Ask HN: Single founder startups: real data and experiences?

It depends, if you are going after investor dollars from the traditional SV VC bunch then yes, they all talk fairly openly how they favor multi-founder companies. At the same time, most of them have invested in solo founders as well if the plan is strong and the business already has traction.

What is your goal? Do you want investment from a SV VC? Do you need it? Do you have enough traction to even get on their radar? Any connections you can use to get introduced?

I personally think the co-founder thing is over blown, but don't underestimate that the many (if not most) investors prefer it. But frankly, if your business is solid, has traction and is growing an investor will still have interest. As a solo founder though, you will have more to prove and more to show that it is moving and you are capable of keeping up. And it doesn't meant that you may not meet someone along the way to bring into the venture.

Also, remember having a co-founder doesn't necessarily mean that the split is equal, in fact rarely is it ever equal from what I have personally seen.

Right now I'm thinking enough seed for a lean and mean run to increase the growth rate, increase the conversion rate by adding value to pro tier, build out into mobile (iOS/Android), and get into a position where a series A would make sense. I'm thinking 18 months of runway: 12 months to get into position, six for series A. (Assuming no revenue growth... revenue growth would stretch the runway of course and I'd be very, very focused on that.)

That would be enough money to go full time myself, hire another employee, and secure the services of a serious PR firm to begin getting the brand and the message out there. It'd likely be in the $500k-ish neighborhood but I haven't made a real spreadsheet yet... still getting the message, basic pitch, and rough plan outline down. If it happens it'd be Feb-March 2015 in all likelihood.

I'm not in SV, and that's too small for most VCs. It'd be an angel/seed round. I have spoken to one seed-stage VC who expressed a little bit of interest, and I told him I'd update him as things progressed (will probably do that soon).

An alternative path I've been thinking about is going for a good incubator. There are two decent looking ones near me:

http://k5launch.com

http://launchpad.la

That might provide a short runway from where I am now to seed, more or less.

Just posted this for a bit of food for thought since I just keep hearing that refrain from all kinds of people, mostly from the SV orbit.

I'm not totally alone BTW. I have assembled an advisory board that is really advising, and I do have some people I bounce ideas off.

Yea, the HN crowd is always great for ideas and overall pretty needed brutal honesty.

So my 2 cents, you are looking at angel money, which at 500k means you will likely be held to a salary of $50-70k for yourself and the hiring of a few people to meet your goals. I mention the salary only because you mention you aren't a young fresh out of college person, so I would guess you have some real bills and possibly a family. After about 6 months of work you will need to be on the track to raising your next round as well to get money in place at month 12-14. This all assumes you have never raised before and so have no proven track record using someone else's money, and of course is just my opinion.

An incubator might be a good idea if you can find one that will take you as solo founder, again not impossible but they play to the VC's desires.

Some other ideas/points,

1: look for traditional angel money outside of just the well known SV firms, people etc. High net worth people invest in companies fairly often and usually are more personally involved in the deal (not in a bad way) and many times are a little more flexible with founder salary if that is needed.

2: Bootstrap a little longer and pay a developer part time to help you meet the other goals. If you have a full time position now take $1,500-$2,500 of what you are making monthly and spend it on hiring part time help to get some of the stuff over the finish line before going after money. Either way this moves the ball further down the path so that if you go after money you are that much better off.

3: Definitely put it up on AngelList.

4: Don't focus on a PR firm, they generally are expensive and a waste of money for early traction. We worked with a startup this summer that spent well over $100k of their money on a PR firm that got them less exposure then did spending $2,500 on a 30 second video and spreading it through friends, family and social media sites. As well the founder figured out that by contacting reporters and bloggers directly the response he received was way better than having the PR firm do it, and all it cost him was a few hours every week talking to these people.

5: Update your website, right now it looks like a side project that isn't getting a lot of love. The website is the first impression people see of you and your service/product. If it looks poorly, so will your chances with converting the client. I speak here from great stupidity and experience for myself on this one.

No matter what, good luck!

Thanks, especially for #4 and #5.

#4 is really food for thought. I mean really. My gut instinct would be to agree with you wholeheartedly. Maybe PR is an area where "business advice" has wormed its way into my brain. Try as I might, I just can't ignore enough "business advice." :)

If I cut that PR component the required raise drops substantially... at least in half.

So far all my growth and conversion has been from viral, social, direct person-to-person, and other "organic" means, but I've also observed that blogs and press mentions drive traffic and prime the pump. My graphs look like this: a remarkably consistent exponential (straight line on log plot) 1.4% daily compounded growth, but every major press or blog hit just elevates the graph vertically a few ticks where it then continues its 1.4% march. The 1.4% number is so incredibly constant it's spooky... I've never seen anything like it. It just continues no matter what I do, for months and months. This is for active online users, which is the best metric for this system. Is a constant growth rate like that common? I always assumed growth rates would look "rocky" like most other real-world data.

