developers, you just need to do it yourself, and, and assuming you have the technical 'skills', that is, have read and worked with enough of the documentation of whatever you are using, classes, TCP/IP, SQL, HTML, CSS, programming languages, system management, which as founder you should know, your time to do the development might be only twice as long as the three developers would take since you would have less time in management. In either salary or equity, hiring the developers is expensive.
"A designer"? Unless you are seeking some super gorgeous, artistic site or app, just borrow 'design' ideas from examples of the work of others and do the design yourself.
"Business major"? I've been in business and been an MBA prof -- I'm missing why a startup needs a business major! Once you are live or about ready to go live, you may need some or all of a bookkeeper, accountant, payroll service, lawyer, business insurance agent, maybe a few more -- Chinese carryout for lunches.
But now as a solo founder with a reasonably successful growing business under me, I'm starting to realize what the limitations are.
Without going into detail, the key one is having the "spare cycles" to deal with the logistics of building the business. While bringing freelancers on helps, I lack the time to run and grow the business (as I'm doing quite well) AND implement the policies and do all the leg work that's necessary to bring other full time employees on or seek funding. I'd need to lower my standards on the "running and growing" to focus on the latter. If I had a co-founder, we could split that work much better.
As it is, my approach is to simply not grow as fast as I could if I had employees, funding, or whatever, and instead hope I can automate enough and get enough competent freelancers on board that I can start to focus on that bigger picture stuff.
An information technology startup with just a Web site or app can be an advantage here: Have a shot at getting to be nicely profitable before having to start hiring. The standard example is Plenty of Fish, the Canadian romantic matchmaking site, long just one guy, two old Dell servers, ads just from Google, and $10 million a year in revenue. The lastest I heard was that now he's hired a lot of people.
I've thought that if my startup is successful, then my first hire will be an 'office manager', your RH man! Next would be a server farm administrator -- get the parts, plug together the computers, position the computers on shelf units or in racks, connect the computers to the A/C power and LAN switch, get the software installed and configured (hopefully using some automatic tools), get the system monitoring and management software installed, get the computer connected to the system management system, monitor everything, when there are symptoms of problem, diagnose and solve the problems, track performance and plan upgrades. Next would be the start of a group for ad sales and customer service. Next would be a software guy to bring up, say, a Web site for self service and 'analytics' for the advertisers. Next would be an internal guy to handle the money, that is, instead of just dumping all the paper on a CPA in town. Then grow it.
But the key thing is to get the software done, go live, and get users. Back to it!
Sadly, there's not one qualifying statement in your comment which leads me to believe you don't know what you're talking about. And that's fine, except you pretend like you do by rationalizing with yourself while trying to convenience others.
How about you first run a few businesses one your own. Then try one with a cofounder. In 10 years, please email me your thoughts. If you want to shorten that time, just go outside and talk to at least 10 founders who've done it.
It's not about me. I should not use my resume as my primary evidence. But, yes, I've been in business, sometimes as a founder. As a founder, sometimes I made good money and sometimes not. Now I am a founder again and hope to 'go live' soon. And I have seen a lot of business founders over the years, some close and some distant, some with failures or with successes from small, medium, large, or extra large. I get my views partly from such observations.
Just now in my work, I don't want a co-founder, and for essentially the reasons I gave: Dilute the direction and/or quality of the work, spend more money, and spend time in 'management'.
It was a worthwhile failure for me, I made some great friends and learned a lot, but I'd counsel any lone founder to focus on growing some kind of support team around them as the first priority. I would never contemplate an accelerator as a solo founder, but I have nothing but admiration for those who have managed it.
Techstars has lots of talks, sessions, and pitch practice. YC has almost none of that - one dinner a week, otherwise, a complete focus on product and customers.
I've since added a co-founder, but we more or less still operate the same (probably a bit to our detriment).
I think there's way too much emphasis in the press & in people's mindsets these days on getting funding, getting into incubators, etc. Those things may be sexy but they're not the point of the game - at best they're tools to help you get there.
But he notes that he had a team already working with him, even though technically he was a "solo founder."
Furthermore, I think as a founder if you concern yourself much over this point you are likely to fail. Building a startup is a game of applying extremely limited resources, if you are focused on structural details like number of founders then you are necessarily not focused on the unique metrics of success for your business. Of course there are pros and cons to being solo or multiple founders, but in the end a motivated individual should never let conventional wisdom get in the way of pushing forward (especially from investors who are grasping for any kind of signal to hang their hat on!). Conversely, if a person with the right talents and skills comes along you should absolutely allow them a co-founder seat even if you planned on going it alone as this will magnify your sphere of opportunity in terms of execution potential.
See PG's comment here: https://news.ycombinator.com/item?id=77319
Keep in mind that, in general, any meaningful research showing differential rates of return will probably be proprietary because of the potential business advantage it confers.
For those who don't know Bizdom is part of the Rock Ventures family of companies. The office: http://bit.ly/WWfdhJ
The sofa in this photo looks more like a casting couch..just saying xD
It's difficult, not impossible, to be accepted to a startup accelerator if you're a solo founder.
wtads [What The Article Didn't Say]
* Startups can't make it without an accelerator
* Solo founders can't run successful startupsEh? Successful startups without accelerators and successful solo founders have been around since the dawn of time...