#5 is interesting too. It looks a lot better than it used to, but perhaps that isn't saying much. I might just use a professional web design hosted software suite like Squarespace or The Grid, since I've got better things to do than dink around with HTML/CSS minutia.

It is up on AngelList: https://angel.co/zerotier-networks

As far as salary goes you're right. I have a family and kids, so I can't afford a really big pay cut. That's another downside of not being a bachelor right out of college, and is a big part of why the startup scene is so biased toward early-twenty-somethings. But hey, I guess part of doing stuff like this is that you have to deal with what you have as intelligently as you can. You can't change your circumstances in these areas but you can hack around them.

You are welcome.

That's great, I totally missed it on AngelList, my bad, glad you posted it.

I have never heard of or seen a growth pattern like that, it is strange. Maybe someone else can comment on it. Usually we see clients that have much more rocky patterns with the overall trend growing but it is up and down and of course has spike trends near events, press coverage etc. Our own growth has seen that same trend so that seems more normal to me, but hey, long as you are growing it is good.

On your website, it isn't horrid, but I just don't think it puts your best foot forward or gives you the first impression of a professional firm yet.

I am in the same position you are overall, solo founder with a wife, kids etc. That is part of what stopped me from taking some investment dollars earlier this year for my product business. We had been seeking out interested investors because we have some traction, but both groups that gave us offers (term sheets + details) were limiting me to such a small founder salary I couldn't support my family on it. Literally one of them was around a $50k salary, which I don't mean to scoff at, but just isn't realistic for this point in my life. We don't live the high life and have little debt/bills overall, but that is just too low for us. The catch is I couldn't be pissed at them because they are focused on making money, it just didn't work for us and they weren't willing to budge. So instead I changed the plan, pulled back some and am regrouping to pull more consulting income again. And I will just bootstrap more until either I make it, the product fails, I fail or I decide to try and raise again. The only part that really sucked to me was that sadly rejecting those offers meant I had to change my team up for that product because I just couldn't support them full time without enough revenue or investment.

Good luck, my email is in my profile if you want to chat offline any.

Sure. I'll drop you a line.

The growth pattern is weird -- in kind of a good way -- and is definitely real as confirmed by admin panel signups, paid conversions, etc. mirroring and confirming it. Those are also pretty solid stable percentages of the overall count.

Web visits follow a much more rocky pattern but if you smooth out the noise you get a rough echo of the 1.4% connected devices growth rate for recurring visits, which make sense and further confirms its reality.

I've just never seen a growth rate so consistent and deterministic. You can hold the edge of a piece of paper under a log(Y) scale graph of "devices online" and the line is straight. Apparently in ten years I will have a device online for every atom in the solar system. /lulz

Granted I've been focusing on bug fixes, software improvements, and working with select customers, so I haven't done much to update the web site or optimize for viral growth. This is very much a "hands off" organic rate. It'll be interesting to see how it responds if I do change things up a bit. The smoothness of it will make any kind of A/B testing a breeze... any change should jump right out and smack me in the face. :)

I'm a startup founder myself and someone once told me that no one will run a startup like the founder himself, especially in the beginning. I've taken this advice to heart because even during the bad times, I've managed to keep going because I'm passionate about my space and I'm patient and persistent. (almost to a fault)

That being said, I've had team members come and go....mostly because I was hiring young developers that were still in school. Even though I was doing most of the leg work, I did have that assistance at times and was able to have that team feel that investors very much liked.

Teams are always in flux and if you have a bad team member, you'll have to face the difficult decision of letting someone go. It's an evolving process but it gets better everytime. I've been at this for a couple of years and I'm not convinced I have that A+ team quite yet. So on certain occasions, I still think I'm a solo founder (if that makes any sense.) I suppose it's how you look at things.

Another thought:

If I were an investor, I would probably have a strong bias toward 2+ founder startups. This wouldn't be because single founder startups never work, but because of "bus factor." Having two or more founders at least halves the likelihood that the single founder will in one way or another become incapacitated. This could refer to medical or personal problems or just to burnout, personality issues, etc. It's a lot of eggs in one basket.

So I suspect that investors like multiple founders because they like to reduce risk.

I also do suspect that single founder startups are at a disadvantage. You have half the networking surface area and are much more prone to getting discouraged without the moral support another person can offer. We are social beings. I'm just curious about whether the disadvantage is as extreme as PG claims. I've seen numerous counterexamples, but honestly I have yet to see any good hard vetted statistics either way. I mostly see a lot of opinion.

I guess it's a tough statistic to really gather, since there is no single central registry of tech startups.